Work and Wages

This page was last updated on: 2021-11-25

Minimum Wage

The main legislation relates to minimum wages in Malaysia are National Wages Consultative Council Act 2011[Act 732], Minimum Wages Order 2020.

Malaysia’s minimum wages policy is decided under the National Wages Consultative Council Act 2011 (Act 732). There is a tripartite body known as the National Wages Consultative Council which is formed to recommend the minimum wages rate to the Government and once approved by the Government, the Minister of Human Resources makes a Minimum Wages Order.

The criteria to decide minimum wages are divided into two; base and adjustment criteria. Base criteria include Poverty Line Income (PLI) and Median Wage while the adjustment criteria include changes in Consumer Price Index (CPI), Productivity Growth (P) and Real Unemployment Rate (UE).

Regardless of the constant changes of minimum wages, the penalties for the offences are:-




First Offence

Fine of not more than RM 10,000 per employee. The court may order the employee each employee the difference between the minimum wages rate and the employee’s basic wages.

General Penalty

Fine of not more than RM 10,000 for each offence where no penalty is provided.

Penalty for Continued Offence

A daily fine of not more than RM 1, 000 for continuous offence after conviction.

Penalty for Repeated Offence

A fine of not more than RM 20,000 or imprisonment not exceeding 5 years.

Sources: Minimum Wages Order 2020;  Sections 43, 44, 45, 46, 47 , 2 and 23 of the National Wages Consultative Council 2011(Act 732)

Regular Pay

There are several legal definitions of the word wages under the written laws. 

Wages are defined under the Employment Act 1955 as “basic wages and all other payments in cash payable to an employee for work done in respect of his contract of service”. Certain exclusions are applicable like wages do not include value of any house accommodation, travelling allowance, gratuity, annual bonus, etc. Wages have different meanings under different Acts and thus a different explanation of wages is found under §2 of Employees Provident Fund Act 1991.

Wages have different scope under different sections of the Employment Act 1955 where basically it means basic wages and all other payments in cash payable to an employee for work done in respect of his contract of service. The word wages have different references and purposes under the Employment Act 1955:


S2: Wages (Definition of wages)

S 60I (For the purpose of ORP)

1st Schedule (For the coverage of employee under the EA)

Value of house accommodations




Value of supply food, fuel, light, water, medical attendance




Employer’s contributions 




Travelling allowance/ value of travelling




Expenses / Reimbursement




Gratuity payable




Annual bonus




Approved incentive payment scheme




Rest day pay




Public holiday pay








Subsistence allowance








*For the above table, wages refer to any payment to an employee excluding the X marked box for each section.

The Employment Act 1955 also has stated some rules and laws on the payment of wages. The Act specifies that a wage period cannot exceed one month and even when the employment contract (referred to as contract of service under the law) does not specify the wage period, it is deemed to be one month. The laws allow employers to pay 7 days after the last day of the wage period and any wages for work done on rest day, public holiday and overtime may be payable not later than the last day of the next wage period. If the Director General of Labour is convinced that payment within such time is not reasonably practicable, he may, on the application of the employer, extend the time of payment by such number of days as he thinks fit.

When a fixed term contract of service expires or when a contract of service for an unspecified term is terminated due to notice by either party, the wages must be paid not later than the day on which the contract is terminated. The wages also shall be paid on the last date of employment if employer terminates the contract by paying salary in lieu of notice, breach of contract by employee or dismissal for misconduct.  Meanwhile, if the contract is terminated by the employee by paying salary in lieu of notice, without notice due to breach of contract and when the dependants have been exposed to violence or disease that is not stated in the contract , the wages shall be paid not later than the third day after the termination.

Meanwhile for the payment of wages, there are few periods of pay that shall be applicable in different circumstances upon the termination of contract:

Pay period


1 month

Normal cycle wage period.  The contract of service shall specify the wage period or if not, it shall not be more than one month.

1 month (and additional 7 days )

Employers have additional 7 days to pay the monthly wages.

Within the next 1 month

The relevancy of the period additional 1 month for payment of wages in references to overtime pay, rest day pay and public holiday pay.

On the day the contract is terminated

A fixed term contract of service expires or

A fixed term contract of service is terminated with notice by either party


On the last day of employment

This is applicable when employer terminates the contract of service in cases of:-

Paying salary in lieu of notice

For breach of contract by employee

Dismissal for misconduct

Not later than 3 days after contract is terminated

This is applicable when employee terminates the contract of service in case of :-

Paying salary in lieu of notice

For breach of contract by employer

When there is not-stated-in-contract of violence or disease exposure happens

Employment Act has detailed instructions on deductions from workers’ wages. It sets a general rule that no deductions can be made by an employer from the wages of an employee otherwise than in accordance with Employment Act. It then lists out the conditions when an employer can make lawful deductions (deductions for overpayment, deductions for indemnity due to employer, deductions for recovery of advance without interest) and the certain conditions of deductions that shall not or shall be made except with the request in 7 days writing of the employee (payments to a registered trade union, payment for any shares of employer’s business) or the Director General (payments into any superannuation or worker welfare scheme, payments for recovery of advance with interest, payments for accommodation and food, etc.).

In general, the employer is not allowed to make deductions from employee’s wages. The exceptions are lawful deductions and at the request of employee upon approval of the DGL. In particular we are referring to:

Lawful deductions

At the request of employee with DGL’s approval

Overpayment of wages

Ie, Employer’s mistake where is the three months immediately preceding the month in which the deductions are made.

Deductions in any fund, scheme for the benefits of the employee.
ie, private provident fund.

Indemnity due to employer

Ie, Employee resigns without serving full notice

Loans given to employees where interest is charged.

ie, car loan by employer and interest is charged, instalments may be deducted.

Recovery of interest-free advance

Ie, employer has given lawful advances of wages , he may recover it with no interest for such advanced.

Payments to a third party on behalf of employer.

ie, employer pays the third party in purchasing employee’s car.

Legally Authorized Deductions

Ie, deductions for EPF, SOCSO and Income Tax , directives from the courts under the Married Women and Children Act 1968.

Payments for purchasing goods of employer’s business.

Ie, A tyre manufacturing company to do deductions in respect of the tyres purchased by the employee.


Rental accommondations and cost of food and meals provided by employer as per employee’s request or contract of service.

Ie, additional pay for house rent of the employee since the rent is more than what has been stated in the contract

Other than the mentioned deductions, employers can only do deductions if the employer makes an application to the DGL and approval has been obtained. The law states  that the amount of deduction in one month should not be more than 50% of the wages in that month.

An employer is only allowed to give a loan of more than one month’s salary if it involves;-

a)     Purchasing , building, renovating a house/land

b)     Purchasing a car, motorcycle or bicycle

c)     Purchasing shares of employer’s business

d)     Enabling employees to purchase a computer

e)     Payments of employee’s/ immediate family member’s medical expenses

f)      Payments of daily expenses pending receipt of temporary disablement under SOCSO’s Act

g)     Payment for educational expenses for self or immediate family member.

Employers are required to provide a wage slip to every employee (relating to details of wages and other allowances earned during each wage period as specified in Employment Regulations 1957) on or before the date of payment of wages. 

Source:  Sections 2, 18, 19,20,21,22 & 24 of the Employment Act 1955 (Act 265);; Regulation 9 of the Employment Regulations 1957


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