The Employment Act 1955 as it stands today

Open any Malaysian HR blog and you will still find the Employment Act described as a statute for low-paid workers, with a coverage line of RM2,000 and a 48-hour week. Both figures are dead. The Employment (Amendment) Act 2022 (Act A1651) rewrote Act 265 with effect from 1 January 2023, and the reprint the Attorney General’s Chambers publishes is now titled as at 1 January 2023. Yet most of the ranking commentary is still the “what changed in 2023” news cycle — written once, never revisited.

This page is the other thing: the Act as it currently stands, by section, so you can check a clause against a number rather than against a headline.

Who does the Act cover?

Paragraph 1 of the First Schedule reads, in its entirety: any person who has entered into a contract of service. There is no wage floor and no occupational filter. If someone works for you under a contract of service in Peninsular Malaysia, they are an employee for the purposes of Act 265.

Paragraph 1A then carves out. For a person whose wages exceed four thousand ringgit a month, the following provisions do not apply:

Provision	What it does
s.60(3)	Rest-day pay rates
s.60A(3)	The 1.5× overtime rate
s.60C(2A)	Ministerial power to make shift-allowance regulations
s.60D(3)	Public-holiday work pay, and the 3× holiday overtime rate
s.60D(4)	Half-day holiday treated as a full day
s.60J	Termination, lay-off and retirement benefit regulations

That is the whole list. Six items. Everything else in the Act — leave, maternity, notice, registers, harassment, forced labour, flexible working — applies regardless of salary.

Paragraph 3 of the Schedule defines “wages” for this test as wages under s.2 excluding commissions, subsistence allowance and overtime payment. A salesperson on RM3,200 base plus RM2,000 commission is under the threshold, not over it.

Paragraph 2 is the part almost nobody reads. It covers, irrespective of the amount of wages, people engaged in manual labour, in operating or maintaining a commercial vehicle, in supervising manual labourers, in certain vessel work, and domestic employees. A workshop supervisor on RM6,000 who oversees manual labourers throughout their work is still inside the overtime provisions. Salary alone does not answer the question.

What are the working-hour limits?

Section 60A(1) sets four separate limits, and all four bite at once:

• no more than five consecutive hours without a rest break of at least 30 minutes
• no more than eight hours in one day
• no more than a ten-hour spread-over in one day
• no more than forty-five hours in one week

The 45-hour figure is the amendment people quote and then misapply. It replaced 48 hours on 1 January 2023. Proviso (iii) allows the eight-hour daily limit to be exceeded by agreement where other days are shorter, but caps the result at nine hours in a day and 45 hours in a week — a compressed week is permitted, a longer week is not.

Section 60A(7) sets an absolute ceiling of twelve hours in any one day, lifted only in the emergency situations in s.60A(2): accident, work essential to the life of the community, defence or security work, urgent machinery repair, unforeseeable interruption, or work in an industrial undertaking essential to the economy.

Overtime is separately capped. Section 60A(4)(a) delegates the limit to regulations, and the Employment (Limitation of Overtime Work) Regulations 1980 fix it at one hundred and four hours in any one month. The Director General may permit more on written application. Note the proviso in s.60A(4)(a): work on a rest day or a gazetted public holiday is not counted as overtime for the purpose of the 104-hour cap, though it is still paid at the rest-day and holiday rates.

What are the pay multipliers?

Section 60A(3)(a): overtime in excess of normal hours is paid at not less than 1.5× the hourly rate, irrespective of how the rate of pay is fixed.

Section 60(3), for work on a rest day, distinguishes by pay basis:

Basis	Up to half normal hours	More than half, up to normal hours	Beyond normal hours
Daily or hourly rated	1 day’s wages at ORP	2 days’ wages at ORP	not less than 2× hourly rate
Monthly or weekly rated	half a day’s ORP	1 day’s wages at ORP	not less than 2× hourly rate
Piece rated	twice the ordinary rate per piece	—	—

Section 60D(3)(a), for work on a paid public holiday, is a flat rule: in addition to the holiday pay, two days’ wages at the ordinary rate, regardless that the period of work done on that day is less than the normal hours of work. Thirty minutes of holiday work costs two days’ wages. Overtime beyond normal hours on that holiday is paid at not less than three times the hourly rate under s.60D(3)(aa).

When must wages actually be paid?

Two deadlines, not one, and this is where employers slip.

Section 19(1): ordinary wages, less lawful deductions, not later than the seventh day after the last day of the wage period.

Section 19(2): wages for work on a rest day, on a gazetted public holiday under s.60D(1)(a) and (b), and overtime under s.60A, not later than the last day of the next wage period.

So overtime earned in January is due by the end of February — later than ordinary January wages, but a hard deadline all the same. “It goes in with the March payroll once we’ve reconciled the timesheets” is a breach. Section 91 makes late payment under ss.19, 20 and 21 an offence.

Section 19(3) lets the Director General extend the time on application where payment within the period is not reasonably practicable. That is a permission to be obtained in advance, not a defence to be raised afterwards.

What leave does the Act give?

Section 60E sets annual leave by length of service. Section 60F sets paid sick leave, with a separate hospitalisation entitlement rather than a carve-out of the sick-leave count — the pre-2023 arrangement, in which hospitalisation was drawn from the same pool, no longer applies.

