Content Outline
Leave Policy in Malaysia
Know the eligibility thresholds and entitlements for various types of leave under the Employment Act like Annual leave, Maternity leave, Sick leave, etc.
Today more companies are moving toward expanding their remote work teams, thus enabling employees to relocate to different countries and businesses to recruit workers located worldwide.
Nevertheless, it signifies that the employers should explore into the local tax and labour rules of locations where they are not commonly present.
The safest way forward for companies that want to hire in Malaysia is to partner with a local EOR firm like FastLane Group that has its own separate local legal entity through which it can hire on your company’s behalf.
Whichever way you choose to hire employees in Malaysia, it is important for you to appreciate that there are local laws guiding the operations that will be affected. Read below to understand the laws regulating different types of employee’s leaves in Malaysia.Note: Sabah and Sarawak are excluded from application of the Employment Act as they maintain their separate labour ordinances known as Sabah Labour Ordinance and Sarawak Labour Ordinance respectively.
Annual Leave Malaysia
Every year, employees in Malaysia have a legal right to annual paid leave. Every employee earns an entitlement of annual leave Malaysia depending on their service period with a particular organization. Below are the minimum annual leave Malaysia that employees are entitled to:
| Length of service | Number of days off per year |
|---|---|
| Less than two years | 8 days for every year of service |
| Between two and five years | 12 days for every year of service |
| More than five years | 16 days for every year of service |
On the other hand, Malaysian employers should consider giving their staff extra days off or different types of leaves. Employees in Malaysia also get some holidays which do not involve annual leave.
The annual leave Malaysia can also be prorated if an employee has worked for less than a year.
However, if a person fails to go to work without permission or sufficient reason for more than ten percent of the working years, such person’s statutory annual leave Malaysia entitlement for the years will be forfeited.
Treatment of unused leave entitlements
In addition, employees should utilise their remaining annual leave Malaysia carried from each subsequent year of service within the following 12 calendar months of service. The leave entitlement will become forfeited if not utilised.
An employee should make sure that he or she reads about unused annual leave Malaysia in both their employment contract and company policy. The minimum requirements on Annual Leave Malaysia should allow an employee to carry over their unexpired Annual Leave days to the next year.
In the case where, upon request of the employer, the employee agrees in writing not to avail themselves any or all of their annual leave, existing employees may also prefer to encash the accumulated annual leave, which they had not utilised. Both parties should agree, in writing. On the other hand, while a worker leaves a job, an employer should pay out for accrued but untaken annual vacation leave.
In addition, if an employee has several days’ worth of unused annual leave when they resign, it will be possible for them to use those remaining days to compensate for their notice period and bring forward their last day of service. Nevertheless, it depends on an employer who has the right to turn down a request for leave by an employee. In such instances, the employee will be paid in lieu of his annual leave balance.
Overlap of leave periods
Annual leave Malaysia does not disqualify employees from being entitled to sick or maternity leave. Where applicable, the annual leave Malaysia should be treated as not taken but the alternative leave should be taken.
Public holidays in Malaysia
Employees are entitled to 11 gazetted public holidays, 5 of which must be:
- National Day
- Yang di-Pertuan Agong birthday
- The employee’s birthday, the Ruler’s or the Yang di-Pertua Negeri of the state (Head of State) where the employee works, or Federal Territory Day if the employee works in the Federal Territory
- Worker’s Day/Labour Day
- Malaysia Day
Besides the 11 gazetted public holidays, workers are also entitled to any public holiday in accordance with section 8 of the Holidays Act 1951.
The other six holidays are at the discretion of the employer who may select them among the gazetted public holidays in addition to the 5 statutory public holidays. Employers need to show a notice before the beginning of every calendar year that explains about the six remaining public holidays for which employees are entitled. There are also other options where employers and the employees can decide to use the other days in place of one or more of the six selected public holidays.
In case a particular public holiday occurs on a rest or any other public holiday, the following working day should be declared as a public holiday.
Under the Employment Act, employees also enjoy another paid holiday when any of the 11 public holidays or substituted days fall within their sick or annual leave periods.
Click on the link to see a full list of Malaysia public holidays for 2024.
Sick leave in Malaysia
In Malaysia, employees are entitled for sick leave. On the drawback, the employers have a right not to pay for these days unless the worker receives a medical certificate (MC). When an employer requests for the employee’s medical certificate, then the employer must pay for the doctor visit by the employee.
Sick leave entitlement is also based on length of service. Below are the minimum sick day allotments for employees in Malaysia:
| Length Of Service | Sick Leave Entitlement | The eligibility for paid hospitalization sick leave | Total eligibility for paid sick leave |
|---|---|---|---|
| Less than 2 years | 14 days | 60 days | 74 days |
| 2 to 5 years | 18 days | 60 days | 78 days |
| More than 5 years | 22 days | 60 days | 82 days |
Where an employee is hospitalised, and this is during the year, he will be entitled to sixty (60) days of Hospitalization Leave in addition to his entitlement above. This certification shall be attested by a registered medical practitioner, officer or dental surgeon.
Emergency leave in Malaysia
The Employment Act 1955 contains no provision for emergency leave, and it is not mandatory for employers to extend this type of leave to employees.
