Amendments to Malaysia’s Employment Act kick in

The amendments are largely based on the International Labour Organisation standards, which provide a framework for addressing labour issues.
By: | January 3, 2023
Topics: Compensation and Benefits | Compliance | Employee Experience | Employment Law | Hybrid Working | Malaysia | News | Restructuring

With changes to the Employment Act coming into effect on 1 January 2023, Malaysians are expected to see a significant change in their workforce.

Among the key amendments include putting an end to forced labour. For instance, employers who threaten, deceive, or force an employee to work or who prevent an employee from leaving the place of work, can be sentenced to a fine not exceeding RM100,000 (US$22,700) or to imprisonment for a term not exceeding two years, or both. 

Also, flexible working arrangements have been introduced, overtime payments have been increased for employees earning up to RM4,000 (US$908) a month, and the number of working hours has been reduced from 48 to 45.

Employees can submit a written application for flexible working arrangements which can cover changes in working hours, days, and workplace location. The employer must provide a written response to the employee within 60 days, as well as the reasons for rejecting it.

Overtime payments are now available to all employees earning up to RM4,000 a month. Prior to the amendment, overtime payments were only available to employees earning up to RM2,000 (US$454). Work hours have also been reduced to a new maximum of 45 hours a week. Employees who work beyond will be entitled to overtime pay. 

READ: Malaysia defers minimum wage order for small businesses

Amendments to the Employment Act were passed in the parliament last March, and were supposed to come into force on 1 September 2022. It was postponed to 1 January 2023 to ensure that employers can comply with the new regulations.