Managing employee leave might not be the most exciting part of running a business, but it’s something you definitely can’t ignore. 

In Malaysia, the Employment Act (EA) clearly defines what types of leave employees are entitled to, and as an employer, it’s important to follow the rules.

Not following these rules can lead to all sorts of issues, like fines or frustrated employees. So, knowing the basics of leave entitlements is key to keeping things smooth and hassle-free in your workplace. 

In this guide, we’ll break down the various leave entitlements under the EA, from annual to sick leave, and even touch on newer entitlements like paternity leave.

Whether you’re dealing with full-time, part-time, or contract workers, this will help you ensure you’re offering the right benefits while staying on the right side of the law. Let’s dive in!

 

Leave Entitlements under the Employment Act (EA) in Malaysia

In Malaysia, leave entitlements are regulated by the Employment Act (EA_ 1995, which was recently updated through the Employment (Amendment) Act 2022. 

This means that as an employer, you’re legally required to provide certain minimum types of leave to your employees, and these rules are designed to protect workers while promoting a fair and balanced work environment. 

Under this law, the government has outlined clear guidelines for different kinds of leave, like annual leave, sick leave, maternity leave, and more. The EA makes it simple by setting minimum standards, so you know exactly what you need to offer. 

Why do you need to comply with it?

Here’s why you need to pay attention to those rules:

• It’s the law: Complying with the EA is not optional. It’s a legal obligation. Failure to do so could result in fines, legal disputes, or even damage to your company’s reputation. 

• Workplace harmony: Following these guidelines helps keep employees satisfied, which in turn boosts morale and productivity. 

• Updated requirements: With the 2022 amendments, there have been some changes, such as increased maternity leave entitlements and new rules for paternity leave. Staying up to date ensures you’re offering the right benefits. 

 

Types of Leave Entitlements in Malaysia

Different types of leave are designed to give employees time off for rest, recovery, or personal needs while still ensuring businesses operate smoothly. 

Whether you're a small business or a large company, it’s important to understand these rules to stay compliant and avoid potential problems. Let’s break down the key types of leave entitlements you should be aware of as an employer:

1. Annual Leave

Annual leave entitlements in Malaysia vary based on how long an employee has been with your company. Under Section 60E of the EA, employees are entitled to annual leave as outlined in the table below. 

 

Duration of employment	Annual leave entitlement
Less than 2 years	8 days for every year of service
2-5 years	12 days for every year of service
More than 5 years	16 days for every year of service

 

Employees are expected to use their annual leave within 12 months after completing each full year of service. For example, if an employee starts working on January 1, 2024, they will complete their first 12-month service period on December 31, 2024. They should use their annual leave earned in that period by December 31,2025. 

Treatment of unused leave entitlements

However, it’s up to the employer’s discretion to decide how to handle unused leave. For instance:

• Carrying forward leave: the employer may allow the employee to carry over unused leave into the next year. So, if the employee has 5 days of unused leave at the end of 2025, they might be able to use those days in 2026. 
• Paying out leave: alternatively, the employer may choose to pay the employee for any remaining leave. If an employee has 5 days of unused leave at the end of 2025, the employer could compensate them with the equivalent of 5 days’ salary instead of letting it carry forward. 

Pro-rated annual leave

If an employee leaves or their contract ends before they’ve worked a full year, they still earn a part of their annual leave based on how many months they’ve worked. This is called pro-rated annual leave.

Here’s how it works:

• If an employee has worked less than half a month, that time doesn’t count towards their leave. 
• If an employee has worked more than half a month, you round up that time to a full day when calculating their leave. 

Example:

Let’s say the employee is entitled to 8 days of annual leave per year, but they leave after working 6 months. They won’t get the full 8 days because they didn’t complete a full year, but they are still entitled to some leave.

To calculate this:

(6 months / 12 months) x 8 days = 4 days of annual leave

This means the employee gets 4 days of annual leave for the 6 months they worked. 

