Leave Policy in Malaysia

Types of Leave

Malaysia’s leave entitlements are defined under the Employment Act 1955 and related amendments. The law applies to employees earning less than MYR 4,000 per month or performing manual labor. Here’s a breakdown of statutory leave types:

• Annual Leave: Employees are entitled to paid annual leave based on years of service: 8 days (1–2 years), 12 days (2–5 years), and 16 days (more than 5 years). Employers must grant leave within 12 months after the entitlement accrues. Advance approval from the employer is typically required, and unused leave must be dealt with according to contract or company policy.
• Sick Leave: Employees with less than 2 years of service get 14 days/year, 2–5 years get 18 days/year, and over 5 years get 22 days/year. If hospitalization is required, an additional 60 days is allowed. Employees must present a medical certificate from a registered practitioner.
• Maternity Leave: Female employees are entitled to 98 consecutive days of maternity leave for each child, provided they have worked for at least 90 days in the 9 months preceding delivery. Employers must pay the maternity allowance unless the employee has 5 or more children and the contract excludes payment.
• Paternity Leave: As of 2023, private sector fathers are entitled to 7 consecutive days of paid paternity leave, applicable for up to 5 births throughout employment, and subject to conditions on tenure and notice.
• Public Holiday Leave: Employees are entitled to a minimum of 11 paid public holidays annually, 5 of which must be fixed by the employer. If required to work on a public holiday, additional compensation must be provided.
• Other Leave: Includes compassionate leave (not mandated by law), marriage leave, and study leave, based on individual employer policies.

Unused Leave

Unused annual leave may be carried forward depending on the employment contract. If not used within the stipulated period, it may lapse unless the employer allows carryover. On termination, resignation, or dismissal, any earned but unused leave must be compensated in cash. Sick leave and maternity leave are not carried over, nor do they require payout unless stated in contract.

Consequences of Mismanagement

Failure to comply with the Employment Act’s leave provisions can lead to penalties of up to MYR 10,000 per offence. Employees may also lodge claims with the Department of Labour, leading to potential back pay orders and reputational damage. Mismanagement of leave can also affect employee morale and retention.

Public Holidays

Malaysia celebrates national and state-level holidays. The 11 mandatory holidays include National Day, Malaysia Day, and Hari Raya. Substitution is allowed if agreed upon, and public holidays worked must be compensated at 2x–3x pay or with a substituted day off. Employers should publish their selected holidays annually.

How AYP Manages Leave Compliance

AYP provides real-time support to manage Malaysia’s complex leave landscape, including leave tracking, entitlements, public holiday compliance, and accurate payroll processing. Our Employer of Record platform ensures that your business operates legally and efficiently when hiring in Malaysia, especially for employers unfamiliar with federal and state-level obligations.

Contact Us

Expanding into Malaysia? Contact AYP to manage local leave obligations and employment compliance, all through a single trusted partner.