Governing Legislation: Malaysia
Employment Act 1955 (Amended by Employment (Amendment) Act 2022, in force Jan 1, 2023)
The Employment (Amendment) Act 2022, which came into full force on January 1, 2023, introduced landmark changes to the Malaysian labor landscape. Most critically, the First Schedule amendment expanded the scope of the Employment Act 1955 to cover ALL employees regardless of salary threshold. Employers must strictly comply with tiered annual leave (8, 12, or 16 days based on tenure), separated 60-day hospitalization leave, expanded 98-day maternity leave, 7-day paid paternity leave, and the reduced 45-hour standard work week.
Mandatory Leave Types in Malaysia
Annual Leave
Citation: Employment Act 1955, Section 60E
Entitlement: 8 days (<2 years), 12 days (2 to <5 years), 16 days (5+ years)Fully Paid
Eligibility
All employees under contract of service. For employees who have served less than 12 months, leave is prorated based on completed months of service.
Carry Over & Cash Commutation
Must be taken within 12 months after the end of every 12 months of continuous service. If not taken due to employer's request or upon termination, it must be paid out in cash.
Service less than 2 years: 8 days per year.
Service 2 years to less than 5 years: 12 days per year.
Service 5 years or more: 16 days per year.
Absence without permission on the workday before or after annual leave does not forfeit the leave unless unexcused absence exceeds 10% of total working days.
Paid Sick Leave & Hospitalization
Citation: Employment Act 1955, Section 60F
Entitlement: Outpatient: 14/18/22 days; Hospitalization: 60 days separateFully Paid
Eligibility
All employees upon examination by a registered medical practitioner (panel doctor or government medical officer). Employee must notify employer within 48 hours.
Carry Over & Cash Commutation
Non-cumulative; unavailed days lapse at year end.
Outpatient tiers: <2 years: 14 days; 2 to <5 years: 18 days; 5+ years: 22 days.
Major 2023 amendment: 60 days of hospitalization leave is now completely SEPARATE from outpatient sick leave (previously, hospitalization was deemed to include outpatient days).
Failure to notify employer within 48 hours deems the absence an unauthorized absence under Section 60F(2).
Paid Maternity Leave
Citation: Employment Act 1955, Section 37
Entitlement: 98 consecutive days with full maternity allowanceFully Paid
Eligibility
Female employees who have been employed for at least 90 days in the 9 months immediately preceding confinement, and who have fewer than 5 surviving biological children.
Carry Over & Cash Commutation
Must commence not earlier than 30 days before confinement or later than the day following confinement.
Increased from 60 days to 98 consecutive days under the 2022 amendments.
Employee may return to work early with mutual agreement and medical fitness certification.
Employer cannot terminate a female employee who is pregnant or on maternity leave except on grounds of willful breach of contract.
Paid Paternity Leave
Citation: Employment Act 1955, Section 60FA (New Section)
Entitlement: 7 consecutive days with full payFully Paid
Eligibility
Married male employees who have been employed for at least 12 months with the same employer. Restricted to first five (5) confinements regardless of number of spouses.
Carry Over & Cash Commutation
Must be taken consecutively commencing on the day of birth.
Employee must notify employer at least 30 days prior to expected confinement or as soon as practicable.
Employer Compliance Checklist
Scope Expansion Compliance
MandatoryApply EA 1955 leave entitlements to all staff, including executives and managers earning above RM4,000/month.
Hospitalization De-coupling
High RiskConfigure HR software to provide 60 full days of hospitalization leave separate from outpatient sick leave balance.
98-Day Maternity Policy Update
MandatoryUpdate all employment contracts and handbooks from 60 days to 98 consecutive days for maternity.
Weekly Hours Cap
Standard PracticeEnsure shift rosters reflect the 45-hour standard weekly maximum (down from 48 hours).
Common Employer Pitfalls
Assuming executives earning above RM4,000 are not entitled to statutory annual leave
Consequence: Breach of Employment Act punishable by fines up to RM50,000 under Section 99A.
Compliant Action: Ensure all employees regardless of wage level receive the minimum 8/12/16 days annual leave.
Deducting outpatient sick leave from the 60-day hospitalization quota
Consequence: Illegal leave deductions under Section 60F(1)(bb) post-2023 amendments.
Compliant Action: Maintain two distinct balances: Outpatient Sick Leave (14/18/22d) and Hospitalization Leave (60d).
