Flexible Working Arrangements (FWA) in Malaysia: How to Implement Them Legally
Flexible working arrangements have become an increasingly important consideration for Malaysian employers and employees. With the rise of hybrid work in Malaysia, both employees and employers need a clear understanding of their legal rights and obligations.
The Employment (Amendment) Act 2022 [Act A1651], which came into force on 1 January 2023, introduced Part XIIC (Flexible Working Arrangement) into the Employment Act 1955 [Act 265]. Sections 60P and 60Q establish the statutory framework for employees to apply for flexible working arrangements and set out the procedures employers must follow when responding to these applications. This complete guide explains how these arrangements function legally, how employees can apply, and how HR teams can implement policies without breaching statutory requirements.
What Are Flexible Working Arrangements (FWA)?
A Flexible Working Arrangement allows an employee to request a change to their standard working conditions. It empowers workers to achieve a better work-life balance while helping businesses retain top talent.
Types of FWA: Hours, Days, and Location
Under Section 60P(1) of the Employment Act 1955, subject to Part XII or anything contained in the contract of service, an employee may apply to an employer for a flexible working arrangement to vary the hours of work, days of work, or place of work in relation to their employment:
- Hours of Work (Flexi-time): Employees may request changes to their working hours, including different starting and finishing times or other agreed adjustments to their working schedule, subject to the applicable provisions of Part XII of the Employment Act 1955 and their contract of service.
- Days of Work (Including Compressed Work Weeks): Employees may request changes to their working days, including arrangements that consolidate working hours into fewer days. However, any proposed schedule must comply with the applicable statutory restrictions under Part XII of the Employment Act 1955. Under the proviso to Section 60A(1)(iii), where the employer and employee agree under the contract of service that the hours of work on one or more days of the week are fewer than eight hours, the eight-hour limit may be exceeded on the remaining days, provided the employee is not required to work more than nine hours in one day or 45 hours in one week. Other applicable restrictions and exceptions under Section 60A must also be considered.
- Place of Work (Remote Work): Employees can request to work from home, a co-working space, or adopt a hybrid schedule rather than reporting to the standard office location.
Employees may also apply for a combination of these arrangements, such as changes to their working hours, working days, and place of work within a single FWA application.
Note: An FWA approval does not, by itself, exempt an employer from statutory working-hour, rest-day, break, or overtime requirements.
The Legal Framework: Employment Act 1955 and Regional Ordinances
The introduction of these provisions provides a clearer statutory framework for handling FWA applications across Malaysia.
Who is Eligible to Apply?
Employees covered by the Employment Act 1955 [Act 265] in Peninsular Malaysia and the Federal Territory of Labuan may apply for Flexible Working Arrangements under Section 60P.
Similar statutory provisions were introduced in Sabah and Sarawak through the Labour Ordinance of Sabah (Amendment) Act 2025 [Act A1753] and the Labour Ordinance of Sarawak (Amendment) Act 2025 [Act A1754], which came into force on 1 May 2025.
In Sabah, Sections 120A and 120B govern Flexible Working Arrangements. In Sarawak, the corresponding provisions are Sections 121A and 121B. These provisions establish the statutory right to apply for Flexible Working Arrangements, subject to Part XII of the Employment Act 1955 in Peninsular Malaysia and Labuan, or Chapter XIV of the respective Labour Ordinances in Sabah and Sarawak, as well as the applicable contract of service. They do not confer an automatic entitlement to approval.
Is FWA Mandatory for Employers in Malaysia?
Employers are not legally required to approve every FWA application. However, where an employee submits an application in accordance with the applicable statutory requirements, the employer must approve or refuse the application within 60 days of receiving it, communicate the decision in writing, and state the ground of refusal if the application is rejected.
How to Process FWA Requests Legally
To maintain compliance and avoid labour disputes, business owners and HR managers must adhere strictly to the timelines and procedures established under the applicable laws.
