A Guide to Minimum Wage in Malaysia in 2024

As an investor or business owner operating in Malaysia, understanding the minimum wage regulations is crucial for ensuring compliance and maintaining fair labor practices. The Malaysian government has implemented minimum wage laws to protect the rights of workers and promote a decent standard of living.

In this article, we will take a look at the current minimum wage rate in Malaysia and what to expect in the coming years.

What is the Minimum Wage Rate in Malaysia?

As of January 1, 2023, the national minimum wage in Malaysia for private sector employees is RM 1,500 per month or RM 7.21 per hour. This rate applies to all employees throughout the country, regardless of their location or industry.

The Minimum Wages Order 2022 introduced these new rates, which represent a significant increase from the previous minimum wage of RM 1,200 in major cities and RM 1,100 in other areas.

Daily Minimum Wage Rates

The minimum wage rates for employees paid on a daily basis vary depending on the number of working days per week.

Here is a quick overview of the daily minimum wage rate for employees in Malaysia based on working days per week:

*The USD amounts are converted from Malaysian Ringgit and are subject to exchange rate fluctuations

What Counts as “Wages” in Malaysia as per Law?

As an employer in Malaysia, it’s essential to understand what qualifies as “wages” for minimum wage calculations. In addition to employee benefits in Malaysia, the Malaysian Employment Act 1955 also defines “wages” as an employee’s basic salary and other cash payments for work performed under their employment contract. 

However, certain benefits and allowances are excluded and must not be considered a part of an employee’s wage. These include:

• Housing, food, fuel, utilities, medical benefits, or approved services
• Employer contributions to pension, provident, retirement, or welfare funds
• Travel allowances or concessions
• Reimbursements for job-related special expenses
• End-of-service gratuities
• Annual bonuses

Employers must carefully review their compensation packages to identify payments subject to minimum wage requirements. This ensures compliance with laws and fair compensation for employees.

Lawful Deductions from Wages

Employers in Malaysia must be aware of the permissible deductions they can make from employees’ wages. The Minimum Wages Order outlines the following lawful deductions:

Permitted without Employee Consent

• Overpayment of wages in the previous 3 months (employer’s mistake)
• Indemnity owed to the employer by the employee
• Advances of wages with no interest charged
• Deductions authorized by other laws

With Employee’s Written Consent

• Union dues, co-op fees, loan installments
• Purchase of employer’s shares
• Contributions to superannuation, provident funds, and welfare schemes (with the Director General’s permission)
• Interest due on wage advances
• Payments to third parties on the employee’s behalf
• Purchase of employer’s goods
• Accommodation, services, and food provided by the employer at the employee’s request or as per contract terms

Employers must ensure any deductions from wages comply with these regulations to avoid penalties which can be up to RM 50,000.

Minimum Wage Review in Malaysia and the Introduction of Progressive Wage Policy in 2024

Under the National Wages Consultative Council Act 2011, the Malaysian government reviews the minimum wage every two years to ensure it remains fair and appropriate. Since the most recent minimum wage order was issued in 2022, the next review is expected to take place this year in June 2024.

Moreover, in Nov 2023, the Minister of Economy in Malaysia also proposed a progressive wage policy where the wage increase will be linked to the acquisition of new skills and productivity levels. The pilot program for this will begin in June 2024 and 1000 companies will participate in this program.

Hire Employees in Malaysia with RecruitGo

If you are looking to hire employees or contractors in Malaysia, RecruitGo’s local recruitment experts make it easier for you to hire the right talent. We understand your goals and take care of the entire process from finding the top talent to interviewing and shortlisting candidates that meet your requirements.

To get in touch with our recruitment experts in Malaysia, fill out the form below.