Section 60D(1)(a) entitles every employee to paid holidays on eleven gazetted public holidays, of which five are compulsory: National Day, the Birthday of the Yang di-Pertuan Agong, the Birthday of the Ruler or Yang di-Pertua Negeri of the state where the employee mainly works (or Federal Territory Day), and the remaining compulsory days listed in the subsection. Section 60D(1B) requires a substitute paid holiday where a public holiday falls during sick leave, annual leave, or a period of temporary disablement under the Employees’ Social Security Act 1969.

Maternity leave is 98 consecutive days under s.37. Section 41A prohibits terminating a pregnant employee, or one suffering an illness arising out of her pregnancy, except for misconduct, wilful breach of contract, or closure of the business — and puts the burden on the employer. Section 60FA gives married male employees seven consecutive days of paid paternity leave.

What is a flexible working arrangement request?

Sections 60P and 60Q were inserted by Act A1651 and are widely described as a wellbeing perk. They are not. They are a procedure with a clock on it.

Section 60P(1): an employee may apply to vary the hours of work, days of work or place of work. Where a collective agreement exists, s.60P(2) requires the application to be consistent with it.

Section 60Q(1): the application must be in writing, in the form and manner determined by the Director General.

Section 60Q(2): the employer shall, within sixty days from the date the application is received, approve or refuse it.

Section 60Q(3): the employer must inform the employee in writing, and on a refusal must state the ground.

Nothing in ss.60P or 60Q gives the employee a right of appeal, and nothing obliges the employer to grant the request. The duty is to decide, to decide in time, to put it in writing, and to give a reason for a refusal. Missing the 60-day window is the breach — not refusing.

What are the sexual harassment duties?

Two duties are live at all times, and they sit in different places.

Section 81H — display: an employer shall, at all times, exhibit conspicuously at the place of employment, a notice to raise awareness on sexual harassment. This is a standing obligation, not triggered by a complaint.

Section 81B(1) — inquire: upon receipt of a complaint of sexual harassment, the employer shall inquire into it in the manner prescribed by the Minister. Where the employer refuses to inquire, s.81B(2) requires him to inform the complainant of the refusal and the reasons in writing, not later than thirty days after receiving the complaint. Section 81B(3) limits the grounds for refusal to a complaint previously inquired into with no harassment proven, or one the employer considers frivolous, vexatious or not made in good faith.

Section 81B(4) lets a dissatisfied complainant refer the matter to the Director General, who may direct an inquiry under s.81B(5)(a). Where the Director General directs an inquiry under s.81D(1), the employer must inquire and submit a report within thirty days of the direction (s.81D(2)).

Section 81F makes failure to inquire, failure to notify a refusal, failure to inquire when directed, or failure to report an offence carrying a fine up to RM50,000.

Note what is not there: the Act sets no deadline for completing an inquiry. The 30-day clocks attach to notifying a refusal and to reporting when directed. Guides that state a flat “30 days to complete the investigation” are inventing it.

Section 81G, which used to restrict Part XVA by wage level, was deleted by Act A1651. Part XVA now applies to every employee.

What did the 2022 amendment add on forced labour?

Section 90B: any employer who threatens, deceives or forces an employee to do any activity, service or work and prevents that employee from proceeding beyond the place or area where such activity, service or work is done, commits an offence. On conviction: a fine up to RM100,000, imprisonment up to two years, or both.

Two elements have to coexist — coercion or deception, and confinement to the place of work. It is not a general mistreatment provision. But it is the hook Malaysian exporters face when a foreign customs authority asks about forced-labour indicators in a supply chain, and it now has a real penalty attached.

Section 60K, separately, requires the prior approval of the Director General before an employer may employ a non-citizen employee.

Common mistakes

Treating RM4,000 as an on/off switch for the whole Act. It disapplies six provisions. An employee on RM12,000 still has statutory annual leave, sick leave, maternity protection, the s.60Q flexible-working clock and the harassment protections.

Quoting 48 hours. Contracts, handbooks and offer letters drafted before 2023 and never revised are still circulating with the old week. The number is 45.

Paying overtime “whenever payroll catches up”. Section 19(2) fixes the deadline at the last day of the next wage period. It is an offence under s.91, not an administrative lapse.

Assuming a high salary removes overtime for manual and supervisory staff. First Schedule paragraph 2 covers listed categories irrespective of wages. Check the work, not just the payslip.

Including commission in the RM4,000 test. Paragraph 3 excludes commissions, subsistence allowance and overtime payment from the definition of wages for the Schedule.

Applying Act 265 in Kota Kinabalu or Kuching. It does not run there. Sabah and Sarawak have their own Ordinances, separately amended in 2025, with a different list of disapplied provisions above RM4,000.

Displaying nothing about harassment. The s.81H notice is a permanent, visible duty that a labour officer can check on a routine inspection without anyone having complained.

What’s next

Check three things this week. First, whether your standard contract still says 48 hours. Second, whether your payroll calendar separates the s.19(1) seven-day deadline from the s.19(2) next-wage-period deadline for overtime and rest-day pay. Third, whether the s.81H notice is actually on the wall.

Then read the companion pages on who the Act covers and on working hours and overtime, and — if you employ anyone in East Malaysia — the separate treatment of the two Labour Ordinances.