Overtime in Malaysia (2025): OT Pay Calculation, Legal Rates & Employee Rights

Introduction

Understanding overtime in Malaysia is crucial for both employers and employees to ensure compliance with local labor laws. The Employment Act 1955, along with its 2022 amendment affective from 1 January 2023, governs overtime (OT) calculations, rates, and eligibility. This comprehensive guide explains how to calculate OT pay in Malaysia, what counts as overtime, and how it applies to different employment types.

2023 Amendment Highlights:

What Qualifies as Overtime in Malaysia?

Under the Employment Act 1955 (Amended 2022), an employee is entitled to overtime pay is they work: 

  • More than 8 hours per day
  • More than 45 hours per week (reduced from 48 hours)
  • On rest days or public holidays

Note: Employees earning above RM 4,000/month may be exempt from certain OT provisions unless specified otherwise.

Overtime Calculation for Monthly Employees

Overtime Pay Formula:

(Monthly Salary ÷ 26 days ÷ 8 or 7.5 hours) × OT Rate × OT Hours Worked

  • Use 8 hours for a 5-day workweek
  • Use 7.5 hours for a 6-day workweek
  • 25 days = Average working days in a month

Overtime Pay Rates in Malaysia:

TYPE OVERTIME RATE WHEN IT APPLIES
Normal Workday 1.5x For hours exceeding normal daily work hours
Rest Day (≤ ½ day) 0.5x If work is half or less than normal hours
Rest Day (> ½ day) 1.0x If work is more than half but not exceeding normal hours
Rest Day (Full Day) 2.0x For work exceeding normal hours on rest days
Public Holiday 2.0x For normal hours worked on a public holiday
Public Holiday OT 3.0x For hours beyond normal hours on a public holiday

Note: Employers may use alternative formulas, but the final amount must not be lower than the statutory rate.

Example: Calculation OT Pay

Scenario: Mr. Low earns RM2,600/month and works on 2 public holidays with 5 hours of OT.

ITEM RATE/HOURS AMOUNT (RM)
Public Holiday Pay RM100 x 2 RM200.00
OT on Public Holiday (2 Days) RM200 x 2 RM400.00
OT Rate on Public Holiday RM12.50 x 3 RM37.50/hour
OT on Public Holidays (5 Hours) RM37.50 x 5 RM187.50
Total OT RM587.50

OT for Daily, Hourly & Piece-Rated Workers

For employees paid daily, hourly, or by piece-rate, the Ordinary Rate of Pay (ORP) is calculated as:

  • ORP = Total wages earned (excluding rest days, PH, incentives) ÷ Total hours worked (excluding rest days & PH)
  • Overtime is then paid at 1.5x, 2x, or 3x the ORP, depending on the workday type.

OT Rules for Part-Time Employees in Malaysia

2023 Update: Clearer OT treatment for part-timers added to the Act

If part-time hours are exceeded but still under full-time limits (8h/day, 45h/week):

  • OT = 1.5x agreed hourly rate

If hours exceed full-time limits: 

  • Standard OT rates under Employment Act apply

Example:

  • A part-timer is scheduled for 5 hours/day but works 7 hours
  • OT Pay = 2 extra hours x 1.5 x hourly rate

Leave Entitlements Comparison (Full-Time vs Part-Time)

LEAVE TYPE FULL-TIME EMPLOYEES PART-TIME EMPLOYEES
Annual Leave 8 days (≤ 2 years) 6 days (≤ 2 years)
12 days (2–5 years) 8 days (2–5 years)
16 days (> 5 years) 11 days (> 5 years)
Sick Leave 14 days (≤ 2 years) 10 days (≤ 2 years)
18 days (2–5 years) 13 days (2–5 years)
22 days (> 5 years) 15 days (> 5 years)
Hospitalization Leave 60 days (including sick leave entitlement) Not Applicable
Maternity Leave 98 days (for first 5 confinements, subject to eligibility) Not Applicable
Paternity Leave 7 days (where applicable) Not Applicable
Public Holidays Entitled to 11 paid public holidays, must include: Entitled to 7 paid public holidays, must include:
Workers' Day Workers' Day
National Day National Day
Malaysia Day Malaysia Day
Birthday of Yang di-Pertuan Agong Birthday of Yang di-Pertuan Agong
Birthday of State Ruler / FT Day Birthday of State Ruler / FT Day

Note: Leave benefits apply after 12 months of continuous service.

Unpaid Leave & Salary Proration Rules

Unpaid leave is not regulated by law but is commonly practiced. Salary for incomplete month is calculated as: 

Pro-Rated Salary = (Monthly Salary × Paid Days) ÷ Total Calendar Days

1.1.1. Examples: Common Scenarios Where This Applies:

SITUATION IS SALARY ADJUSTED?
Starting job after the 1st of the month
Resigning before the end of the month
Taking unpaid leave days
Absent due to national service obligations

1.1.2. Salary Calculation Examples:

SCENARIO DETAILS CALCULATION FINAL SALARY
New Joiner Start Date: 12 Jan 2023 RM2,200 × (20 ÷ 31) RM1,419.35
Monthly Salary: RM2,200
Worked: 20 out of 31 days
Resignation Mid-Month Resigned: 18 Apr 2023 RM2,700 × (18 ÷ 30) RM1,620.00
Monthly Salary: RM2,700
Worked: 18 out of 30 days
Unpaid Leave (4 Days) June 2023 RM2,500 × (26 ÷ 30) RM2,166.67
Monthly Salary: RM2,500
Unpaid Leave: 4 days → Paid Days: 26 out of 30

Important Notes

  • Always use calendar days (not just working days) in the formula.
  • Employers may choose more favorable calculations if beneficial to employees.

FAQs

Conclusion

Malaysia’s overtime laws ensure fair compensation for extra work hours. Employers must comply with the Employment Act 1955 rates, while employees should verify their OT calculations. Whether you’re full-time, part-time, or on a daily wage, understanding these rules helps protect your rights.

Need help with payroll compliance? Consult an HR expert or refer to the latest Employment Act amendments for updates.

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