Leave Policy in Malaysia
Employees in Malaysia are entitled to various types of leave under the Employment Act 1955, including annual leave, sick leave, maternity leave, and more. Understanding these entitlements is essential for both employers and employees.
As businesses expand globally and adopt remote work models, many employers now hire talent across different countries. However, this also means navigating local labour and tax regulations, which can be complex if you do not have an established presence in the country.
For companies hiring in Malaysia, the most secure approach is to work with an Employer of Record (EOR) such as FastLane Group. With a local legal entity in place, FastLane can hire employees on your behalf, ensuring full compliance with Malaysian employment laws.
Whether hiring directly or through an EOR, it is crucial to understand the local leave entitlements and obligations that apply. (Note: The Employment Act does not apply in Sabah and Sarawak, which follow their own labour ordinances.)
Annual Leave In Malaysia
Annual leave is one of the most important benefits for employees in Malaysia. It provides rest, work-life balance, and productivity support. In Malaysia, annual leave entitlements are mainly governed by the Employment Act 1955, with updates under the Employment (Amendment) of First Schedule 2022.
While the Act sets a minimum requirement, many employers, especially in the private sector offer more generous leave policies to stay competitive in the job market.
Annual Leave Entitlement Under Malaysian Law
The number of annual leave days you receive depends on your length of continuous service with the same employer. Originally, the Act applied to employees earning RM4,000 or less or those doing manual labour. Since 1 January 2023, it now covers all employees, regardless of salary.
| Years of Service | Minimum Annual Leave Entitlement |
| Less than 2 years | 8 days |
| 2 years – < 5 years | 12 days |
| 5 years or more | 16 days |
Other Key Things to Know About Annual Leave
1. Prorated Leave
If you join mid-year or work part-time, your annual leave is calculated on a prorated basis.
- Example (full-time, <2 years service):
(8 ÷ 12) × 6 months = 4 days leave - Example (part-time, 40% workload):
8 × 40% = 3 days leave (rounded as per company policy)
2. Public Holidays Are Separate
Annual leave is different from public holidays. Employees are entitled to 11 paid public holidays per year, including:
- 5 fixed nationwide:
- National Day
- Agong’s Birthday
- Ruler/State Governor’s Birthday (or Federal Territory Day)
- Labour Day
- Malaysia Day
- 6 additional days, determined by state or employer policy.
3. Leave Carry-Forward Policies
The Employment Act does not require unused leave to be carried forward. This depends on company policy. Some companies allow carry-forward (e.g., max 5 days).
Others follow a strict “use it or lose it” policy.
4. Private Sector Practices
To attract and retain talent, many private companies especially MNCs and tech/finance firms offer more than minimum entitlements. Companies may offer new employees 15 to 20 days of annual leave, going beyond the minimum set by law.
5. Changes in Leave Coverage (2023 Update)
With the Employment (Amendment of First Schedule) Act 2022:
- The law now covers all employees, regardless of salary.
- However, certain benefits (like overtime and public holiday pay) still apply only to employees earning RM4,000 or below or manual workers.
- Annual leave entitlements remain the same, but more employees are now legally protected.
How Annual Leave Works for Part-Time and New Employees in Malaysia
1. Annual Leave for Part-Time Employees
Part-time employees are entitled to annual leave proportional to their working hours compared to full-time staff.
- A part-time employee who works 2 days per week (equivalent to 40% of a full-time schedule) would be entitled to: 8 × 40% = 3.2 days of annual leave (commonly rounded to 3 days, depending on company policy).
If the part-timer has been employed for less than a full year, their entitlement is further prorated.
- Example: Part-timer entitled to 3 days, worked 2 months:
3÷12×2=0.53 ÷ 12 × 2 = 0.53÷12×2=0.5 days (rounded according to company policy)
2. Leave Entitlement for Employees With Less Than 3 Months of Service
The Employment Act 1955 does not explicitly guarantee leave for employees with less than one year of service.
| Service Duration | Prorated Leave Calculation | Typical Outcome |
| Less than 1 month | N/A | Usually no statutory entitlement (some employers may offer leave as goodwill) |
| 2 months | 8 ÷ 12 × 2 | ~1–2 days |
Note: If your company policy or employment contract allows prorated leave within the first 3 months, it should be honored.
3. 8 Days or 14 Days – How Much Leave Do You Actually Get?
Your annual leave entitlement depends on length of service and company policy.
| Years of Service | Legal Minimum (Employment Act) | Typical Private Sector Practice |
| Less than 2 years | 8 days | 14–15 days (common in tech or corporate firms) |
| 2 – 5 years | 12 days | 14–16 days |
| More than 5 years | 16 days | 16–20+ days (especially if unused leave can be carried forward) |
Treatment of unused leave entitlements
Carry Forward: The Employment Act does not mandate leave carry-forward. However, many companies allow employees to carry a limited number of days (e.g., 5 days) into the next calendar year.
Forfeiture: Unused leave not carried forward or taken within 12 months is typically forfeited based on company policy.
Encashment: With mutual written agreement, employees may convert unused leave into cash instead of taking time off.
Resignation: Upon resignation, employers must pay out accrued but unused annual leave. Employees may also request to use remaining leave to offset their notice period, though employers can decline and instead provide payment in lieu.
