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Malaysian Labour Law on Working Hours & Overtime: A 2025 Guide

Navigating the complexities of employment law is one of the most critical responsibilities for any Malaysian business. The Employment Act 1955 forms the bedrock of these regulations, and a thorough understanding of its rules is not just good practice, it’s essential for survival. For HR managers and business owners, mastering the specifics of Malaysian labour law working hours, overtime, and rest day pay is fundamental to maintaining a compliant, fair, and productive workplace.

This comprehensive guide will break down the essential components of the Employment Act 1955, focusing on the latest rules following recent amendments. We will cover everything from standard hours and overtime calculations to record-keeping, helping you avoid costly mistakes and build a foundation of trust with your employees.

Why Understanding the Employment Act 1955 is Crucial for Your Business

Compliance with the Employment Act is non-negotiable. Ignoring its provisions, whether intentionally or not, can lead to severe consequences that affect both your finances and your reputation.

Avoiding Costly Penalties and Legal Disputes

Failure to comply with the regulations on working hours, overtime pay, or rest days can result in significant fines imposed by the authorities. Furthermore, it opens the door to legal challenges from employees, which can lead to expensive back-pay awards, legal fees, and protracted disputes that drain valuable time and resources.

Building Trust and Fairness with Your Employees

A company that respects its employees’ rights is a company that fosters loyalty and engagement. When you ensure that every employee is paid correctly for their time and that their right to rest is protected, you create a culture of fairness. This transparency is a cornerstone of positive employee relations and a key factor in attracting and retaining top talent.

Who is Covered by the Employment Act 1955?

One of the most significant recent changes to Malaysian labour law was the expansion of the Employment Act’s coverage, which took effect on January 1, 2023.

Employees Covered Before the 2022 Amendments

Previously, the Act primarily applied to employees whose monthly wages were RM2,000 or less, as well as all manual labourers regardless of their salary. This left a large portion of the workforce outside its direct protection for matters like overtime and working hours.

Expanded Coverage: Who is Included Now?

Following the 2022 amendments, the Act now applies to all employees under a contract of service, irrespective of their monthly wages. This was a landmark change, extending protections to a much broader segment of the Malaysian workforce. However, it’s important to note that certain sections of the Act, particularly those concerning overtime pay and work on rest days, still only apply to a specific group (more on this in the FAQ).

What Are the Standard Malaysian Labour Law Working Hours?

The 2022 amendments also brought key changes to the definition of standard working hours, aimed at promoting better work-life balance.

The 45-Hour Work Week Rule

The most notable change is the reduction of maximum weekly working hours from 48 to 45 hours per week. This is the new standard that employers must adhere to for their full-time employees. Any work performed beyond these 45 hours is generally considered overtime.

Maximum Daily Hours and Spread-Over Period

Under the law, an employee shall not be required to work:

• More than 8 hours in one day.
• More than a spread-over period of 10 hours in one day. The spread-over period is the total duration between the time an employee starts and finishes work for the day, including any rest periods.

Mandatory Rest Periods During the Workday

Employers are required to provide a rest period of at least 30 minutes after every 5 consecutive hours of work. This break is not counted as part of the working hours and is unpaid unless specified otherwise in the employment contract.

The Complete Guide to Overtime Law in Malaysia

Overtime is a critical area where mistakes can easily be made. Understanding the legal definition, limits, and calculation methods is essential for compliance.

What Legally Defines “Overtime Work”?

Overtime is defined as any work carried out beyond the normal hours of work per day. For an employee working a standard 8-hour day, any time worked after the 8th hour is considered overtime and must be compensated according to the overtime law in Malaysia.

What is the Maximum Limit for Overtime Hours?

To protect employees from overwork, the law sets a limit on the amount of overtime an employee can perform. The maximum allowable overtime is 104 hours per month. Employers cannot require employees to exceed this limit.

How to Calculate Overtime Pay Rates (with Examples)

The foundation for all overtime calculations is the Ordinary Rate of Pay (ORP), which is the employee’s daily wage. The minimum overtime rate for a normal working day is 1.5 times the hourly rate of pay.

Example Calculation:

1. Employee’s Monthly Salary: RM3,000
2. Calculate Hourly Rate of Pay: (Monthly Salary x 12 months) / (52 weeks x 45 hours) = Hourly Rate
   (RM3,000 x 12) / (52 x 45) = RM36,000 / 2,340 = RM15.38 per hour
3. Calculate Overtime Rate: RM15.38 x 1.5 = RM23.07 per hour of overtime

Working on Rest Days and Public Holidays: The Rules

The law provides for higher rates of pay for employees required to work on their designated rest days or on public holidays.

Defining an Employee’s Entitled Rest Day

Every employee is entitled to one whole day of rest per week. This day is determined by the employer and specified in the employee roster. It is a paid rest day.

Calculating Pay for Work on a Rest Day

If an employee is required to work on their designated rest day, the rest day pay Malaysia calculation is as follows:

• Work up to half the normal hours: The employee is paid half a day’s wages at their ORP.
• Work more than half but not exceeding normal hours: The employee is paid one full day’s wages at their ORP.
• Overtime on a rest day: For any hours worked beyond the normal daily hours, the employee must be paid at a rate of 2.0 times their hourly rate of pay.

Calculating Pay for Work on a Public Holiday

Employees are entitled to paid holidays on the gazetted public holidays. If they are required to work on a public holiday, they must be paid a holiday pay supplement in addition to their regular day’s pay.

• Work during normal hours: The employee is paid two additional days’ wages at their ORP.
• Overtime on a public holiday: For any hours worked beyond the normal daily hours, the employee must be paid at a rate of 3.0 times their hourly rate of pay.

Record-Keeping is Not Optional: Understanding Section 61

Accurate record-keeping is a legal requirement under the Employment Act 1955, and failure to comply can lead to serious issues during an audit.

What is Section 61 of the Employment Act?

Section 61 of the Employment Act mandates that every employer must prepare and maintain a register containing specific information for each employee. This register serves as the official record of employment and is crucial for verifying compliance with labour laws.

Essential Information for Your Employee Register

The register, whether physical or digital, must contain key employee particulars, including but not limited to:

• Full name and address
• NRIC number
• Date of commencement of employment
• Job title and description
• Wages and allowances
• Details of all payments made for salary and overtime

The Risks of Inaccurate or Incomplete Records

Maintaining incomplete or inaccurate records is a breach of the Act. During an inspection by the Labour Department, these records are the primary source of verification. Flawed records can lead to fines and may weaken your position in the event of an employee dispute over wages or overtime pay.

Automate Compliance and Eliminate Errors with an HRMS

Manually calculating overtime, rest day pay, and maintaining compliant records is tedious and prone to human error. This is where a modern human resource management system becomes an invaluable asset for any business.

How Worksy Simplifies Overtime and Rest Day Calculations

A robust HR system like Worksy automates all the complex calculations required by Malaysian labour law. By setting up your company’s work policies in the system, it can automatically calculate overtime rates, rest day pay, and public holiday pay with 100% accuracy, saving your HR team hours of manual work and eliminating costly errors.

Generating Compliant Records for Audits Instantly

Instead of scrambling to compile paper records, a platform like Worksy maintains a secure, digital employee register that is always up-to-date. With just a few clicks, you can generate comprehensive reports that satisfy the requirements of Section 61, ensuring you are always prepared for an audit. This seamless integration with modern payroll software ensures end-to-end compliance.