Are you aware of your rights as an employee in Malaysia? Whether you're a fresh graduate entering the workforce or a seasoned professional, understanding your rights is crucial for a fair and productive working environment.

Malaysia has specific laws and regulations in place to protect employees, and it's essential to know what you're entitled to.

We'll dive into the rights of Malaysian employees, covering topics such as minimum wage, working hours, annual leave, and more. By knowing your rights, you can ensure that you are treated fairly and can take appropriate action if necessary.

Let's read on!

Definition of an Employee

In the context of Malaysian Employment Law, particularly the Employment Act 1955, an employee is broadly defined to encompass all categories of workers. Following the recent amendments, the Act now applies to all employees, irrespective of their salary bracket.

Prior to this change, the Act's provisions applied only to employees earning RM2,000 or less per month. The definition of an employee, therefore, extends across various levels of the workforce, from manual labourers to professionals and from part-time to full-time employees.

Key elements that substantiate a person as an employee under the Act include the control or direction in work, the provision of tools or equipment, work done for the benefit of another person, and payment for work.

The control or direction of work refers to the employer's authority to dictate the manner and scope of the employee's duties. The provision of tools or equipment underlines the employer's responsibility in facilitating the employee's tasks.

In addition, if the work is done for the benefit of another person, this indicates an employer-employee relationship. The ultimate determinant of an employment relationship, however, is the payment for work.

This remuneration or salary forms the contractual obligation between the employer and employee, thereby validating the employment relationship under the Act.

Malaysian Employee Rights That You Need to Know

1. Employment Contracts in Malaysia

In Malaysia, it is mandatory for employees who are engaged in work for a period of more than a month to have an employment contract.

This legal document serves as a binding agreement between the employer and the employee, outlining the terms and conditions of the employment. Implementing employment contracts ensures that both parties understand their rights and responsibilities, enhancing transparency and reducing potential disputes.

The employment contract should include a comprehensive detail of the job nature, salary, benefits, work hours, and safety measures. It is vital for the contract to outline the nature of the job the employee is hired for to provide clarity on the employee's role and responsibilities.

The contract should also clearly state the salary amount, the payment schedule, and additional benefits such as health insurance, bonuses, or allowances. It's also important to specify the working hours, including break times, to ensure that the rights of the employees are not violated.

Furthermore, the contract should also include safety measures that the employer will undertake to provide a safe working environment. This can consist of procedures for reporting and handling workplace hazards, first aid arrangements, and emergency procedures.

In addition to the above, the employment contract must be kept for seven years after expiration. This is a legal requirement in Malaysia to ensure that there is a record of the employment relationship even after it has ended. Retaining these documents can be beneficial in the event of any legal disputes or claims related to the employment.

2. Working Hours and Overtime

The standard working hours in Malaysia are eight hours per day or 45 hours per week. This is the time that you are expected to commit to your professional duties, typically within the normal working days from Monday to Friday.

Depending on the nature of your job and your employer's requirements, you might be called upon to work during weekends, holidays, or beyond the standard working hours.

When it comes to overtime work, employees should be compensated at a rate of 1.5 times their normal hourly wage. This means that for every extra hour, you work beyond the standard working hours, you should get paid one and a half times more than your usual rate.

However, it is essential to note that different rates may apply for different types of overtime work. For instance, the rate might be higher if you are required to work during public holidays or late into the night.

3. Leave Entitlements

The duration of this leave varies based on the number of years an employee has served in the company. This means the longer the company has employed you, the more annual leave days you are entitled to. This right is protected under the Employment Act of 1955, which sets the minimum annual leave entitlement for employees.

In addition to the annual leave, Malaysian employees also have rights to sick leave and hospitalisation leave. The sick leave entitlement also varies based on the years of service within the company.

This is separate from the hospitalisation leave, which is granted in addition to the sick leave. This allows employees to take the necessary time off to recover from illnesses or medical procedures without worrying about the loss of income during this period.

For female employees in the private sector, they are entitled to 60 days of paid maternity leave. This ensures that women have adequate time to recover after childbirth and take care of their newborns.

4. Minimum Wage Salary

In Malaysia, the minimum wage law was revised on 1 January 2023, which means that employers, regardless of employee status, must pay a minimum monthly salary of RM1,500.

In other words, you, as an employee, by right, should be receiving at least RM1,500 in monthly salary.

This also applies if you are working for a micro, small or medium enterprise (MSME) company, as the minimum wage law for MSMEs took effect on 1 July 2023. They were temporarily exempted from the minimum wage increase, pending feedback from the MSMEs.

5. Employees Provident Fund (EPF) Contribution

The Employees Provident Fund (EPF) is a crucial component of retirement planning for Malaysian employees.

As an employee, it is vital to understand that your employer is legally obligated to register with the EPF and make monthly contributions towards your EPF account. This is a mandatory requirement for all employers under Malaysian law, ensuring a steady accumulation of savings for your retirement years.

Moreover, the rate at which contributions are made to the EPF varies based on the salary amount. This means that the percentage of your salary that goes into the EPF account may differ depending on whether you are a permanent, temporary or contract employee.

Therefore, it is important for you as an employee to be aware of your category and corresponding EPF contribution rate.

6. Termination of Employment in Malaysia

One of the key aspects to note is the notice period that must be given upon termination. The duration of this period can range between four to eight weeks and is dependent on the number of years you have served with the company.

This is designed to provide employees with ample time to secure alternative employment and make necessary arrangements. It also provides employers with a reasonable timeframe to find a suitable replacement.

Therefore, an abrupt dismissal without following the stipulated notice period could be deemed unlawful unless there are exceptional circumstances.

In addition to the termination notice period, the process of termination itself needs to be justified and carried out in good faith.

Any decision to terminate an employee must be based on valid reasons such as poor performance, misconduct, or company restructuring. A termination without a fair and genuine cause could be regarded as unfair dismissal, and the affected individual may have the right to seek legal remedies.

Furthermore, upon termination, employees are generally entitled to severance pay, which is calculated based on the number of years of service. However, in certain situations, an employee may not be entitled to severance pay.

These include instances of misconduct, voluntary termination by the employee, or retirement. It's, therefore, crucial for employees to understand the circumstances and conditions surrounding the termination of employment to ensure that their rights are not violated.

For instance, if an employee voluntarily resigns or retires, they should be aware that they may not be eligible for severance pay. Conversely, if an employee is dismissed due to misconduct, they should be mindful of their rights to defend themselves and possibly contest the termination.

All in All,

If you are employed by a company in Malaysia, it is vital to understand your rights as an employee. This includes understanding the minimum wage laws in place, the various types of employment categories, and the notice period required upon termination.

Furthermore, you should be aware of your rights to severance pay and defend yourself if dismissed without a fair or genuine reason. 

At Upscale, we are committed to helping employees understand their rights and ensure their talents are rewarded fairly.

If you need help with matching your talent to an employer that aligns with what you do, contact us today at upscale.my.

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