Under the Employment Act 1955 annual leave is 8, 12 or 16 days a year by length of service. Sick leave where hospitalisation is not necessary is 14, 18 or 22 days. Hospitalisation leave is a further 60 days a year, and since 1 January 2023 it is a separate entitlement rather than an aggregate cap — so a five-year employee can have 22 days of sick leave plus 60 days of hospitalisation leave. Paid gazetted holidays are eleven, five of which are compulsory.
- s.60E(1) — annual leave of 8 days under 2 years of service, 12 days from 2 to under 5, and 16 days from 5 years.
- s.60F(1)(aa) — sick leave without hospitalisation of 14, 18 or 22 days on the same service bands.
- s.60F(1)(bb) — 60 days of hospitalisation leave; the aggregate proviso that used to cap total sick leave at 60 days was deleted by the Employment (Amendment) Act 2022.
- An employee certified as needing hospitalisation but not admitted is deemed hospitalised for the purposes of s.60F.
- s.60D(1) — eleven paid gazetted public holidays, five of which are National Day, the Agong's birthday, the State Ruler's or Governor's birthday or Federal Territory Day, Workers' Day and Malaysia Day.
- Leave entitlements are not switched off above RM4,000 a month — First Schedule paragraph 1A disapplies only ss.60(3), 60A(3), 60C(2A), 60D(3), 60D(4) and s.60J.
- s.60E(2) — annual leave not taken within twelve months after the end of the qualifying year is forfeited, except where the employee agrees in writing at the employer's request to be paid in lieu.
Who this applies to: Employers, HR and payroll staff administering leave in Peninsular Malaysia and Labuan.
On this page
The single most expensive leave error in Malaysian payroll is still being made three years after the law changed: treating the 60 days of hospitalisation leave as a ceiling that absorbs ordinary sick leave. It is not, and it has not been since 1 January 2023.
What changed in section 60F
Before the Employment (Amendment) Act 2022, s.60F(1) gave sick leave of 14, 18 or 22 days where no hospitalisation was necessary and 60 days where it was — and then closed with a proviso capping the total number of days of paid sick leave in a calendar year at 60 in the aggregate. An employee who used 22 days of ordinary sick leave had 38 days of hospitalisation leave left.
That proviso was deleted. The current text sets out two independent limbs:
(aa) where no hospitalization is necessary — 14 days if employed less than two years, 18 days from two to under five, 22 days from five years.
(bb) 60 days in the aggregate in each calendar year if hospitalization is necessary.
There is no aggregate cap. A five-year employee has 22 plus 60. Payroll systems configured before 2023, and a large share of the guidance still ranking online, get this wrong.
One more limb matters. The proviso to s.60F(1) deems an employee hospitalised where a registered medical practitioner or medical officer certifies them ill enough to need hospitalisation but they are not hospitalised for any reason whatsoever — bed shortages, refusal, home care. The entitlement follows the certificate, not the admission.
Annual leave under section 60E
| Continuous service with the same employer | Paid annual leave |
|---|---|
| Less than 2 years | 8 days for every 12 months |
| 2 years to under 5 years | 12 days |
| 5 years or more | 16 days |
Where the contract terminates before twelve months of continuous service is completed in that year, entitlement is in direct proportion to completed months. Fractions below half a day are disregarded; half a day or more counts as a full day.
Four operating rules go with it:
- s.60E(1A) — annual leave is in addition to rest days and paid holidays.
- s.60E(1B) — sick or maternity leave arising during annual leave displaces the annual leave for those days.
- s.60E(2) — leave must be taken within twelve months after the end of the qualifying year, or it is lost. Payment in lieu is permitted only where, at the employer’s request, the employee agrees in writing not to take it.
- s.60E(3B) — unpaid leave exceeding 30 days in aggregate in any twelve months is disregarded when computing length of service for this section.
There is also a forfeiture the market rarely mentions: the second proviso to s.60E(1) removes the entitlement entirely where the employee has been absent without permission and without reasonable excuse for more than 10 per cent of the working days in the qualifying twelve months.
On termination, s.60E(2A) entitles the employee to take accrued leave before the termination takes effect, and s.60E(3A) requires payment at the ordinary rate for untaken leave — except where the employee is dismissed under s.14(1)(a) for misconduct.
Sick leave mechanics
The examination must be at the employer’s expense, by a medical practitioner appointed by the employer or, where none is appointed or the appointed practitioner is not obtainable within a reasonable time or distance, by any other registered medical practitioner or medical officer.
Section 60F(1A) extends the entitlement to certification by a dental surgeon under the Dental Act 1971, but expressly inclusive of the days in paragraphs (aa) and (bb) — dental leave does not add a third bucket.
Section 60F(2) turns sick leave into unauthorised absence in two cases: uncertified leave, and certified leave where the employee did not inform or attempt to inform the employer within 48 hours of it starting.
Section 60F(4) removes paid sick leave for any period during which the employee is entitled to maternity allowance under Part IX, is receiving disablement compensation under the Workmen’s Compensation Act 1952, or is receiving periodical payments for temporary disablement under the Employees Social Security Act 1969. That last limb is the one payroll misses — an employee on SOCSO temporary disablement is not simultaneously on paid sick leave.
Payment is at the ordinary rate of pay, and a monthly-rated employee who receives the full month’s wages without abatement is deemed to have received it.
