Malaysia Minimum Wages Increase to RM1,700 from Feb 2025

From February 1, 2025, Malaysia will raise the national minimum wage from RM1,500 to RM1,700 a month. This new minimum wage will apply to all workers without discrimination based on nationality, race, or gender to those expatriate workers working in the private sector but excluding domestic workers and workers under apprenticeship contracts.

This change was declared by the Prime Minister Datuk Seri Anwar Ibrahim while presenting the Budget 2025 to meet the cost of living and economic requirements of workers across the country.

Who Does the Minimum Wage Apply To?

The new minimum wage of RM1,700 applies to all sectors and workers in Malaysia, including:

• Full-time and part-time employees in the private sector
• Non-citizen workers, except for domestic workers
• Employees working under regular employment contracts, not those in apprenticeship roles

Six-Month Grace Period for Small Businesses

For businesses with fewer than five employees, the government has granted a six-month deferment. While the new wage will take effect for most employers in February 2025, smaller businesses will have until August 1, 2025, to comply with the RM1,700 minimum wage. This grace period is designed to give small employers more time to adjust to the increase.

Penalties for Non-Compliance

Employers who fail to comply with the minimum wage order may face serious consequences. Penalties range from RM1,000 to RM20,000, or imprisonment for up to five years. It is crucial for employers to adhere to the new wage laws to avoid these penalties.

Key Points for Employers to Consider

As an employer, there are a few important points to keep in mind regarding this minimum wage increase:

1. Compliance Deadline: Ensure that your payroll systems are updated by February 2025, unless your business has fewer than five employees, in which case you have until August 2025.
2. Apprentices and Domestic Workers: If you employ domestic workers or apprentices, note that they are not covered by this minimum wage increase.
3. Non-Citizen Workers: The RM1,700 minimum wage applies to non-citizen workers as well, except for those in domestic roles.
4. Penalties for Non-Compliance: As mentioned, failure to comply with the new wage laws could result in fines ranging from RM1,000 to RM20,000 or even imprisonment for up to five years.

How Often Does the Minimum Wage in Malaysia Increase?

The minimum wage in Malaysia is reviewed by the government every two years. This means there's a potential for an increase (or adjustment) at least biennially.

The review process considers various factors, including:

• Cost of living: Rising inflation and living expenses can prompt the government to raise the minimum wage to ensure workers can afford basic necessities.
• Economic conditions: Overall economic growth and business sustainability are also factored in. The government aims to find a balance that protects workers while not hindering business development.
• National Wages Consultative Council (NWCC): This council, established by law, plays a crucial role in advising the government on minimum wage revisions. They gather data and hold consultations with various stakeholders like employers and worker unions.

Preparing Your Business for the Change

With this minimum wage increase, employers may need to reassess their budgets and operational costs. Planning ahead, particularly for small businesses, is key to avoiding financial strain. Review your salary structures and ensure all staff members are compensated according to the new law when the time comes.

If you are a small employer benefiting from the grace period, use the additional time to make the necessary adjustments so you are fully compliant by August 2025.

The 2025 minimum wage increase reflects the government’s efforts to enhance workers’ well-being and ensure fair compensation across all sectors. Employers must be ready to meet this new requirement, ensuring that their staff is paid at least RM1,700 per month starting from February 2025 (or August 2025 for smaller businesses). By preparing early and complying with the law, businesses can avoid penalties and ensure a smooth transition to the new wage standards.

Have some questions about minimum wages?

AJobThing HR forum allows you to connect with HR professionals and discuss your specific needs. Additionally, our comprehensive HR library offers a wealth of resources to address all your HR requirements.

Supercharge Your Hiring with AJobThing Instant Job Ads

In today's competitive job market, attracting top talent efficiently is crucial. By connecting with qualified candidates swiftly through AJobThing, you not only streamline your hiring process but also enhance your chances of finding the right fit for your team. Try AJobThing's instant job ad now! Get your open positions seen by qualified candidates quickly and easily.