Malaysia Employment Act 1955 Amendments: What Changed and What Employers Must Know (2026)

The Employment Act 1955 (Amendment) 2022 took effect on January 1, 2023, introducing the most significant changes to Malaysian labor law in decades. The amendments expand coverage to all employees regardless of salary level, reduce maximum working hours from 48 to 45 per week, extend maternity leave from 60 to 98 days, and introduce flexible work arrangement provisions.

What Are the Key Changes in the 2022 Employment Act Amendments?

How Did Coverage Expansion Change Employer Obligations?

Before the 2022 amendments, the Employment Act only covered employees earning RM 2,000/month or below (plus manual laborers and specific categories). The amendment extended coverage to all employees regardless of salary. All employers must now comply with Employment Act provisions for every employee including executives, managers, and professionals.

Key implications: written contracts are now required for all employees (previously only for EA-covered employees). All employees are entitled to the statutory minimum benefits: 8-16 days annual leave, 14 + 60 days sick leave, public holidays, maternity leave, and termination protections. Overtime provisions (Part XII) still apply only to employees earning RM 4,000/month or below.

What Are the New Working Hours Rules?

Maximum working hours reduced from 48 to 45 hours per week. The daily limit remains at 8 hours (or 9 hours if a 5-day work week with a shorter day). Overtime is now capped at 104 hours per month (unchanged). The change gives employees approximately 3 fewer working hours per week without salary reduction.

Employers with existing 48-hour work weeks must reduce to 45 hours. Options include: reducing the work week from 6 days to 5.5 days, shortening each working day, or implementing a 5-day work week with 9-hour days. The reduced hours cannot result in salary reduction for existing employees.

What Are the New Maternity and Paternity Leave Provisions?

Maternity leave increased from 60 days to 98 days (14 weeks). This aligns Malaysia with the ILO Convention 183 recommendation. Maternity allowance remains at the employee's ordinary rate of pay. Eligibility: female employee employed for at least 90 days in the 9 months before confinement period, and fewer than 5 surviving children.

Paternity leave of 7 consecutive days was introduced for the first time as a statutory right. Eligibility: the father must have been employed for at least 12 months, must be married to the mother, and must notify the employer at least 30 days before expected confinement. Paternity leave is paid at the employee's ordinary rate of pay. The 7 days must be taken consecutively.

What Are Flexible Work Arrangements Under the Amended Act?

The amendment gives employees the right to apply for flexible work arrangements. Flexible work includes: changes in working hours, changes in working days, and changes in the place of work (remote/hybrid). The employer must respond in writing within 60 days. If the employer refuses, the response must state the grounds for refusal.

The employer is not obligated to approve flexible work requests. However, the employer must provide a written reason for refusal. Acceptable grounds include: business operational requirements, team coordination needs, client-facing requirements, and performance concerns. This provision does not create a right to remote work: it creates a right to apply and receive a response.

What Anti-Discrimination Provisions Were Added?

The amendment prohibits employment discrimination based on gender, religion, race, and disability. This applies to recruitment, employment terms, promotions, and termination. Previously, Malaysia had no comprehensive employment anti-discrimination legislation. The Director General of Labour can now investigate complaints and order remedies.

The forced labor prohibition makes it an offense to coerce, threaten, or use deceptive practices to force a person to work. Penalties include fines up to RM 100,000 and/or imprisonment up to 2 years. This addresses Malaysia's Tier 2 Watch List status on the US Trafficking in Persons report and strengthens compliance with international labor standards.

Does the Employment Act now apply to all employees in Malaysia?

Yes. Since January 1, 2023, the Employment Act covers all employees in Peninsular Malaysia and the Federal Territory of Labuan regardless of salary. However, Part XII (rest days, hours of work, holidays, overtime) applies only to employees earning RM 4,000/month or below. Employees above RM 4,000 are covered for other provisions (contracts, termination, maternity, etc.).

Do employers need to update existing employment contracts?

Yes. Employers should update all employment contracts to reflect the new provisions: 45-hour work week, 98-day maternity leave, 7-day paternity leave, and flexible work arrangement rights. Contracts that reference the old 48-hour work week or 60-day maternity leave should be amended. Aniday's EOR Malaysia (Aniday EOR Malaysia) issues fully updated contracts.

Can employers still require 48-hour work weeks?

No. The maximum is now 45 hours per week. Employers requiring more than 45 hours must pay overtime. Contractual terms specifying 48 hours are void to the extent they exceed the statutory maximum. Employers should have adjusted schedules by January 1, 2023. Non-compliance triggers labor inspection and penalties.

Is remote work mandatory under the new amendments?

No. The amendment gives employees the right to apply for flexible work arrangements, not the right to work remotely. The employer can refuse the request with written justification. The provision ensures employees can formally request flexibility and receive a response. The employer retains discretion on whether to approve based on business needs.

What penalties apply for non-compliance with the amended Act?

General penalties under the Employment Act: fines up to RM 50,000 per offense. Forced labor violations: fines up to RM 100,000 and/or imprisonment up to 2 years. Discrimination complaints can result in compliance orders from the Director General. Repeat offenders face increased penalties. The Labour Department conducts routine and complaint-based inspections.

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