A Guide to Annual Leave in Malaysia

Statutory Annual Leave Entitlement in Malaysia

As per Article 60E of the Malaysian Employment Act 1955, the number of paid annual leave days in Malaysia increases with the length of employment.

The current annual leave allowance in Malaysia is as follows:

• Less than 2 Years: 8 days of paid leave per year
• 2 to 5 Years: 12 days of paid leave per year
• 5+ Years: 16 days of paid annual leave per year

Annual Leave Calculation in Malaysia for an Incomplete Year

If an employee’s contract ends before they complete 12 months in a given year, Employees must calculate their annual leave proportionally based on the number of completed months worked.

For example, John with 4 years of service has their contract terminated after 6 months into the current year. Their prorated annual leave would be calculated as:

Annual leave allowance for 12 months (for 2 to 5 years of service) = 12 days 

Prorated leave for 6 months = (number of months worked in the year/12 months) x Annual leave allowance
Prorated leave for 6 months = (6/12) x 12 days = 6 days

Therefore, John is entitled to take 6 days of paid annual leave.

To calculate the annual leave entitlement for your employees, use our Annual Leave Calculator.

What Can Employees Do with Unused Leaves?

By law, Malaysian employees must use their annual leave within 12 months after completing each year of employment. For instance, for the employment period of Jan 2023 to Dec 2023, employees can take their annual leave until Dec 2024. After that period, they will lose the unused days.

However, some companies have a carry-forward policy for their employees that allows them to move some of their unused days to the next year. The number of days an employee can carry forward is usually described in the employment contract.

In addition to that, if an employee does not take annual leave at the request of their employer, they can opt for leave encashment for their unused days. However, that requires the written consent of employees.

Other Mandatory Leave Entitlements for Employees

In addition to the annual leaves, employees in Malaysia get a range of statutory leave options such as sick leave, maternity leave, paternity leave, and public holidays. It is important for employers to comply with these legal requirements to avoid any potential legal issues.

Here’s an overview of statutory leave entitlements in Malaysia:

According to article 60E (1A & 1B) of the Employment Act, these statutory holidays are in addition to regular days off and public holidays. Even if an employee is on annual leave and becomes eligible for sick or maternity leave, the annual leave will not be counted for those days.

For more information on employee benefits, read our comprehensive guide on Employee Benefits in Malaysia.

Hire Top Talent in Malaysia with RecruitGo

Looking to expand your operations to Malaysia? Having a local recruitment partner can simplify the process for you. RecruitGo’s hiring experts in Malaysia understand the job market and local regulations. Through our extensive network of top talent, we make it easier for employers to find and hire the right people in Malaysia.

Fill out the form below to talk to one of our recruitment experts in Malaysia.