What are Malaysian labour laws?
Malaysian labour laws are the set of Acts that govern the relationship between employers and employees. At their core are the Employment Act 1955 and the Industrial Relations Act 1967, supported by laws on EPF, SOCSO, EIS, sexual harassment, workplace safety, personal data and retirement age. Together they decide what employees are owed, how a company may discipline staff, and what happens after a dismissal.
For Malaysia SMEs, labour law is the floor beneath every employment contract, handbook and disciplinary step. Most disputes are not deliberate breaches; the paperwork simply never caught up with the law.
Employment Act 1955: who does it cover and what does it give?
The Employment Act 1955 covers all employees in Peninsular Malaysia and Labuan. However, certain provisions, such as overtime, rest days, public holidays, and termination and lay-off benefits, apply only to employees earning up to RM4,000 a month or doing listed work (for example, manual work).
- Normal working hours: a maximum of 45 hours a week.
- Annual leave (EA s.60E): 8 days (under 2 years' service), 12 days (2–5 years), 16 days (5+ years).
- Paid sick leave: 14 / 18 / 22 days; hospitalisation leave up to 60 days a year.
- Public holidays: 11 paid gazetted public holidays a year, 5 of them compulsory (National Day, Agong's Birthday, State Ruler's Birthday or Federal Territory Day, Labour Day, Malaysia Day).
- Maternity leave of 98 days; paternity leave of 7 days for married male employees.
- Notice of termination (EA s.12, unless the contract says more): 4 weeks (under 2 years), 6 weeks (2–5 years), 8 weeks (5+ years).
Discipline under EA s.14
After due inquiry, an employer may dismiss, downgrade or impose a lesser punishment for misconduct, including suspension without pay of up to 2 weeks. While the inquiry is pending, the employee may be suspended for up to 2 weeks on at least half pay.
Industrial Relations Act 1967: how is unfair dismissal handled?
Under section 20 of the Industrial Relations Act 1967, a dismissed employee, including a probationer or a manager, may file a representation of unfair dismissal within 60 days. The case first goes to conciliation; if it is not resolved, it may be referred to the Industrial Court.
The Industrial Court decides whether the dismissal was "with or without just cause or excuse". It may order reinstatement, or compensation in lieu of reinstatement plus back wages. The court acts according to equity, good conscience and the substantial merits of the case (IRA s.30(5)), so evidence and records matter. Managers earning above RM4,000 can claim too.
Other employment laws bosses must know
Wages and statutory contributions
The minimum wage is RM1,700 a month under the Minimum Wages Order 2024. Under the EPF Act 1991, employees contribute 11% and employers 13% (wages up to RM5,000) or 12% (above RM5,000). SOCSO contributions under the Employees' Social Security Act 1969 and EIS contributions under the Employment Insurance System Act 2017 are compulsory.
Workplace protection
- Anti-Sexual Harassment Act 2022: companies need a way to receive and handle sexual harassment complaints.
- Occupational Safety and Health Act 1994 (amended 2022): employers must look after employees' safety and health at work.
- Personal Data Protection Act 2010 (amended 2024): employee data must be collected, used and kept lawfully.
- Minimum Retirement Age Act 2012: the minimum retirement age is 60.
- Trade Unions Act 1959: governs how trade unions are formed and run.
- Act 446 (Employees' Minimum Standards of Housing, Accommodations and Amenities Act 1990): sets minimum standards where employers provide accommodation.
Malaysia employment laws at a glance
- Employment Act 1955
- Working hours, leave, notice, maternity and paternity leave, discipline (s.12, s.14, s.60E)
- Industrial Relations Act 1967
- Unfair dismissal representation within 60 days (s.20); Industrial Court decides by equity and good conscience (s.30(5))
- Minimum Wages Order 2024
- Minimum wage of RM1,700 a month
- EPF Act 1991 / SOCSO / EIS
- EPF 11% employee, 13% or 12% employer; SOCSO and EIS compulsory
- Anti-Sexual Harassment Act 2022
- A process for sexual harassment complaints
- OSHA 1994 / PDPA 2010
- Safety and health at work; protection of employee personal data
- Minimum Retirement Age Act 2012
- Minimum retirement age of 60
- Sabah Cap. 67 / Sarawak Cap. 76
- Separate labour ordinances for East Malaysia
What changed in the 2022 Employment Act amendments?