Overlap with Other Leave: If annual leave overlaps with maternity or sick leave, the statutory leave is applied, and the annual leave remains unaffected.
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 2025.
Sick leave in Malaysia
Employees in Malaysia are entitled to paid sick leave under the Employment Act 1955, provided they obtain a valid medical certificate (MC) from a registered medical practitioner. If an employer requires the employee to provide an MC, the cost of the consultation must be borne by the employer.
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 (per year) | Hospitalisation Leave (per year) | Total Maximum Entitlement |
| 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 |
- Ordinary Sick Leave covers minor illnesses, such as flu or fever, provided the employee submits a valid medical certificate (MC).
- Hospitalisation Leave applies when the employee is admitted to a hospital or certified by a doctor as requiring hospital-level care.
- The total entitlement is capped at 60 days of hospitalisation leave plus the respective sick leave based on years of service. This means hospitalisation leave is not additional on top but inclusive of the total sick leave limit.
For example, an employee with 3 years of service who has already taken 10 days of ordinary sick leave in a year would still be entitled to up to 60 days of hospitalisation leave, but the combined total cannot exceed 78 days.
Emergency leave in Malaysia
The Employment Act 1955 does not provide for emergency leave, and employers are not legally required to offer it. However, many companies choose to include emergency leave as part of their internal policies.
- Typical allowance: 2–3 days per year, granted at the employer’s discretion.
- Excess absence: Any additional days may be treated as unpaid leave or deducted from the employee’s annual leave entitlement.
- Employee responsibility: Employees must provide a valid reason and notify (or attempt to notify) their employer as soon as possible when unforeseen circumstances arise.
Family leave in Malaysia
Family Leave
While the Employment Act does not define a specific “family leave,” many employers provide family-related leave benefits as part of their internal HR policies. These may include time off for childcare, elder care, or family emergencies, usually offered as paid or unpaid leave depending on company policy.
Maternity Leave
Female employees in Malaysia are entitled to comprehensive maternity protections under the Employment Act 1955.
- Duration: 98 consecutive days of paid maternity leave. This may begin up to 30 days before the expected date of confinement and continues after delivery.
- Eligibility: Employees must have been employed for at least 90 days within the 9 months before the expected due date, and must have fewer than five surviving children.
- Pay: Maternity leave is paid at the employee’s usual daily rate or the prescribed maternity allowance, whichever is higher.
- Termination Protection: Employers cannot dismiss employees due to pregnancy or related illnesses, except for specific circumstances such as contract expiry, misconduct, or company closure. The burden of proof lies with the employer.
- Medical Resumption: Employees may return to work during the leave period if certified fit by a doctor and with employer consent.
- Non-Retaliation Window: Employees are protected from dismissal for 90 days after maternity leave.
Paternity leave in Malaysia
Effective 1 January 2023, married male employees in both the public and private sectors are entitled to 7 consecutive days of paid paternity leave when their spouse gives birth.
- Eligibility: Must have been employed continuously for at least 12 months before the leave.
- Notification: Employees must inform their employer at least 30 days before the expected due date, or as soon as possible after childbirth.
- Note: The entitlement is limited to 7 consecutive calendar days, not business days.
Adoption leave
The Employment Act does not provide for adoption leave. Any adoption-related leave is at the discretion of the employer and may be offered as an additional benefit.
Carer’s leave
Currently, there is no statutory provision for carer’s leave in Malaysia. Employers may choose to implement it as part of their internal HR policies.
Childcare Leave
Labour regulations require a minimum of 6 days of childcare leave per year for employees with children aged 6 years or below. Policies may vary depending on the employer.
Rest Day in Malaysia
The Employment Act 1955 requires that all employees receive at least one rest day per week, usually after six consecutive working days. While Sunday is traditionally the rest day, employers may designate any day, and many companies today follow a five-day work week that provides both Saturday and Sunday as rest days.
If an employee is required to work on their rest day, the law ensures fair compensation. Daily- and hourly-rated employees who work half a normal day are paid one full day’s wages, while more than half a day is compensated with two days’ wages. Any hours beyond the normal schedule are considered overtime and must be paid at twice the ordinary hourly rate. Monthly-rated employees follow a similar system, with pay adjusted proportionally.
Although the law only guarantees one rest day, the two-day weekend has become common practice in many sectors, reflecting a shift toward better work-life balance in Malaysia.
Compassionate leave in Malaysia
The Employment Act 1955 does not provide for compassionate or bereavement leave, meaning there is no statutory requirement for employers to grant it. However, many organisations in Malaysia choose to include compassionate leave in their employment contracts or offer it as part of company policy to support employees during difficult times.
The number of days granted is at the employer’s discretion and often depends on the employee’s relationship to the deceased. It typically ranges from two to five days, with immediate family members usually given more time off. Some companies provide this leave on a paid basis, while others may classify it as unpaid or deduct it from annual leave.
Although not legally mandated, compassionate leave has become a common practice in Malaysia, reflecting the importance of balancing workplace obligations with personal and family responsibilities during periods of loss.
Civil service leave
The Employment Act 1955 does not provide for civil service leave, and there is no statutory entitlement for employees to take time off for civic duties. Unlike some countries, Malaysia does not have jury duty, and national or state elections are typically declared as public holidays, meaning employees already receive leave on those days.
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 in Malaysia
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.
