Employment Laws in Malaysia

1. Overview of the Employment Law Framework

Malaysia's employment environment is governed by a robust legal framework aimed at ensuring fair labor practices and employer accountability. The Ministry of Human Resources (MOHR) is the primary regulator of employment standards and enforcement. Recent amendments to the Employment Act in 2023 and 2025 expanded protections to all employees, regardless of wages, and recognized flexible work arrangements.

2. Primary Employment Statutes and Regulatory Bodies

Key statutes include:

• Employment Act 1955 (EA)
• Industrial Relations Act 1967
• Minimum Wages Order 2024
• Occupational Safety and Health Act 1994
• Trade Unions Act 1959
  The Department of Labour (under MOHR) oversees compliance and enforcement.

3. Employment Contracts: Legal Requirements

Employers must provide written contracts to employees employed for more than one month. Contracts should specify role, salary, working hours, benefits, and termination clauses. Flexibility in work location and time must now be addressed upon employee request under the flexible working arrangement provisions introduced in 2023.

4. Working Hours and Overtime: Statutory Standards

The standard workweek is 45 hours, reduced from 48 under the amended Act. Employees must not work more than 12 hours/day including overtime. Overtime is payable at 1.5x the hourly rate and capped at 104 hours/month. Violations may result in fines up to RM50,000.

5. Wages and Payroll Compliance

The national minimum wage in Peninsular Malaysia is RM1,700/month. Sabah and Sarawak have slightly different rates. Employers must:

• Pay wages no later than the 7th day after wage period
• Issue itemized payslips
• Maintain records for at least 6 years
• Avoid unlawful deductions or late payment
• Non-compliance attracts administrative fines and labor court claims.

6. Foreign Worker Regulations and Employer Duties

Hiring foreign workers requires prior approval from MOHR and the Immigration Department. Employers must:

• Secure quotas
• Obtain Visit Pass (Temporary Employment)
• Provide housing that meets government standards
• Register with Social Security Organization (SOCSO) and Employment Insurance System (EIS)
  Employers are liable for repatriation costs and must ensure compliance with levy payments.

7. Labor Inspections and Enforcement Risks

The Labour Department conducts surprise inspections on wages, working hours, and documentation. Breaches can result in:

• Compound fines
• Suspension of hiring privileges
• Court actions under the EA or IR Act
  Employers must maintain up-to-date records and respond promptly to inspection notices.

8. How AYP Helps You Stay Compliant

AYP’s Employer of Record (EOR) solution ensures:

• Localized contracts and documentation
• Compliance with EA updates and minimum wage
• Management of foreign worker regulations and MOHR submissions
• Risk mitigation in inspections and disputes
  Our legal experts handle compliance while you focus on business growth.

9. Contact Us

Hiring in Malaysia? Let AYP manage your HR compliance, contracts, and labor risk.
👉 Contact us today.