Minimum Wage & Worker Rights in Malaysia: What’s Really Changing in 2025?

From 1 February 2025, the new Minimum Wages Order 2024 (MWO 2024) raises the monthly floor wage to RM 1,700 and extends enforcement tools that target wage theft and worker mistreatment. Here’s a breakdown to help your HR team and payroll managers stay ahead.

Why Is This Important to Employers?

1. Higher operating risk: Non-compliance now carries five-figure compounds and public “name-and-shame” exposure.
2. Stronger worker voice: Unions such as the MTUC are pressing for real-time enforcement and progressive wage models.
3. Global scrutiny: Overseas clients increasingly audit Malaysian supply chains for ethical wage practices.

1. New Minimum Wage: RM 1,700 (MWO 2024):

Worksy’s payroll module ensures that your organization is safely above the statutory wage floor by validating gross pay against the latest MWO in real time, and holding payroll finalization until discrepancies are fixed. Because the system also restricts deductions to legally approved categories and stores a transparent audit trail (bank-credited salaries, digital payslips, e-contracts), it eliminates the under-payment and documentation gaps that most often trigger JTKSM’s surprise inspections—helping you stay compliant and off the labour-department’s radar.

2. Stamping Out Illegal Salary Deductions (Employment Act 1955: Section 24–25):

According to the Employment Act 1955: Section 24-25, only 4 deduction types are legal: 

1. Statutory contributions such as EPF, SOCSO, EIS and PCB
2. Court-ordered payments
3. Employee-requested items in writing (e.g. union dues)
4. Any other charge that carries written approval from the Director-General of Labour

Typical violations that trigger enforcement:

• Recruitment or agency fees passed to migrant workers
• “Till-short” penalties for cash shortfalls
• Bond, onboarding or medical-check costs that employers must absorb

Penalties include: 

• Court fine: Up to RM 50,000 per offence under Section 99A
• Compound offer: Up to 50% of that amount (RM 25,000) before prosecution (Section 101A)
• Foreign-worker freeze: Unresolved convictions can halt new or renewal quota requests

How does Worksy Payroll keeps your organization safe? 

• Locked deduction codes: Only statutory or DGL-approved categories are available (*DGL refers to Director-General of Labour)
• Real-time compliance notifications: System blocks payroll finalization if an illegal deduction is spotted
• Audit-ready trail: Digital payslips, bank-credited wages and e-contracts are stored for instant download during site inspections

3. Expanding Protection for Migrant Workers:

From 1 July 2024, migrant workers are covered under SOCSO’s Invalidity & Survivors’ Scheme, giving 24-hour protection, pensions and funeral grants.

Other reforms include:

• Direct-hire model: Employers must recruit foreign workers themselves, cutting agent fees that often end up as wage deductions.
• Mandatory bank-credited wages & e-contracts: Pilot projects in manufacturing and plantations, with nationwide rollout by 2026, create an auditable digital trail.

4. Union & Civil-Society Push:

The Malaysian Trades Union Congress (MTUC) continues to urge:

1. A tripartite wage-enforcement task force
2. A public list of repeat violators
3. Integration of a Progressive Wage Model (PWM) to link pay scales with skill levels

Next, Your Compliance Checklist:

Conclusion

Fair pay isn’t just a good idea in Malaysia—it’s the law, and slipping up can cost you. With Worksy’s all-in-one HRMS handling the details, you stay inspection-ready and let your team know you’re committed to treating them right.

Are you ready to future-proof your payroll?
👉 Book a free Worksy demo today and see how quickly you can tick every item off your compliance checklist.