Paid public holidays
Section 60D(1) entitles every employee to paid holidays on eleven gazetted public holidays, of which five are fixed by the Act:
- 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 wholly or mainly works, or Federal Territory Day for Federal Territory employees
- Workers’ Day
- Malaysia Day
Plus any day appointed under s.8 of the Holidays Act 1951. The employer must display a notice before each calendar year begins specifying the remaining six, under s.60D(1A), and may substitute other days by agreement.
Where a holiday falls on a rest day or on another public holiday, the next working day becomes a paid holiday in substitution.
Who is covered
Everyone under a contract of service, by First Schedule paragraph 1 — no wage floor and no wage ceiling for leave purposes. The RM4,000 threshold in paragraph 1A disapplies only ss.60(3), 60A(3), 60C(2A), 60D(3), 60D(4) and s.60J, which are pay rates for rest-day, overtime, shift and holiday work, and termination benefits.
The real carve-out is domestic employees. First Schedule paragraph 2(5) disapplies ss.12, 14, 16, 22, 58A, 60, 60A, 60B, 60C, 60D, 60E, 60F, 60FA, 60I, 61 and 64, and Parts IX and XIIA, to them.
Sabah and Sarawak run their own Labour Ordinances, and the 2025 amendments there do not map section-for-section onto Act 265.
Common mistakes
Netting hospitalisation leave against sick leave. Two separate limbs since 2023.
Requiring actual admission. The proviso deems the employee hospitalised on the certificate alone.
Paying out annual leave as a matter of course. Payment in lieu under s.60E(2) requires the employer’s request and the employee’s written agreement — not the reverse.
Counting probation out of service. Continuous service runs from the start of the contract, not from confirmation.
Paying sick leave on top of SOCSO temporary disablement. Section 60F(4) excludes it.
Assuming senior staff have no leave rights. Paragraph 1A is a closed list of six provisions and leave is not in it.
What’s next
Reconfigure the sick-leave and hospitalisation-leave buckets in payroll as separate counters, then check the s.60D(1A) notice of the six remaining gazetted holidays is displayed before the year starts. For the year’s dates see public holidays by state.
Is hospitalisation leave part of the 14 to 22 days of sick leave?
No, not since 1 January 2023. Section 60F(1) now sets out two separate limbs — paragraph (aa) for sick leave where no hospitalisation is necessary, at 14, 18 or 22 days by service band, and paragraph (bb) for 60 days where hospitalisation is necessary. The proviso that used to cap the total at 60 days in the aggregate was removed by the Employment (Amendment) Act 2022. An employee with five or more years of service therefore has up to 22 days of ordinary sick leave and a further 60 days of hospitalisation leave in the same calendar year.
Does an employee earning above RM4,000 still get statutory leave?
Yes. First Schedule paragraph 1 covers any person who has entered into a contract of service, with no wage floor or ceiling. Paragraph 1A disapplies exactly six provisions above RM4,000 a month — subsections 60(3), 60A(3), 60C(2A), 60D(3) and 60D(4) and section 60J. Those are rest-day, overtime, shift and holiday-work pay rates and termination benefits. Annual leave under s.60E, sick and hospitalisation leave under s.60F, paid holidays under s.60D(1), maternity leave under Part IX and paternity leave under s.60FA are not among them.
Can unused annual leave be carried forward?
The Act does not provide for carry-forward. Section 60E(2) requires the employer to grant and the employee to take the leave not later than twelve months after the end of every twelve months of continuous service, and an employee who fails to take it then ceases to be entitled to it. The proviso allows payment in lieu where, at the employer's request, the employee agrees in writing not to take some or all of the leave. A more generous contractual carry-forward policy is permitted by s.7A.
What notice must an employee give for sick leave?
Section 60F(2) treats sick leave as unauthorised absence in two situations — where it is not certified by a registered medical practitioner, medical officer or dental surgeon, and where it is certified but the employee did not inform or attempt to inform the employer within 48 hours of the commencement of the leave. The examination must be at the employer's expense under s.60F(1).
Do sick leave and annual leave overlap?
Section 60E(1B) resolves it in the employee's favour. Where an employee on paid annual leave becomes entitled to sick leave or maternity leave, the sick or maternity leave is granted and the annual leave is deemed not to have been taken for those days. Section 60D(1B) does the same for a public holiday falling during sick leave, annual leave or a period of temporary disablement — the employer must grant another day as a paid holiday in substitution.
Are these entitlements the same in Sabah and Sarawak?
No. Sabah and Sarawak are governed by their own Labour Ordinances, amended in 2025 by Acts A1753 and A1754 respectively, both in force from 1 May 2025 except the housing-standards Part IVA. Sarawak's replacement First Schedule is structurally different from the Employment Act's, so an Act 265 compliance matrix cannot simply be find-and-replaced across. Check the applicable Ordinance for any East Malaysian workforce.
The following are deliberately unstated or described only qualitatively until confirmed by a subject-matter expert:
- Confirm whether paid annual leave and sick leave days are counted as calendar days or working days where a rest day or gazetted holiday falls within the period
- Confirm the equivalent annual, sick and hospitalisation leave bands under the Sabah and Sarawak Labour Ordinances as amended in 2025
Sources
- Employment Act 1955 (Act 265), updated text as at 1 January 2023 — Jabatan Tenaga Kerja Semenanjung Malaysia
- Jadual Hari Kelepasan Am Persekutuan dan Negeri 2026 — Bahagian Kabinet, Perlembagaan dan Perhubungan Antara Kerajaan, Jabatan Perdana Menteri
- Holidays Act 1951 (Act 369), updated text — Attorney General's Chambers
Change history
| Version | Date | Change | By |
|---|---|---|---|
| 01.00 | 20 Jul 2026 | Approved and published. | — |