Nevertheless, employers have the capacity to provide and restrict emergency leave at will but to a maximum of two or three days per annum to give room for some adjustment as regards accommodation of the wants of that an employee entails. Any other subsequent absenteeism can be characterized as leave without pay or deduct from the tenure of annual leaves.
The employee is required to have a valid reason for it; he should have informed or attempt to inform the employer at his/her earliest convenience concerning the unforeseen circumstances.
Family leave in Malaysia
Family leave allocations are given to all full-time employees in Malaysia. Malaysia requires employers to create a family leave policy which allows employees to take a leave and be paid.
Maternity leave in Malaysia
Female employees in Malaysia are entitled to comprehensive maternity leave benefits under the Malaysian Employment Act:
- Maternity Leave Duration:
- Continuous Ninety-Eight (98) days paid maternity leave.
- Begins not less than 30 days prior to birth and post day.
- Resuming work during leave, if medically certified and employer consents.
- Termination Protection:
- Employers cannot terminate employment due to pregnancy or related illnesses unless for specific reasons: the breakdown of a contract, misbehavior, or company closure.
- The above reasons enable freedom to fire and employers must prove termination was not due to pregnancy.
- Maternity Leave Entitlements:
- Maternity leave of not less than 60 days lump sum anywhere between 22 weeks before the due date and fourteen days prior to the delivery.
- Individuals can extend their permit of stay, if required more than the 60 days period for any health reason.
- Leave with pay at normal rate or prescribed maternity leave rate, if higher.
- A no-retaliation 90 day window post family leave.
- Eligibility Criteria:
- At least 90 days employed with nine months to the due date.
- Having fewer than five children.
Under Malaysian labour law these provisions qualify pregnant women to enjoy maternity leave.
Paternity leave in Malaysia
Since January 1, 2023, the Malaysian public and private sector employees receive rights of seven days paid paternity leave. Nonetheless, this advantage relates only to married employees who have had their wife give birth.
The seven days of allowance are the total entitlement to time off and do not equate to consecutive seven business days.
Married male employees qualify for seven consecutive days of paid paternity leave under these conditions:
- Employment Duration:
- For a continuous period of not less than 12 months immediately preceding the paternity leave.
- Notification Requirement:
- Inform employer of spouse’s pregnancy at least 30 days before the expected date of parturition or any time soon after childbirth.
The hyped-up policy also ensures a work-life balance to married male employees in the critical period after a child birth.
Adoption leave
Adoption leave is not a covered provision to employees in Malaysia. As such, any adoption leave entitlement employees may be enjoying in Malaysia are merely extras and an employer may decide not to offer them.
Carer’s leave
The Malaysian Employment Act does not currently specify carer’s leave benefits for employees; making it optional for employers.
Childcare Leave
According to labor laws, the minimum mandate is 6 days per annum. The child should be aged 6 years or below.
Rest Day in Malaysia
At least one rest day per week should be given to the Malaysian employees. Although it is usual for a rest day to be on Sunday, if it becomes necessary that an employee serves on the weekend, every attempt should be made to schedule his rest day on some other weekday.
For any day of rest, an employee is entitled to a compensation at not less than double the amount of their ordinary hourly rate from their employer if they envisage reducing the number of employees for work on weekends and their weekly holidays.
Compassionate leave in Malaysia
According to the Employment Act of Malaysia, compassionate leave does not exist in its statutes. Although not compulsory, a lot of firms include compassionate or bereavement leave in their employment contracts by mutual agreement.
However compassionate leave may be given by employers under their discretion even when this is not expressly provided for in contracts or other documentation.
Usually, it ranges from two to five days and depends on the relationship of the employee with the particular passed family member. This allowance differs among employers.
In Malaysia, however it’s a customary unpaid benefit, the compassionate leave is not obligatory. In general, an employer offers a one-day to three-day leave without pay as an entitled period in case of the death of one’s immediate family.
Civil service leave
There are no civil service leave policies in Malaysia (i.e., no paid or unpaid leave for civic duties like jury duty, voting). In the end, however, it is entirely at the employer’s discretion to offer this additional benefit to their workers or not.
Marriage leave
Although not compulsory, a marriage leave policy is a typical benefit provided by the vast majority of Malaysian employers. This normally involves rewarding the employees with three days free of duty to attend marriage ceremonies.
Maintaining Compliance when Hiring Employees in Malaysia: Interaction Between Foreign and Local Employers
When it comes to international hiring, it is important that employers remain compliant with all tax and labor laws. This can be an extremely difficult process especially if you were planning to only hire a few employees in a country.
Yet, while Malaysian employers who violate the country’s regulations even inadvertently on local matters could incur severe fines and penalties. For instance, let’s say you want to employ one or more laborers in Malaysia and are not conversant with the laws of the country; there is no better way than involving an EOR.
FastLane Group Employer of Record (EOR) services help protect international employers because we carry the liability of managing payroll, onboarding, benefits and more for international employees. You are therefore able to go after the best talent across the world and Malaysia without worrying about any non-compliance penalty or legal cost. If you want to hire employees in Malaysia in a safe way, ask for a free consultation right now.