Employment Law in Malaysia: How Labour Laws Apply to Foreign Workers

5 min read|Last Updated: August 25, 2023|

To prevent companies in Malaysia from mistreating and/or exploiting their employees, labour laws are established. Such laws grant the employees the rights to be employed in a fair and respected manner, and this applies to local workers and foreign talents who are working in the country.

The primary employment and labour laws in Malaysia include, among others:

  • Employment Act 1955
  • Industrial Relations Act 1967
  • Employee’s Provident Act

What are the Employment Laws in Malaysia?

There are a few Acts and Orders under the Employment laws in Malaysia. The most common employment laws in Malaysia include:

1. The Employment Act of 1955

This the primary law governing employment in Malaysia, and it protects any employee who falls under the First Schedule. After the 2022 amendment, the First Schedule includes not only employees earning less than RM2,000 per month or those involved in manual labour, but also those who enter contracts of service, subject to the Excluded Sections (S.60(3), S.60A(3), S.60C(2A), S.60D(3), S.60D(4) and S.60(J)).

This is an updated table on rights entitled to as a foreign worker, taking into account the Amendments to the Employment Act starting from 1 Jan 2023: 

Basic Rights Descriptions
Payment of Wages Employees must be paid within 7 days after the last day of the wage period.

(Section 18 & 19) 

Working hours Employees cannot work more than 5 hours consecutively without a minimum rest time of 30 mins

Employees also cannot work for more than 8 hours a day, more than 45 hours a week, excluding mealtime.

(Section 60A) 

Annual leave entitlement The number of paid annual leave allowed is based on the employee’s number of years of employment:  

< 2 years: 8 days

>2 years, < 5 years: 12 days

>5 years: 16 days

Medical leave entitlement The number of paid sick leave (not including Hospitalisation) allowed is based on the employee’s number of years of employment: 

< 2 years: 14 days

>2 years, < 5 years: 18 days

>5years: 22 days

Hospitalisation: 60 days

Paternal Leave Maternity leave: 98 days

Paternity leave: 7 days

It is also to note to employers that in the past, the Act only required employers to provide the Director General with details about the foreign employee within 14 days of their commencement of employment. Currently, getting prior approval of the Director General is mandatory before employers can hire a foreign employee.

As per Section 99A of the Employment Act, anyone who commits an offence under this act, or fails to follow the provisions of the act could face a fine of up to RM 100,000, imprisonment for a maximum of five years, or both penalties combined.

2. The Industrial Relations Act 1967

The Industrial Relations Act is applicable to every employee in Malaysia as well and it governs the relationship between employee and employers. It also specifies regulations and assists the settlements of any dispute that arises between employee and employers.

3. Trade Union Act 1959

This governs trade unions, protecting the rights and liabilities of all members of trade unions in the country.

4. Employee’s Provident Fund Act 1991 (EPF Act)

For the EPF Act, it requires all employers and their employees to contribute a certain amount from their salary to the EPF. This is similar to the Employee’s social security Act 1969 which provides social security from employers and employees by imposing compulsory rates. These Acts require both employees and employers to contribute funds at a certain prescribed rate.

5. The Occupational Safety and Health Act 1994

This Act governs the welfare, health, and safety of all individuals in a certain workplace.

6. Minimum Wage Order 2018

The Minimum Wage Order 2018 prescribes the minimum wage that all employees in Malaysia are to receive. The Minimum Retirement Age Act sets the minimum retirement age at the age of 60 and employers are unable to retire the employees below the minimum age of 60 unless early retirement by the decision of employee is permitted.

7. Personal Data Protection Act (PDPA)

This Act governs the privacy of employee’s personal and any sensitive information.

Application of the Employment Laws to Foreigners in Malaysia

Similar to any employees in Malaysia, foreign employees are entitled to all protections provided in the Employment Act 1955. Any employer holding the wages of employee unlawfully and commits a crime that breaches Employment Act 1955 will be fined up to RM 10,000 and will be liable for prosecution in the court of law.

Examples of mistreatments are as follows:

  • Employer confiscated a foreign employee’s passport as a form of safekeeping but in reality, they are aiming to take complete possession of them
  • These employees are threatened with deportation in order to comply with the employer’s demands
  • As the employer is illegally retaining the employees’ passports, the immigrant department will have no way of knowing whether the firm would provide accurate information about the employees

No employer is allowed to make a deduction from a foreigner employee unless the stipulations provided in Malaysia’s employment regulations allow it. These include:

  • Deductions made due to overpayments made within the previous three months of the deduction
  • Deductions for indemnity by the employee due to the employer as specified by law
  • Deductions made from wages given as an advance as long as the advance has not accrued any interest charges
  • Any other deductions as required by written law or regulation All wages must be paid in legal cash to avoid being declared null and void and so considered illegal.

As for female employees, they are entitled to maternity leave and allowance for a period of 60 days.

