Malaysia Labor Law Guide: Hours, Leave & Maternity

With its rapidly growing manufacturing, logistics, and service industries, Malaysia has become a popular base for companies expanding into Southeast Asia. An increasing number of Korean companies are also establishing local entities and production facilities in the country. To manage a workforce effectively, it is important to understand the basic framework of Malaysian labor law. In this article, we will take a step-by-step look at key requirements, from working hours and rest periods to annual leave, sick leave, and maternity leave.

The three primary laws governing employment relations in Malaysia are the Employment Act, the Industrial Relations Act, and the Trade Unions Act.

First, the Employment Act 1955 governs individual employment relationships, including wages, working hours, maternity protection, the employment of foreign workers, and employers' obligations. It applies to all manual workers regardless of wage level. Following the latest amendment on August 29, 2022, which took effect on January 1, 2023, the scope of the Employment Act was expanded to include foreign workers.

The Industrial Relations Act 1967 governs procedures for labor-management disputes involving matters such as dismissal, disciplinary action, working conditions, and collective bargaining. It is a key piece of industrial relations legislation that all employees and employers in Malaysia must comply with.

The Trade Unions Act 1959 governs the establishment, registration, and operation of trade unions. It sets out requirements for union formation and registration, internal operations, strikes, and dispute resolution, with the aim of ensuring that trade union activities are conducted in an orderly manner.

Therefore, to maintain stable business operations in Malaysia, companies should understand the minimum employment standards required under these three laws and establish their HR policies accordingly.

💡 Malaysian Employment Laws
- Malaysia Employment Act 1955
- Malaysia Industrial Relations Act 1967
- Malaysia Trade Unions Act 1959
- Malaysia Federal Legislation

In Malaysia, statutory working hours are limited to 45 hours per week, with 8 hours per day as the general rule.

Employees must also be provided with designated rest periods during working hours, which they must be free to use as they wish. For example, an employee working for 5 hours must receive at least a 30-minute break, while an employee working continuously for 8 hours must be provided with a 45-minute rest period.

Overtime is limited so that total working hours, including statutory working hours, cannot exceed 12 hours per day. However, exceptions apply to industries operating on a shift system. Due to the nature of shift schedules, shift workers may work more than 12 hours per day or 45 hours per week, provided that their average working hours over a period exceeding three weeks do not exceed 45 hours per week.

Malaysia provides different annual leave entitlements based on an employee's length of service. In general, employees become entitled to annual leave after completing at least one year of service, with the minimum number of days varying by length of service as shown below. Employees are also entitled to paid sick leave, with the number of days likewise varying by length of service.

One of the most significant changes under Malaysia's Employment Act, which took effect in January 2023, concerns maternity and paternity leave. Under the amended rules, female employees who have completed at least 90 days of service are eligible for maternity allowance, may begin maternity leave within 30 days before childbirth, and are entitled to at least 98 consecutive days of maternity leave.

To support employees' family caregiving responsibilities, married male employees are also entitled to 7 consecutive days of paid paternity leave beginning on the day of childbirth or immediately afterward. In addition, a pregnant employee cannot be dismissed except for reasons such as breach of contract, misconduct, or closure of the employer's business.

Malaysian labor law sets out relatively clear standards for core areas of HR management, including working hours, overtime, and leave entitlements. With many provisions recently amended, companies need to understand these changes accurately to manage their local workforce effectively.

Working hour management, overtime calculation, and leave management are all directly connected to day-to-day HR operations. Why not make workforce management across your overseas operations easier with Shiftee?