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FOZL Services

FOZL Services

Dedicated to being your reliable partner in the Malaysian market, helping you successfully launch your journey to success in Malaysia.

Salary Calculations

In Malaysia, salary calculation includes several basic components and statutory deductions to ensure employees' social security, retirement savings, and tax compliance. Understanding these elements is crucial for both employers and employees to comply with legal requirements and financial planning.

Salary is the fixed sum of money or remuneration that an employer regularly pays an employee in exchange for the work performed or services rendered. It is usually expressed as an annual amount and paid monthly.

Minimum Wages

The Malaysian government reviews the national minimum wages every 2 years. As of 1st January 2023, the minimum wages are as follows:

  • Peninsular Malaysia: Increased from RM1,200 to RM1,500 per month
  • Sabah, Sarawak, and Labuan : Increased from RM1,100 to RM1,200 per month

 

Effective from 1 February 2025, the national minimum wage will be raised from RM1,500 per month to RM1,700 per month, as announced by Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim in his Budget 2025 speech.

However, the government will temporarily postpone the minimum wage requirement for small businesses with fewer than five employees until 1 August 2025.

Overtime Eligibility

In Malaysia, employees earning up to RM4,000 per month are eligible for overtime pay.

Employee can work up to 45 hours per week (excluding lunch break). Any work performed beyond that is considered overtime.

However, specific categories of employees, such as managerial or executive positions, may be exempt from overtime pay entitlements. The following employees are typically eligible for overtime compensation under the 2022 amendment:

  • Earning RM 4,000 and below per month.
  • Engaged in manual labour, regardless of wages.
  • Individuals operating or maintaining mechanized vehicles.
  • Supervising or overseeing manual labourers, regardless of wages.

 

An employee should not work more than 12 hours per day including overtime hours. The maximum monthly limit for overtime hours is 104 hours for normal working days. Work done on rest days, public holidays, or substituted paid holidays does not count towards the monthly overtime limit.

As an employer, it’s essential to understand local tax regulations, employment laws, and reporting requirements to LHDN regarding employee salaries and deductions. This guide will walk you through the key steps to ensure a smooth transition into your new role as an employer in Malaysia.

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