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Malay female working on laptop As an employee working in Malaysia, you are entitled to receive minimum basic wages of RM900 in Peninsular Malaysia and RM800 in Sabah, Sarawak and Labuan. With the implementation of the Minimum Wages Order 2012 your employer is required by law to ensure that all employees meet the minimum wages rate. While some items can be counted towards the minimum wages calculation, you should be aware of your rights in your negotiations with your employer. For more information as to what can and cannot be factored into your minimum wages, please follow this link.

Scenarios

Ali works for a Sabah SME in the manufacturing industry. He was hired on 5th January 2012 at a basic wage of RM600 with an additional RM200 in the form of allowances. Prior to the 1st January 2013 implementation of the Minimum Wages Order 2012, his employer held a meeting with him to restructure his wages by absorbing all his allowances (RM200) to form a new basic wages of RM800, which is the minimum wages threshold for Sabah.
 
Ah Seng works for a Kuala Lumpur SME in the service industry. He was hired on a daily basis, earning RM20 per day for six days a week. With this wage and work schedule, Ah Seng makes RM20 x 26 = RM520 per month. This is RM380 less than the minimum wages set for Peninsular Malaysia, and his employer will have to raise his daily rate by RM14.62. His new daily wage is RM34.62 or RM900.12 per month.
 
Ravi, a Malaysian was just hired by a Selangor manufacturing company, and has been put on probation for six months. Based on the Minimum Wages Order 2012, his wages for the first six months cannot be less than 70% of the minimum wages rate. In other words, he must be paid a minimum of RM630 for the first six months. Once his probation period of six months is over, his wages will rise to RM900 per month.
After the end of the probation period, his employer decides that Ravi needs more training, and his probation period is extended by another three months. However, reduced minimum wages apply only to the first six months of probation, and the employer must now raise Ravi’s basic wages to RM900 even though he is still on probation.
 
Salmah has been working for a Kuching manufacturer for the past three years. She was earning RM700 in basic wages as well as RM50 for her monthly housing allowance, bringing her total monthly income to RM750. Since the enforcement of the Minimum Wages Order 2012, her employer has restructured her wages adding an additional RM50 to bring the basic wages to RM800. The employer restructured her housing allowance to make it a part of her basic wages, and topped up the difference.
The employer initially wanted to include the company’s EPF contributions as part of the minimum wages calculation but Salmah correctly told him that he was not allowed to do that. In fact, employers are not allowed to include the following items as part of the minimum wages calculation:
  • Housing accommodation including supply of provisions
  • Contributions by the employer to any superannuation scheme
  • Travelling allowance or concession
  • Sum payable to the employee to defray special expenses, e.g., claims
  • Gratuity payable on discharge or retirement
  • Annual bonus or any part thereof
 
For more information, please see the section Information on Restructuring Employee Wages.

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Minimum Wages Policy has raised the basic wages of all employees to a minimum of RM900 in Peninsular Malaysia and RM800 in Sabah, Sarawak and Labuan respectively. This means that as an employee in Malaysia, you have the right to expect minimum basic wages. The Minimum Wages Order 2012 commenced on 1 January 2013 for employers with more than five employees, and on 1 July 2013 for employers with five or fewer employees. Meanwhile, SMEs will pay their foreign employees minimum wages beginning 1 January 2014. Deferments have been given to members of specific organisations and individual companies as stipulated by the Minimum Wages (Amendment) Order 2012, Minimum Wages (Amendment) Order 2013, Minimum Wages (Amendment) (No.2) Order 2013 and Minimum Wages (Amendment) (No.3) Order 2013. The Minimum Wages Order 2012 does not apply to apprentices nor to domestic servants (e.g., maids, gardeners and personal drivers) as defined under Section 2 of the Employment Act 1955 [Act 265], Section 2 of the Sabah Labour Ordinance [Cap. 67] and Section 2 of the Sarawak Labour Ordinance [Cap. 76].

Know your rights!

The implementation of minimum wages for all employees is changing significantly the wage structure in Malaysia, and employees need to be aware of their new rights. Examples of questions may include:
  • What kind of payments count towards minimum wages?
  • How can I negotiate my salary with my employer?
  • What if I’m on probation or if I am a part-time worker?
For answers to these questions and more, please consult our searchable FAQ. If you still can’t find answers to your questions, please click here to submit your question and you will receive an answer as soon as possible.

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Additional Information for Employees

[accordion first_one_open="false"] [pane title="Why was the Minimum Wages implemented and how does it benefit me?"]

The Minimum Wages Order 2012 was implemented to ensure that all employees in Malaysia earn more than the country’s Poverty Line Income (PLI), which in 2009 stood at RM800. In a study conducted in 2009 showed that more than 33.8 % of workers in the private sector earned less than the PLI.

The Minimum Wages Order was formulated to ensure that all employees benefit from the fruits of development as the country continues to transform itself into a high-income nation by 2020. The establishment of minimum wages will also create greater job opportunities for Malaysian employees.

[/pane] [pane title="True or False? My boss says…"]

  1. is there anybody exempted from paying minimum wages...

    True. This Minimum Wages Order 2012 shall not apply to domestic servants (eg. maid, gardener and personal driver) as defined under Section 2 of the Employment Act 1955 [Act 265], Section 2 of the Sabah Labour Ordinance [Cap. 67] and Section 2 of the Sarawak Labour Ordinance [Cap. 76]. The Order also does not apply to apprentices.

  2. that it’s okay for him to pay me less than minimum wages if I consent to it…

    False! Your employer is required by law to pay you minimum wages. Even if you agree to it, he is punishable as per the stipulations of the law if he pays you less.

  3. that the allowance I received previously can be restructured as part of my basic wages to meet the minimum wages threshold…

    True! Your employer can restructure wages to include allowances as part of employees’ minimum wages but only if the negotiations are done before the commencement of the Minimum Wages Order for your employer and with employees’ consent. However, not all payments are considered wages under the legislation. For more information on restructuring your wages, please follow this link.

  4. that I may be paid lesser than the minimum wages rate as I am a probationer and I am local employee…

    True! Because under the specific formula for calculating your wages it cannot be lower than 30% of the minimum wages level of RM900 in Peninsular Malaysia or RM800 in Sabah, Sarawak and Federal Territory of Labuan. In other words, it cannot be lower than RM630 for Peninsular Malaysia and it cannot be lower than RM560 for Sabah, Sarawak and Labuan. Furthermore, it only applies for the first six months of your probation period and cannot be extended even if your probationary period is extended. In other words, if you are on probation for a year, you will receive a reduced pay for the first six months only. For the rest of the year you will see your salary increase to the minimum wages level or higher.

  5. that he can now use the Minimum Wages Order 2012 to pay me less than what I agreed to…

    False! The Minimum Wages Order clearly states that your employer cannot use the Order as an excuse to pay you less than the wages agreed upon in the contract of service.

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