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Unpaid Salary in Malaysia: A Guide to Your Rights and Employer Responsibilities

Receiving your salary late, or not at all, is more than just an inconvenience, it’s a significant source of stress that can disrupt your life. In Malaysia, your right to be paid on time is protected by law. Whether you are an employee worried about a delayed payment or an HR manager committed to upholding compliance, understanding these regulations is crucial.

This guide breaks down Malaysia’s labour laws on salary payments, outlines the steps employees can take when faced with unpaid salary, and explains the serious consequences for employers who fail to comply. Furthermore, we will explore how modern solutions like HR software can prevent these issues from ever arising.

Understanding Malaysia’s Labour Law on Salary Payments

The foundation for salary regulations in Malaysia is the Employment Act 1955. This legislation clearly defines the obligations of employers to ensure employees are paid correctly and on time. Ignoring these rules is not just unethical; it is illegal.

What is the Legal Deadline for Salary Payment?

Many people believe that salaries must be paid by the end of the month, but the law provides a specific grace period. According to Section 19 of the Employment Act 1955, every employer must pay their employees their salary not later than the seventh day after the last day of the wage period.

For example, if a company’s wage period is from January 1st to January 31st, the salary for January must be paid no later than February 7th. Any payment made after this date is legally considered a delay.

Who is Protected Under the Employment Act 1955?

The Employment Act 1955 was updated with significant amendments that took effect on January 1, 2023. Previously, it primarily covered employees earning RM2,000 or less per month. Now, it applies to all employees in the private sector, regardless of their wage level, with a few exceptions for certain sections like overtime and termination benefits.

However, the core protections regarding timely salary payment cover almost everyone. Your employment contract should clearly state your wage period and salary details, but these terms cannot override the minimum requirements of the Act.

What Constitutes a “Salary Delay” vs. “Unpaid Salary”?

While the terms are often used interchangeably, there is a legal distinction.

• Salary Delay: This refers to a payment made after the 7th day of the following month but is eventually paid. While still a violation of the Act, it is often resolved directly with the employer.
• Unpaid Salary: This is a more severe issue where the employer fails to pay the salary for a wage period without any valid reason, forcing the employee to take further action.

Understanding this difference helps you determine the appropriate steps to take.

A Step-by-Step Guide for Employees: What to Do If Your Salary is Late

Discovering your salary hasn’t been credited can be alarming. It is essential to act calmly and methodically. Here is a clear, four-step process to follow if your employer doesn’t pay you in Malaysia.

Step 1: Review Your Employment Contract and Payslips

Before taking any action, double-check your facts. Review your letter of offer or employment contract to confirm the agreed-upon payday and wage period. Sometimes, a simple misunderstanding or a bank holiday could be the cause. Ensure you have copies of past payslips as evidence of your regular salary amount.

Step 2: Communicate Professionally with Your Employer or HR

The next step is to raise the issue internally. Send a formal yet polite email or written letter to your direct manager or the HR department.

• Be Clear and Concise: State that you have not received your salary for a specific period.
• Ask for an Update: Inquire about the reason for the delay and ask for a specific date when you can expect the payment.
• Keep it Professional: Avoid making accusations or emotional statements. A professional approach is more likely to yield a positive result and preserves your working relationship.

Step 3: Document Everything Meticulously

From the moment you notice the delay, start a documentation trail. This evidence will be vital if you need to escalate the matter. Keep a record of:

• Dates: The date the salary was due and each day it remains unpaid.
• Communication: Copies of all emails, letters, and text messages sent to and received from your employer.
• Promises: Notes of any verbal promises made by your employer regarding the payment date.

Step 4: Filing a Formal Complaint with the Labour Department (Jabatan Tenaga Kerja)

If internal communication fails and your salary remains unpaid, your next step is to seek help from the authorities. You can file a formal complaint with the nearest Labour Department (Jabatan Tenaga Kerja Malaysia).

You can do this by:

1. Visiting the office in person to make a statement.
2. Calling their office to inquire about the process.
3. Filing a complaint online through the official JTKSM e-Aduan system.

When you file your complaint, you will need to provide your documented evidence, including your employment contract, payslips, and communication records. The Labour Office will then investigate the claim and may summon both you and your employer for a hearing.

Consequences for Employers: The Risks of Late Salary Payments

For employers, failing to pay salaries on time is a high-risk practice with far-reaching consequences that go beyond a simple administrative lapse. Adhering to the latest Malaysian labour laws is not optional.

Legal Penalties Under the Employment Act 1955

Under Section 99A of the Employment Act, employers found guilty of failing to pay salaries within the stipulated time can face a fine of up to RM50,000 for each offence. This penalty can be applied for each employee whose salary is delayed, making it a costly mistake for any business. The courts and the Labour Department take wage-related offences very seriously.

Damage to Company Reputation and Employee Morale

News of unpaid salaries travels fast. It can severely damage a company’s reputation, making it difficult to attract and retain top talent. Internally, persistent salary delays destroy employee morale. When employees are worried about their finances, their focus, productivity, and loyalty plummet. This creates a toxic work environment where trust is broken.

The Cost of High Employee Turnover

Employees who are not paid on time will leave. The cost of replacing an employee including recruitment, hiring, and training, can be substantial. High turnover disrupts team dynamics, delays projects, and puts a continuous strain on company resources. Ultimately, consistent payroll issues are a direct threat to business stability and are a key reason to invest in strong employee retention strategies.

How Employers Can Prevent Salary Delays and Ensure Compliance

The most effective way to avoid the legal penalties and business damage of late salaries is to implement a robust and reliable payroll process. Manual payroll management, relying on spreadsheets and manual calculations, is prone to human error and inefficiencies.

The Importance of an Automated Payroll System

An automated payroll system removes the risks associated with manual processing. It ensures that all calculations including EPF, SOCSO, EIS, and PCB (Potongan Cukai Bulanan), are accurate and compliant with the latest regulations from LHDN, KWSP, and PERKESO. Automation streamlines the entire workflow, from data entry to final disbursement.

How Worksy HRMS Ensures Timely and Accurate Payroll

This is where a dedicated solution like Worksy HRMS becomes indispensable. Worksy is a modern payroll software designed to solve these exact challenges for Malaysian businesses.

Our system automates every aspect of payroll management:

• Accurate Calculations: Worksy automatically calculates all statutory contributions, ensuring full compliance.
• Timely Processing: By automating the workflow, it drastically reduces the time needed to run payroll, guaranteeing you meet the 7-day deadline every month.
• Integrated System: It connects with attendance, leave, and claims management, ensuring all payment variables are captured accurately without manual data entry.

Generating Compliant Payslips with Worksy HRMS

The Employment Act also mandates that employers provide a detailed payslip to every employee. Worksy HRMS automatically generates clear, compliant, and easy-to-understand payslips that include all required details, such as earnings, deductions, and net pay. This not only ensures legal compliance but also fosters transparency and trust with your employees.

Conclusion: Upholding Fairness in the Workplace

Timely salary payment is a fundamental right of every employee and a core responsibility of every employer. For employees, knowing the law empowers you to take the right steps when your salary is unpaid. For employers, compliance is non-negotiable and essential for building a stable, motivated, and successful organization.

By embracing modern tools like Worksy HRMS, businesses can move beyond the risks of manual processing and build a foundation of trust and reliability, ensuring everyone is paid accurately and on time, every time.