Global Employment Updates 2023: Malaysia

Employment Laws of Malaysia 2023

An Overview

The Employment (Amendment) Act 2022 was passed in Parliament which includes several changes to the existing laws governing employment in the country and has come into force on 1 January 2023.

1. MINIMUM WAGE

Malaysia has announced that the implementation of the RM1,500 (US$339) Minimum Wage Order (MWO) for employers with fewer than five employees will be postponed from 1 January 2023 to 1 July 2023. However, Employers having five or more workers will have to continue paying the minimum wage of RM1,500 per month.

2. WORKING HOURS

As of 1st January 2023, the maximum working hours per week have been reduced to 45 hours. Employee shall not be required to work More than eight hours in one day and more than five consecutive hours without a period of leisure of no less than thirty minutes. Employees shall be allowed each week a rest day of one whole day.

3. FLEXIBLE WORKING ARRANGEMENT

An employee may apply in writing to his employer for a flexible working arrangement to vary his hours, days, or place of work. Upon receipt of such request, the employer is required to inform the employee in writing of his approval or refusal of the application within 60 days.

4. MATERNITY LEAVE AND PREGNANCY PROTECTION

Paid maternity leave entitlement for working mothers who are recovering post-delivery has increased from 60 days to 98 days. If a female employee is pregnant or is suffering from an illness resulting from her pregnancy, her employer is not allowed to terminate her job or provide her with a termination notice except on the grounds of:

• wilful breach of a condition of the contract of service.
• misconduct; or
• closure of the employer’s business.

5. PATERNITY LEAVE

Married males will have the right to 7 consecutive days of paid paternity leave per birth. Eligibility for the leave will be limited to just 5 births, regardless of the number of spouses.

Married male employees will qualify for paternity leave if they have worked for the same employer for at least a year (12 months) prior to the start of the paternity leave and if they provide the employer 30 days’ notice from the due date of the anticipated pregnancy or as soon as possible after the birth.

6. SICK PAY

The legal entitlement to paid sick leave from work is as follows:

• 14 days per year if employed for 1–2 years,
• 18 days per year if employed for 2–5 years,
• 22 days per year if employed for longer than 5 years.

7. HOSPITALIZED LEAVE

Employees will be entitled to a hospitalization leave of 60 days per year and separated from the sick leave entitlement. This will give employees 60 days of sick leave if they need to stay in the hospital, in addition to their normal sick leave allotment.

8. PAID ANNUAL LEAVE

The legal entitlement to paid time off from work is as follows:

• 8 days per year if employed for 1–2 years,
• 12 days per year if employed for 2–5 years,
• 16 days per year if employed for longer than 5 years.

9. CONTRIBUTIONS FOR SOCIAL INSURANCE

• In 2023, the Social Security tax rate is 6.2% for employers and employees, unchanged from 2022. The Social Security wage base is $160,200 for employers and employees, increasing from $147,000 in 2022. Self-employed people must pay 12.4% on the first $160,200.
• In 2023, the Medicare tax rate for employers and employees is 1.45% of all wages, unchanged from 2022. Self-employed people must pay 2.9% on all net earnings.

10. EMPLOYMENT OF FOREIGN EMPLOYEE

An employer is required to obtain the prior approval of the Director General before employing a foreign employee. Failure to do so is an offense and on conviction, in which case the employer shall be liable to a fine not exceeding RM 100,000 imprisonment for a term not exceeding five years or both.

11. SEXUAL HARASSMENT

The amendment has raised the fine from RM10,000 to RM50,000 for employers who don’t investigate claims of sexual harassment. Employers must now also post a notice to raise awareness about sexual harassment in the workplace.

• OVERTIME PAY

Under the Amendment Act, employees who earn up to RM4,000 are now entitled to overtime. Prior to the amendment, overtime payments were only available to employees earning up to RM2,000. This however does not apply to employees whose wages exceed RM4,000 per month.