The 2022 amendments took effect on 1 January 2023. The main changes:
- HoursNormal working hours capped at 45 hours a week.
- MaternityMaternity leave of 98 days.
- Paternity7 days' paternity leave for married male employees.
- FlexibilityEmployees may apply for flexible working arrangements.
- HarassmentEmployers must handle sexual harassment complaints.
If your employee handbook and employment contracts were written before 2022, your hours, leave and complaint procedures may no longer match the law.
Is it different in Sabah and Sarawak?
Yes. Employees in East Malaysia are mainly governed by their own state laws: the Sabah Labour Ordinance (Cap. 67) and the Sarawak Labour Ordinance (Cap. 76), rather than the Employment Act 1955. If you have a branch or staff in Sabah or Sarawak, review their contracts and leave policies against the local ordinance instead of copying the Peninsular version.
Common labour law mistakes Malaysia SMEs make
- Assuming staff earning above RM4,000 are "not covered" by labour law.
- Leaving the employee handbook unchanged for years, with old hours or leave.
- Dismissing without a show cause letter or a Domestic Inquiry.
- Framing charges without particulars, and keeping incomplete evidence and minutes.
- Choosing a penalty out of proportion to the misconduct.
Industrial Court awards show that process and evidence decide the outcome: a probationer's poor-performance dismissal cost RM173,400 (Award 1580/2026); an investigation of 27 people still lost, with RM358,400 awarded (Award 1630/2026); a proper show cause and DI kept the Ketum dismissal upheld (Award 1671/2026); and the Federal Court confirmed a director can also be an employee (Acexide).
How JP Asia helps Malaysia SMEs stay compliant
Since 2014, JP Asia Capital has helped Malaysia SMEs turn labour law into systems their teams use every day, so compliance runs on autopilot. We are an HR management and employment law consultancy and an HRD Corp Registered Training Provider, not a law firm.
- Business diagnosis of your staff and current documents.
- HR Health Check against the Employment Act 1955 and related laws.
- We update your employment contracts and employee handbook and HR policies.
- We set up discipline and performance management.
- We help you plan a Domestic Inquiry when needed, backed by our HR Legal Advisor service.
What you receive
- A labour law compliance gap list, in order of priority
- Updated employment contract templates
- An employee handbook and HR policies that match current law
- A disciplinary SOP and HR compliance templates
- HRDC Claimable employment law training for bosses and HR
Frequently asked questions
What are the main Malaysia employment laws?
The core Malaysia employment laws are the Employment Act 1955 and the Industrial Relations Act 1967, supported by the EPF, SOCSO, EIS, anti-sexual harassment, OSHA, PDPA and retirement age laws. Sabah and Sarawak have their own labour ordinances (Cap. 67 and Cap. 76).
Does the Employment Act 1955 cover employees earning above RM4,000?
Yes. The Employment Act 1955 covers all employees in Peninsular Malaysia and Labuan; only provisions such as overtime, rest days, public holidays and termination benefits are limited to those earning up to RM4,000 a month or doing listed work. Higher earners can still claim unfair dismissal under IRA s.20.
How long does an employee have to claim unfair dismissal in Malaysia?
Within 60 days, under section 20 of the Industrial Relations Act 1967; probationers and managers can file too. Unresolved cases may go from conciliation to the Industrial Court.
What are the minimum wage and EPF rates in Malaysia?
The minimum wage is RM1,700 a month under the Minimum Wages Order 2024. For EPF, employees contribute 11% and employers 13% for wages up to RM5,000 or 12% above that. SOCSO and EIS contributions are also compulsory.
Is JP Asia a law firm? Can you represent us in court?
No. JP Asia Capital is a law-backed HR management and employment law consultancy and an HRD Corp Registered Training Provider. We build compliant HR systems with you; we do not represent clients in court.
Start with a business diagnosis to see what your contracts, handbook and disciplinary process are missing.
Disclaimer: This page is general information, not legal advice for a specific case, and reflects the law as at October 2026. For a particular situation, please seek professional advice.