Introduction: What Is the Employment Act 1955?
The Employment Act 1955 is Malaysia’s main piece of labour legislation, regulating the relationship between employers and employees in Peninsular Malaysia and Labuan.
It sets the minimum standards of employment, including wages, working hours, leave, benefits, and termination rights.
This law ensures that employees are treated fairly and that employers follow standard labour practices that align with Malaysia’s labour policy and international standards.
In simple terms: The Employment Act 1955 = Malaysia’s foundation for fair employment and HR compliance.
1. The Purpose of the Employment Act 1955
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The main goal of the Employment Act 1955 is to protect workers’ rights and provide a legal framework for employment relationships.
It aims to ensure fairness, transparency, and harmony between employers and employees.
Key Objectives:
Define employee rights and employer duties.
It outlines what employers must provide (e.g. wages, rest days, leave) and what employees are entitled to.
Prevent exploitation and unfair treatment.
It ensures employees receive fair pay and safe working conditions.
Standardize employment practices.
The Act provides uniform standards for employment across Malaysia.
Support social and economic stability.
A fair labour system helps maintain a productive and equitable workforce.
The Employment Act provides the “minimum floor” of protection — companies can offer more benefits, but not less.
2. Coverage: Who Is Protected Under the Employment Act 1955?
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The amended Employment Act (effective 1 January 2023) has expanded coverage to include almost all employees in Malaysia — regardless of salary level.
Who Is Covered:
- All employees, whether full-time, part-time, or temporary.
- Local and foreign workers employed under a valid contract of service.
Exceptions:
Employees earning more than RM4,000/month are excluded from certain financial provisions, such as:
- Paid public holidays
- Maternity/paternity leave
- Rest days
- Protection against unfair dismissal
Even high-salary employees are still legally protected under Malaysia’s Employment Law.
3. Key Areas Covered by the Employment Act 1955
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The Act covers several major aspects of employment relationships, including:
Working Hours & Rest Days
- Maximum working hours: 45 hours per week.
- Minimum 1 rest day per week.
- Overtime rules and pay are clearly defined.
Wages & Payment
- Employers must pay wages no later than the 7th day after the wage period ends.
- Deductions are only allowed under lawful conditions (e.g. EPF, SOCSO, EIS, income tax).
Leave Entitlements
- Annual leave, sick leave, maternity leave (98 days), and paternity leave (7 days) are specified.
- Public holiday entitlements are guaranteed.
Flexible Working Arrangements (FWA)
- Employees can formally apply for flexible working hours, workdays, or work-from-home options under Sections 60P and 60Q.
Protection for Women & Maternity
- Prohibits dismissal of pregnant employees except for misconduct or business closure.
- Protects maternity rights and benefits.
Termination and lay-off benefits
- Requires written notice before termination.
- Provides compensation rights under specific conditions.
- Employers must have valid reasons for dismissal (e.g. misconduct, redundancy).
Prohibition of Forced Labour & Harassment
- Explicitly bans forced labour and sexual harassment.
- Employers must maintain a safe and respectful workplace.
HR Insight: Compliance isn’t just about avoiding penalties — it’s about maintaining fairness and a good employer brand.
4. Who Enforces the Employment Act 1955?
The Director General of Labour (DGL) under the Ministry of Human Resources (MOHR) is responsible for enforcing the Act.
The DGL has the authority to:
- Inspect workplaces for compliance.
- Investigate employee complaints.
- Issue orders or fines for violations.
- Mediate disputes between employers and employees.
Penalties for non-compliance can reach up to RM50,000 per offence.
5. Why the Employment Act Matters for Employers & HR
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HR Perspective:
- It sets the minimum compliance standard every HR policy must follow.
- It helps HR professionals align internal policies with national law.
- It prevents labour disputes, penalties, and reputational damage.
Employer Benefits:
- Builds trust with employees.
- Improves retention through fair treatment.
- Protects businesses from legal risk.
When your HR policies align with the Employment Act, your company operates confidently within the law.
6. Common Misunderstandings About the Employment Act 1955
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HR Perspective:
Myth Reality The Act only covers low-wage workers.
Wrong. It now covers all employees in Malaysia.
HR can decide leave benefits freely.
No. Minimum entitlements are fixed by law.
High-salary staff don’t have labour rights.
They do — only certain financial benefits differ.
Verbal contracts are enough.
Always have a written contract of service for legal clarity.
Conclusion: Employment Act 1955 — The Foundation of Malaysia Labour Law
The Employment Act 1955 forms the backbone of Malaysia’s labour law, ensuring every employee is treated fairly and every employer understands their obligations.
For HR and business owners, compliance isn’t just legal — it’s strategic.
A company that respects Malaysia’s labour laws builds stronger teams, reduces disputes, and creates long-term business stability.
In short: Know the law, follow the law, and your business will grow with integrity.
Frequently Asked Questions
What is the Employment Act 1955?
It’s Malaysia’s main employment law that governs the terms and conditions of employment, ensuring fair treatment for all employees.
Who does the Employment Act 1955 apply to?
It applies to all employees in Peninsular Malaysia and Labuan, regardless of salary, with some exceptions for financial benefits above RM4,000/month.
What is the purpose of the Employment Act 1955?
To protect workers’ rights, regulate employer-employee relationships, and promote fair labour practices.
How many working hours are allowed in Malaysia?
The Act limits working hours to 45 hours per week, excluding meal breaks.
What leave benefits are employees entitled to?
Employees are entitled to annual leave, sick leave, maternity/paternity leave, and paid public holidays.
What happens if an employer violates the Employment Act?
Employers can face fines of up to RM50,000 per offence, and employees may file complaints with the Labour Department.
Is the Employment Act the same across Malaysia?
It applies to Peninsular Malaysia and Labuan. Sabah and Sarawak have separate labour ordinances.
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