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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