The Employee Application Process
Under Section 60Q(1) of the Employment Act 1955, an employee must submit an application for a flexible working arrangement in writing, in the form and manner as may be determined by the Director General.
For applications governed by the Sabah and Sarawak Labour Ordinances, the corresponding provisions require applications to be made in writing, in the form and manner as may be determined by the Director under the respective Ordinance.
For administrative clarity, employees are encouraged to identify the proposed changes to their hours of work, days of work, or place of work, together with the proposed commencement date, duration, and reasons for the request. Under Section 60P(2), where a collective agreement exists, the application must be consistent with the terms and conditions of that collective agreement. The corresponding provisions under Section 120A(2) of the Labour Ordinance of Sabah and Section 121A(2) of the Labour Ordinance of Sarawak also require applications to be consistent with the terms and conditions of any applicable collective agreement.
The 60-Day Employer Response Timeline
Under Section 60Q(2) of the Employment Act 1955, the employer must approve or refuse an FWA application within 60 days from the date the application is received. Note that this statutory period refers to 60 calendar days, not working days, and the law does not expressly provide that an application is automatically approved if an employer fails to respond.
Section 60Q(3) further requires the employer to communicate its decision to the employee in writing. If the application is refused, the employer must state the ground of refusal.
Grounds for Refusing an FWA Application
Section 60Q(3) of the Employment Act 1955 requires an employer to state the ground of refusal when rejecting a Flexible Working Arrangement application. The provision does not prescribe a specific or exhaustive list of permissible grounds for refusal.
Depending on the circumstances, employers may consider operational matters such as staffing requirements, service delivery, additional costs, supervision, workplace safety, or the practical requirements of the employee’s role. However, these considerations should not be treated as automatically sufficient grounds for refusal in every case. Employers should assess applications individually, document the relevant circumstances, and ensure that decisions are consistent with applicable employment laws, contractual obligations, and collective agreements.
Best Practices for Implementing an FWA Policy
Relying solely on the statutory minimums often creates confusion. Progressive businesses build robust internal policies, guided by official resources like the JTKSM Garis Panduan Pelaksanaan Aturan Kerja Fleksibel, to ensure fairness and efficiency.
Establishing Clear Guidelines and Eligibility
HR should establish a written FWA policy covering application procedures, assessment criteria, decision-making responsibilities, and expectations following approval. The policy may identify operational requirements affecting different roles. For example, employees performing on-site manufacturing duties may face practical limitations on remote working arrangements. However, these limitations should not automatically be treated as removing an employee’s statutory right to submit an FWA application.
Addressing Productivity and Communication Expectations
Clear performance expectations can help employers manage flexible teams while maintaining accountability. When implemented effectively, FWAs may improve employee satisfaction and work-life balance without compromising business operations. Managers should define core working hours, response time expectations, and clear KPIs.
Legal Compliance After FWA Approval
Approving a Flexible Working Arrangement does not remove an employer’s obligations under applicable employment legislation. Employers should review the following matters before implementing an approved arrangement:
- Working Hours and Rest Days: Changes to working schedules must comply with the applicable statutory requirements governing working hours, rest periods, and rest days. In Peninsular Malaysia and Labuan, these requirements are principally governed by Part XII of the Employment Act 1955.
- Overtime and Payroll: Employers should assess how changes to working schedules affect the calculation of normal working hours, overtime, and other applicable payments. Entitlement to statutory overtime payments depends on the relevant legal provisions and the employee’s circumstances.
- Employment Terms and Documentation: Where an approved FWA changes contractual employment terms, employers should document the agreed changes, including the commencement date, duration, work schedule, work location, and any applicable review conditions.
- Data Protection and Remote Work: Employers implementing remote attendance monitoring should consider applicable personal data protection requirements under the Personal Data Protection Act 2010 [Act 709] (as amended in 2024), particularly where employee location information or biometric data is collected and processed.
