Minimum Wage Laws in Malaysia

July 1st 2024

In Malaysia, fair pay for workers is a fundamental aspect of labour law. Minimum wage legislation is crucial to defend employees’ rights and well-being across industries. These laws are intended to provide a basic standard of living for workers, protect them from exploitation, and promote economic stability.

In our comprehensive guide, you will find everything you need to know about the minimum wage laws in Malaysia. Understanding these regulations, whether as an employer or employee, is crucial for encouraging fair labor practices across the board.

This Article Covers:

What is the Minimum Wage in Malaysia?

The monthly minimum wage in Malaysia is 1,500 Malaysian ringgit (RM) nationwide. An employment contract must specify the wage period, which cannot exceed one month. If none is mentioned, it is deemed to be one month. Malaysian employers must pay employees their wages no later than the seventh day after the last day of any wage period. If an employee has not completed a whole month of service, their wages should be calculated according to the following formula:

(Monthly wages / number of days of the particular wage period) x number of days eligible in the wage period

According to the National Human Resource Centre, employers that compensate their employees on an hourly basis must compute the minimum wage at RM7.21 per hour. Employers must pay wages through a financial institution, which includes licensed banks, licensed Islamic banks, and prescribed institutions. Employers may pay employee wages by cash or by check only at the written request of the employee and with the approval of the Director General. Employees must be provided with pay slips for each wage period.

Wage advances to employees cannot exceed the previous month’s earnings or the employee’s expected earnings in a month, unless approved by the Department of Labour Peninsular Malaysia. Furthermore, advances must be made without interest.

History of the Minimum Wage in Malaysia

Malaysia introduced the minimum wage policy in 2013, which covers all workers excluding domestic workers. The minimum wage in Malaysia started at RM900 per month for Peninsular Malaysia and RM800 per month for Sabah, Sarawak, and the Federal Territory of Labuan. In the recent wage order, all states in Malaysia follow the RM1,500 minimum wage.

The government makes the final decision on minimum wage levels after reviewing proposals from the National Wages Consultative Council (NWCC) and collaborating with relevant stakeholders in the country. The government may either accept the Council’s recommendations or supervise them to create new ones. The Council has proposed a set of criteria and a methodology to guide the revision of minimum wage rates.

The National Wages Consultative Council is a tripartite advisory council that comprises technical experts and was established by the National Wages Consultative Act 2011. The council is required to conduct at least four meetings every year. Before making recommendations, the Council must:

  • Interact with the public about the rate and coverage, and
  • Collect and analyze data, as well as conduct and publish research on wages and socioeconomic variables.

The Council can also make suggestions on the minimum wage’s coverage, non-applicability to specific sectors or regions, and implementation issues.

Who is Eligible for the Minimum Wage in Malaysia?

All employees who have signed a contract of service with their employers are entitled to the minimum wage. Interns who are trainees or learners receiving practical training as part of their educational or occupational training program are not eligible under the Wages Order. Although interns may not be entitled to the minimum wage, they should be protected from exploitation or discriminatory treatment. They should work in a safe setting, have regular working hours and rest days, and be treated fairly throughout the internship.

Who is Exempted from Earning the Minimum Wage in Malaysia?

Certain workers, such as domestic workers and those in informal or non-traditional jobs, may not be covered by minimum wage regulations. However, as a member state of the International Labour Organization (ILO), Malaysia complies with the recommendation that domestic workers are paid a minimum salary without discrimination. The ILO recommendations also include expanding minimum wage protection to informal economy workers as they transition to formal employment. This includes people with non-standard jobs, such as fixed-term contracts or part-time work. While public sector employees may not be protected by labor laws, administrative mechanisms frequently ensure they are paid at least the minimum wage.

Who is Responsible for Upholding Minimum Wage Laws in Malaysia?

The Government decides the minimum wage after discussions with the National Wages Consultative Council (NWCC) following their recommendations. The NWCC is empowered to advise the Government on all matters relating to minimum wages and make recommendations to the Government on the minimum wage rates and coverage according to sectors, types of employment, and regional areas.

Compliance with Minimum Wage Laws in Malaysia

Employers must comply with the Malaysia minimum wage laws, and keep abreast of their frequent changes. Employers who do not comply with the minimum wage will face the following penalties:

Offence Penalty
First Offense Fine of no more than RM10,000 per employee; the court may also order the employer to pay each employee the difference between the minimum wage rate and the employee’s basic wage.
General Penalty Fine of no more RM10,000 for each offense.
Penalty for Continued Offense Daily fine of no more than RM1,000 for a continuous offense after conviction.
Penalty for Repeated Offense A fine of no more than RM20,000 or imprisonment not exceeding 5 years.

How Often Does the Minimum Wage in Malaysia Increase?

The Malaysian government, together with the NWCC, intends to revise the national minimum wage every 2 years to guarantee a fair and balanced approach for both employers and employees. The criteria to decide minimum wages in Malaysia are categorized into:

  • Base criteria (e.g., Poverty Line Income (PLI) and Median Wage)
  • Adjustment criteria (e.g., Consumer Price Index (CPI), Productivity Growth (P), and Real Unemployment Rate (UE)

Important Cautionary Note

When making this guide, we have tried to make it as accurate as possible. However, we do not give any guarantee that the information provided is correct or up-to-date. We therefore strongly advise you to seek advice from qualified professionals before acting on any information provided in this guide. We do not accept any liability for any damages or risks incurred by the use of this guide.