The minimum wage is a crucial labour policy designed to ensure that employees are fairly compensated for their work, helping them cope with rising living costs while promoting a more equitable economy. In Malaysia, the minimum wage is reviewed regularly to reflect changing economic conditions and workers’ needs.
With the Minimum Wage Order 2024 gazetted on 4 December 2024, employers across Malaysia must prepare for a significant update to wage requirements. The revised minimum wage of RM1,700 will be implemented in two phases throughout 2025, impacting businesses of all sizes. This article provides employers with a clear overview of the upcoming wage changes, compliance requirements, and what steps to take to ensure readiness.
Key Summary
New Wage Order
Malaysia’s minimum wage will increase from RM1,500 to RM1,700, implemented in two phases starting February and August 2025.
Coverage
Applies to local and foreign employees in the private sector, including part-time staff, but excludes apprentices and domestic workers.
Wage Breakdown
Equivalent rates are RM1,700/month, RM65.38/day, or RM9.78/hour to cover all types of wage structures.
Compliance & Penalties
Employers who fail to comply may face fines of up to RM20,000 or imprisonment of up to 5 years.
Employer Preparation
Adjust payroll early to avoid disruptions and penalties.
What Is The Minimum Wage in Malaysia?
The minimum wage is the legally mandated lowest wage that employers can pay their employees. It serves to protect workers’ rights, support employees in covering basic living expenses and promote fair growth across industries.
Currently, Malaysia’s minimum wage is RM1,500 per month, but under the new order, it will increase to RM1,700 starting in February 2025. This wage applies to both local and foreign employees in the private sector including full-time and part-time employees under standard employment contracts.
Exceptions: Apprentices and domestic workers are excluded from this increase.
Read: Malaysia Salary Guide 2025
Key Updates About The Minimum Wage Order
The Minimum Wage Order 2024, gazetted on 4 December 2024, introduces a new minimum monthly wage of RM1,700, implemented in two phases to give employers time to adjust.
Phase 1 – Effective 1 February 2025
- Applies to employers with five or more employees.
- Applies to MASCO-classified employers (professional activities under the Malaysia Standard Classification of Occupations 2020), regardless of the number of employees.
Phase 2 – Effective 1 August 2025
- Extends the RM1,700 minimum wage to all employers in Malaysia, regardless of size.
- Includes a six-month grace period for small businesses with fewer than five employees.
This phased implementation ensures that larger companies adjust first while smaller businesses are given extra time to comply.
Minimum Wage Breakdown by Payment Basis
While the headline figure is RM1,700 per month, the law also defines equivalent daily and hourly rates to ensure compliance across different wage structures.
| Payment Basis | Minimum Wage (Effective 2025) |
| Monthly | RM1,700 |
| Daily | RM65.38 (based on 26 working days per month)* |
| Hourly | RM9.78 (based on 173 working hours per month)* |
Note: Figures are calculated based on typical working hours/days and serve as a guideline. Employers must align with the official wage order breakdown.
For Employees Paid Differently
- Piecework, tonnage, assignment, journey, or commission-based pay: Employers must ensure the total monthly earnings are not less than RM1,700.
- This guarantees fair pay for all employees, regardless of the structure of their compensation package.
Employers should review their payroll systems to ensure that all employees, whether paid monthly, daily, hourly, or by output are compensated at or above the new minimum wage.
Who Does The Minimum Wage Apply To?
The Minimum Wage Order 2024 ensures that the new minimum wage of RM1,700 per month is inclusive and applies across various employment categories in Malaysia.
Specifically, it covers:
- Full-time employees – all employees under standard employment contracts, regardless of industry.
- Part-time employees – workers with reduced hours are also entitled to a pro-rated minimum wage based on the equivalent hourly or daily rate.
- Non-citizen employees in the private sector – foreign workers must also be paid the minimum wage, ensuring fair and non-discriminatory treatment.
However, there are a few exceptions:
- Apprentices – workers under training or apprenticeship contracts are not covered.
- Domestic workers – including maids, domestic helpers, and similar roles.
By clarifying these groups, employers can determine which employees are affected and take proactive steps to ensure compliance with the law.
