Minimum wage laws exist to establish a baseline standard of living for employees, prevent exploitation, and support economic stability. Malaysia has a fair set of minimum wage regulations designed to uphold these principles, ensuring that workers receive a fair income for their work.
In this guide, we will cover everything you need to know about Malaysia’s minimum wage laws, including the current minimum wage rates, recent changes to the legislation, and how these laws can impact you. Whether you’re an employer or employee, understanding these laws is absolutely critical for navigating the labour market and ensuring fair compensation.
This Article Covers:
- What is the Minimum Wage in Malaysia?
- History of the Minimum Wage in Malaysia
- Who is Entitled to Minimum Wage in Malaysia?
- Who is Exempt from Earning the Minimum Wage in Malaysia?
- Who is Responsible for Upholding Minimum Wage Laws in Malaysia?
- Penalties for Minimum Wage Violations in Malaysia
- How Often Does the Minimum Wage in Malaysia Increase?
What is the Minimum Wage in Malaysia?
In Malaysia, the National Minimum Wage is set at 1,500 Malaysian Ringgit (RM) per month for all workers across the country. This means that no matter where you work in Malaysia, you should be paid at least RM1,500 per month.
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, if employers pay employees by the hour, they must pay at least RM 7.21 per hour. Wages must be paid through a financial institution, like a licensed bank or Islamic bank. Employers can only pay by cash or check if the employee requests it in writing and gets approval from the Director General. Employees must also receive a pay slip for each pay period.
If employers want to give wage advances to employees, these advances cannot be more than the employee’s earnings from the previous month or their expected earnings for the current month, unless they get permission from the Department of Labour Peninsular Malaysia. Additionally, any wage advances must be interest-free.
History of the Minimum Wage in Malaysia
Malaysia first introduced its minimum wage policy in 2013, which applies to all workers except domestic workers. Initially, the minimum wage was set at RM900 per month in Peninsular Malaysia and RM800 per month in Sabah, Sarawak, and the Federal Territory of Labuan. It has since grown over the years, adjusting to better reflect the changing economic conditions and cost of living.
In 2022, the national minimum wage was set to RM1,500 per month across all states in Malaysia.
The government decides the minimum wage levels after reviewing proposals from the National Wages Consultative Council (NWCC) and consulting with various stakeholders. The government can either accept the Council’s recommendations or oversee the creation of new ones. The NWCC has established criteria and a methodology to guide these wage revisions.
The National Wages Consultative Council, formed under the National Wages Consultative Act 2011, is an advisory body made up of technical experts. The Council must meet at least four times a year. Before making recommendations, the Council must:
- Engage with the public about the wage rates and coverage
- Collect and analyze data, and conduct and publish research on wages and socioeconomic factors
The Council can also make recommendations on which sectors or regions the minimum wage should cover or exclude, as well as on issues related to implementing the wage policy.
Who is Entitled to Minimum Wage in Malaysia?
The minimum wage set by the Minimum Wages Order 2022 is consistent across all regions, states, and cities throughout the country. Local and foreign employees with a signed contract of service are entitled to the national minimum wage.
Section 2 of the National Wages Consultative Council Act 2011 (Act 732) defines a “contract of service” as any agreement, whether spoken or written, and whether explicit or implied, where one person agrees to hire another as an employee, and the other person agrees to work for them. This definition does not include apprenticeship contracts.
Who is Exempted from Earning the Minimum Wage in Malaysia?
Some workers, like domestic workers and those in informal or non-traditional jobs, might not be covered by minimum wage laws.
However, as a member of the International Labour Organization (ILO), Malaysia follows the recommendation to ensure domestic workers receive a fair minimum salary without discrimination. The ILO also suggests extending minimum wage protection to informal economy workers as they move into formal employment. This includes people with non-standard jobs, like those with fixed-term contracts or part-time positions. Although public sector employees may not be protected by labour laws, they have often ensured at least the minimum wage through administrative measures.
Who is Responsible for Upholding Minimum Wage Laws in Malaysia?
Malaysia’s minimum wage policy is established under the National Wages Consultative Council Act 2011 (Act 732). The National Wages Consultative Council, a tripartite body, recommends minimum wage rates to the government. The NWCC has the authority to advise the Government on all issues related to minimum wages. It can recommend minimum wage rates and determine which sectors, types of jobs, and regions should be covered. Once the government approves these recommendations, the Minister of Human Resources issues a Minimum Wages Order.
Penalties for Minimum Wage Violations in Malaysia
Violating minimum wage regulations in Malaysia comes with significant consequences. This table outlines the penalties for not meeting minimum wage requirements and the consequences for repeated or ongoing violations.
| Offence | Penalty |
| First Offense | A fine of up to RM10,000 per employee, plus the court may require the employer to pay the difference between the minimum wage and the employee’s basic wage. |
| General Penalty | A fine of up to RM10,000 for each violation. |
| Penalty for Continued Offense | A daily fine of up to RM1,000 for continuing the offence after a conviction. |
| Penalty for Repeated Offense | A fine of up to RM20,000 or imprisonment for up to 5 years. |
How Often Does the Minimum Wage in Malaysia Increase?
The Malaysian government, along with the National Wage Consultative Council (NWCC), plans to review and update the national minimum wage every two years to ensure it is fair for both employers and employees. The process for setting minimum wages in Malaysia involves two main types of criteria:
- Base Criteria: These are foundational factors such as the Poverty Line Income (PLI) and the Median Wage.
- Adjustment Criteria: These are factors used to adjust the minimum wage, including the Consumer Price Index (CPI), Productivity Growth (P), and the Real Unemployment Rate (UE).
Learn more about Leave Entitlement in Malaysia and Malaysia labour laws.
Important Cautionary Note
This content is provided for informational purposes only. While we make every effort to ensure the accuracy of the information presented, we cannot guarantee that it is free of errors or omissions. Users are advised to independently verify any critical information and should not solely rely on the content provided.