- FWA Application and Approval Records: HR departments should retain relevant application records, written approvals or refusals, and documented grounds for rejection. Maintaining these records can help demonstrate compliance with the statutory application process.
- Occupational Safety and Health: Employers should assess occupational safety and health risks associated with approved Flexible Working Arrangements, including risks arising from remote working environments. The Department of Occupational Safety and Health (DOSH) published its Panduan Keselamatan dan Kesihatan Pekerjaan Bagi Pelaksanaan Aturan Kerja Fleksibel (AKF) 2026, which provides guidance on employer and employee responsibilities, ergonomic considerations, employee well-being, and occupational safety and health risk assessments. Employers should consider this guidance alongside their applicable obligations under the Occupational Safety and Health Act 1994 [Act 514].
How Worksy HRMS Supports Flexible Workforces
Geofenced Attendance and Remote Clock-Ins
Worksy supports mobile attendance tracking with GPS and Wi-Fi geofencing capabilities, helping HR teams manage attendance across different working locations. Employers can configure location-based attendance requirements according to their operational needs, making it easier to manage on-site, hybrid, and remote employees through a centralized attendance system.
Managing Flexible Schedules and Workforce Records
Worksy helps HR teams manage employee records, attendance, shift schedules, and payroll information through a centralized Cloud HRMS. Its attendance and rostering capabilities support businesses managing employees across different schedules and working locations. By connecting workforce data with payroll processes, Worksy can help reduce manual administration and improve visibility over employees’ working arrangements. Employers should maintain appropriate records of FWA applications, written decisions, and approved changes to employment arrangements to support compliance with applicable labour laws.
Conclusion
Flexible Working Arrangements are governed by statutory application procedures in Malaysia. By understanding the Employment Act 1955 and the respective Sabah and Sarawak Labour Ordinances, implementing clear internal policies, and adhering to the 60-day response requirement, employers can better manage flexible work arrangements. HR technology such as Worksy can support this process by simplifying workforce scheduling, attendance tracking, employee record management, and payroll administration.
Frequently Asked Questions (FAQ)
Can an employer cancel an approved FWA?
An approved Flexible Working Arrangement may be subject to review, variation, or termination depending on the terms of the approval, the employee’s contract of service, and any applicable collective agreement. Sections 60P and 60Q of the Employment Act 1955 do not expressly prescribe a general procedure for revoking an approved FWA. Employers should clearly document the duration of the arrangement, any review conditions, and the circumstances under which changes may be considered. Where an approved arrangement forms part of the employee’s contractual terms, employers should ensure that any subsequent changes comply with their contractual and statutory obligations.
Do Sabah and Sarawak follow the same FWA laws?
Sabah and Sarawak have similar statutory provisions governing Flexible Working Arrangements, but they operate under separate labour legislation. The Labour Ordinance of Sabah [Sabah Cap. 67] provides for FWA applications under Sections 120A and 120B, while the Labour Ordinance of Sarawak [Sarawak Cap. 76] provides corresponding rights under Sections 121A and 121B. These provisions were introduced through the respective 2025 amendment Acts, which came into force on 1 May 2025. They similarly require written applications and written employer decisions within 60 days, including the ground of refusal where an application is rejected.
Does FWA affect an employee’s salary or benefits?
An approved Flexible Working Arrangement does not automatically change an employee’s salary or statutory employment entitlements. Where an arrangement changes only the employee’s working schedule or place of work, without altering the agreed remuneration or other contractual terms, those existing terms generally continue to apply. If the arrangement involves reduced working hours or a change in employment status, any adjustment to salary or benefits must be assessed against the employee’s contract of service and applicable employment legislation. Where the employee falls within the scope of the Employment (Part-Time Employees) Regulations 2010, the specific statutory requirements governing part-time employment must also be considered. Employers should document any agreed changes and ensure that employees continue to receive their applicable statutory minimum entitlements.