Penalties For Non-Compliance
The government has set strict enforcement measures to ensure employers comply with the minimum wage requirements.Penalties include
- Fines: Ranging from RM1,000 to RM20,000 depending on the severity of the violation.
- Imprisonment: Up to five years for serious or repeated offences.
The employers should ensure to follow the compliance to
- Avoid legal risks: Non-compliance may lead to costly lawsuits and reputational damage.
- Protect business continuity: Payroll compliance helps prevent disruptions caused by penalties or government investigations.
- Safeguard employee relations: Meeting wage requirements builds trust, improves morale, and reduces turnover.
Employers are strongly advised to review their HR and payroll systems ahead of the deadlines (February 2025 or August 2025 for small businesses) to ensure compliance and avoid these penalties.
Read: Understanding Labour Law Malaysia
How Often Does Malaysia’s Minimum Wage Increase?
In Malaysia, the minimum wage is reviewed every two years to ensure it reflects current economic conditions and the cost of living. This regular review allows the government to maintain a balance between worker welfare and business sustainability.
Factors Influencing Wage Revisions
- Cost of Living – Rising inflation and household expenses can prompt adjustments to ensure employees can meet basic needs.
- Economic Conditions – The government considers overall economic growth and business viability to prevent undue strain on employers.
- National Wages Consultative Council (NWCC) Recommendations – This council, established by law, gathers input from employers, trade unions, and other stakeholders to advise on appropriate minimum wage levels.
By understanding these factors, employers can anticipate potential wage changes and plan accordingly.
Read: Payroll Processing and Administration Guide in Malaysia
Preparing Your Business for the Wage Increase
The upcoming minimum wage increase to RM1,700 requires proactive planning by employers to ensure compliance and smooth payroll operations.
Key Preparation Steps for Employers
- Review Salary Structures – Audit current employee salaries and adjust any pay below the new minimum wage.
- Update Payroll Systems – Ensure your payroll software reflects the new monthly, daily, and hourly rates to avoid errors.
- Budget Planning and Cost Assessment – Especially important for SMEs, reassess your workforce costs and operational budget to accommodate the wage increase.
- Ensure HR/Payroll Compliance Before the Deadline – Larger businesses must comply by February 1, 2025, while smaller businesses with fewer than five employees have until August 1, 2025.
Employers who act early will not only comply with legal requirements but also benefit from smoother operations, improved employee satisfaction, and avoidance of penalties.
Read: Malaysian Payroll Simplified: Effortless Payroll Processing with Xero
Why Compliance Benefits Employers
Complying with the Minimum Wage Order 2024 is not only about legal obligations, it also brings tangible benefits for employers:
- Promotes Fair Pay and Employee Satisfaction – Paying employees at or above the minimum wage helps improve morale, loyalty, and productivity.
- Enhances Company Reputation – Businesses known for fair and compliant practices are more attractive to talent, investors, and customers alike.
- Supports Long-Term Business Sustainability – By proactively managing wages, employers reduce the risk of penalties, lawsuits, and staff turnover, ensuring smoother operations and financial planning.
Fair wage compliance creates a win-win scenario, benefiting both employees and the business in the long run.
Conclusion
The Minimum Wage Order 2024 marks a significant step toward fair compensation in Malaysia, increasing the minimum wage to RM1,700 per month in two phases starting February and August 2025. Employers must understand who it applies to, adjust salary structures, ensure payroll compliance, and prepare for potential revisions every two years. By taking proactive steps now, businesses can safeguard against penalties, improve employee satisfaction, and ensure smooth operations while supporting a balanced and sustainable economy.
How FastLane Can Help
FastLane Group offers comprehensive HR & Payroll Outsourcing Services to help businesses navigate minimum wage compliance with ease:
- Automated Payroll Adjustments – Ensure all employees, whether monthly, daily, hourly, or commission-based, are paid in accordance with the new minimum wage.
- Wage Calculations and Reporting – Accurate calculations, statutory reporting, and record-keeping to prevent compliance issues.
- Advisory on HR Policies and Cost Management – Guidance on salary structures, budgeting, and workforce planning to maintain business sustainability.
With FastLane, employers can focus on growing their business while ensuring full compliance with Malaysia’s minimum wage regulations. Contact us for a consultation!
