This article exclusively covers the regulations of the Employment Act that are applicable to specific employee categories, such as manual workers or those earning a monthly wage below RM4,000.
Distinct rates are implemented based on different scenarios, including regular workdays, rest days, and public holidays, as well as whether the work is performed during normal working hours or outside of them.
Overtime on normal work days
When employees work overtime on regular workdays, they will receive compensation at a rate that is at least one and a half times their regular hourly pay.
Overtime on rest days
When employees work on their designated rest days, the compensation varies based on the type of worker and the hours worked.
For daily-rated workers who work on a rest day during normal working hours:
- They will receive 1 day’s wages if the work doesn’t exceed half of their regular working hours.
- They will receive 2 days’ wages if the work exceeds half of their regular working hours.
For monthly-rated workers who work on a rest day during normal working hours:
- They will receive 1/2 day’s wages if the work doesn’t exceed half of their regular working hours.
- They will receive 1 day’s wages if the work exceeds half of their regular working hours.
However, for overtime work on a rest day outside normal working hours, all employees will be paid at a rate of not less than two times their hourly rate of pay.
Overtime on public holidays
When an employee works during normal working hours on a public holiday, they are entitled to receive two days’ wages at their ordinary rate of pay, in addition to the holiday pay they already receive for that day. This holds true even if the period of work done on the public holiday is less than their normal hours of work.
To calculate this additional payment, you simply need to apply the extra x2 rate, as the employee’s normal holiday pay is already included in their monthly salary.
For any overtime work carried out by an employee outside normal working hours on a public holiday, they shall be paid at a rate of not less than 3 times their hourly rate of pay.
Ordinary Rate of Pay
As per the Employment Act, is determined by dividing the employee’s monthly wages by 26 for overtime calculations. However, employers have the flexibility to opt for any other calculation basis that is more advantageous to the employee.
Wages for the purpose of this definition encompass the employee’s basic wages and all cash payments made in relation to the work performed under their contract of service. However, the following elements are not included in the calculation of wages:
(a) The value of any provided house accommodation, food, fuel, light, water, medical attendance, approved amenity, or approved service.
(b) Employer contributions to pension funds, provident funds, superannuation schemes, retrenchment, termination, lay-off or retirement schemes, thrift schemes, or any other funds or schemes established for the employee’s benefit or welfare.
(c) Traveling allowances or the value of any traveling concessions.
(d) Special expenses payments incurred by the employee due to the nature of their employment.
(e) Any gratuity payable upon discharge or retirement.
(f) Any annual bonus or its portions.
Furthermore, the following items are also excluded from the definition of wages specifically for overtime calculation purposes:
- Payments made under an approved incentive payment scheme.
- Payments for work done on a rest day or any gazetted public holiday granted by the employer under the contract of service or any substituted day for the gazetted public holiday.