Employment Law for Rest Days, Holidays & Annual Leave in Malaysia

Every employee has the right to rest once every week and is entitled to a paid holiday at the ordinary pay rate on every public holiday in Malaysia of the calendar year. If a public holiday falls on a weekend, the next working day directly followed will be made a public holiday. The annual leave entitlement under the labour law is dependent on the number of years the employee has been with the company and ranges from 8 to 16 days a year.

Any noncompliance with the labour law will result in punishments in Malaysia. The general penalty is a fine not exceeding RM10,000 on the first offense. If repeated, the offender will be fined on a daily basis of not more than RM1,000 and will be sentenced to a five-year jail term or be forced to pay a fine of RM20,000.


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What is the maximum probationary period permitted by law?2021-09-24T16:40:54+08:00

The law does not prescribe a maximum probationary period. The probationary period may be extended if the employee does not meet the expected standard of employment. It is recommended that the contract of employment reserves the employer’s right to extend the probationary period.

Are there any restrictions or prohibitions against requiring a medical examination as a condition of employment?2021-09-24T16:40:20+08:00

There are no restrictions or prohibitions against requiring a medical examination as a condition of employment. There are also no restrictions on an employer refusing to hire an applicant who refuses to submit to a medical examination.

What should a Foreign Worker in Malaysia do during a violation of rights?2020-04-29T11:41:18+08:00

If any foreigner feels that their rights have been violated, the foreigner may formally file a petition to the relevant authorities against the body, organization, or person at fault. One can file a complaint by sending an official letter in writing to a labor office or via email. It is also possible to file the complaint via telephone.

There must be supporting documents which accompany the complaint such as a letter of job offer or contract which was given at the time of hiring. Upon successful submission of the documents, the foreigner will receive an official notice from the labor department after investigations have been completed. In most instances, the labor office will contact the employer to inquire about your claims. If the employer agrees to the claim and chooses to make a settlement, the person who made the complaint will be required to withdraw the case against the employer. Otherwise, a lawsuit between the two will be heard in a labor court at a predetermined date. Both parties involved are to attend such a hearing.

How do Malaysia’s labor laws relate to the hiring of Foreign Workers?2020-04-29T11:40:28+08:00

Malaysian labor laws are constantly being reviewed by the government and other relevant authorities. The country intends to prioritize its citizens with regard to job opportunities in order to reduce the unemployment rate. Therefore, foreign workers will only be considered only if they offer services which are not offered by locals.

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Join the discussions

  1. Shahzad sultan December 22, 2021 at 5:06 pm - Reply

    Aslamo Alaikum I m working here from last almost three years I already resign from my work I give them one month advance formal resignation which was last dated of 24th June but when I ask my dues from my company they never giving me even my visa is expired in June now they are not renew my visa not giving my three years dues as employment contract they have to pay me one month salary and air ticket but they never give me annaul leave and never pay me annaul leave money from last three months even now I m suffering from infection my employer not paying me for hospital and never paying my dues so where I can contact for my rights

  2. Niko November 16, 2021 at 1:26 pm - Reply

    Hello i need a legal avice about the recalibiration. If employees wanted to resign and the employers threatening them that they put them on the black list. Th3 company have any liability for that

    • Paul Hype Page November 17, 2021 at 6:05 pm

      Hi Niko,

      Unfortunately, we do not offer legal advice. You can reach out to a legal firm for your request. Thanks.

      Best Regards,

  3. Kelly September 4, 2021 at 12:49 pm - Reply

    Hello, if the conpany hold the salary of foreigner. Which authorities they can contact to? Thank you

  4. Abbas said August 29, 2021 at 6:16 am - Reply

    If there is no work contract, is the salary receipt sufficient to prove my rights in the company?

  5. Christa December 3, 2020 at 12:33 am - Reply

    Can an employment pass(category III) holder give birth in Malaysia? And what kind of pass can the newborn get?

    • Tiwi December 4, 2020 at 2:51 pm

      Hi, while there is no law saying that employment pass (category III) holders cannot give birth in Malaysia, employment pass (category III) holders are not allowed to bring dependents. Hence, the newborn will not be entitled to a dependent pass. All non-Malaysia newborn will get red color birth certificates.

      Please contact us via Paul Hype Page to discuss further.
      Thank you.

  6. Edna Jumadiao November 8, 2020 at 12:17 am - Reply

    Can a helper who’s almost finish her 2 years of contract,can ask her Employeer an EARLY RELEASE In any case? or need to have a Reasonable reason?

    • Tiwi November 13, 2020 at 3:39 pm

      Hi Edna, thanks for reaching out. This depends on your employer’s or agency contract. You should discuss reasonable terms.

      Please contact us via Paul Hype Page to discuss further.
      Thank you for your question.
      Warm regards

  7. JOHAL September 18, 2020 at 9:38 am - Reply

    Can a legal foreign worker switch jobs to another company

    • Tiwi September 28, 2020 at 9:57 am

      Hi Johal,

      Yes. It is possible.

      Please contact us via Paul Hype Page to discuss further.


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