 

2. Sick Leave

Employees are entitled to sick leave when they’re unfit for work due to illness or hospitalization. Under Section 60F, the number of days an employee can take for sick leave depends on their years of service, as outlined in the table below:

 

Duration of employment	Sick leave entitlement
Less than 2 years	14 days per calendar year
2-5 years	18 days per calendar year
More than 5 years	22 days per calendar year

 

Meanwhile, hospitalization leave entitles employees to 60 days of leave if they need to be hospitalized. This benefit applies to all employees, regardless of how long they have been working with the company, meaning even new employees are eligible for this leave if hospitalization is necessary. 

Medical Certification Needs for Sick Leave

Sick leave in Malaysia requires a medical certificate if an employee is absent for more than two consecutive days. This certificate, issued by a registered medical practitioner, verifies the employee’s illness and justifies their absence. 

However, if the employee is sick for two days or less, they do not need to provide a medical certificate and can simply notify their employer. 

This policy balances the need for verification with the flexibility to accommodate short-term illnesses, ensuring that sick leave is used appropriately while supporting employees’ health needs. 

 

3. Public Holidays

Under Section D of the EA, employees in Malaysia are entitled to paid leave on 11 gazetted public holidays each year, receiving their ordinary rate of pay for those days.

From 11 gazetted public holidays, 5 of which must be:

• National Day,
• Birthday of Yang di-Pertuan Agong,
• Birthday of the Ruler of the Yang di-Pertua Negeri or the Federal Territory Day,
• The Workers’ Day, and
• Malaysia Day. 

In addition to those mandatory holidays, employers must display a notice before the beginning of each calendar year, listing the 6 additional public holidays that employees are entitled to. These 6 days can be chosen from other federal or state-level public holidays, which will be detailed in another paragraph.

Furthermore, additional public holidays can be declared throughout the year under Section 8 of the Holidays Act 1951. 

Substitution and extra pay

If a public holiday falls on a rest day or coincides with another public holiday, the next available workday will be designated as a substitute public holiday. 

For employees on a monthly salary, their holiday pay is considered completed as long as they receive their regular monthly wages. This means there shouldn’t be any deductions from their pay for the public holiday. 

If an employee earns up to RM 4,000 or is classified as a manual worker and is required to work on a public holiday, they are entitled to extra pay. Specifically, they will receive two days’ wages at their normal rate, in addition to the regular pay for that public holiday. 

These provisions ensure that employees are fairly compensated for their work on significant public holidays. This balance helps protect employees’ rights while also meeting the needs of the business. 

Public holidays at the federal and state levels

In Malaysia, public holidays can differ between federal and state levels, making it essential for employers and employees to stay updated on any changes.

Each state may declare its own holidays based on local customs or significant events, in addition to the national public holidays set by the federal government. For instance, certain states may celebrate their rulers’ birthday or local festivals that are not recognized nationwide. 

This variation means employees in different states may have different holiday entitlements, so employers must monitor these changes to ensure compliance. 

Additionally, the government may announce extra holidays for special occasions, and it’s crucial for employers to regularly check official announcements to keep their holiday schedules accurate.

4. Maternity Leave

Under Section 37 of the EA, every female employee is entitled to 98 consecutive days of maternity leave for each confinement. “Confinement” is defined as childbirth that occurs after at least 22 weeks of pregnancy, resulting in a child or children, whether alive or deceased. 

The maternity leave should start no earlier than 30 days before the expected delivery date and must commence no later than the day following the confinement. 

Eligibility criteria for maternity leave and allowance

To qualify for maternity leave, employees must have worked for their employer for a minimum of 90 days prior to the expected delivery. This requirement ensures they have established a sufficient working relationship with their employer before taking maternity leave.

Additionally, to be eligible for maternity allowance during their maternity leave, a female employee must meet the following criteria:

• Have been employed by the employer for at least 90 days in the 9 months preceding confinement.
• Have been employed by the employer at any time during the 4 months immediately before confinement. 
• Have fewer than 5 surviving children at the time of her confinement. 

Employee protection during maternity leave

• Paid leave: Employees are entitled to full pay during their maternity leave, provided they meet the eligibility criteria (have worked a minimum of 90 days prior to the expected date of delivery).

• Protection from dismissal: Employees can’t be dismissed or subjected to any adverse treatment during their maternity leave or while pregnant. This protection ensures that women can take their leaves without fear of losing their jobs. 

The termination is only possible under specific conditions, such as wilful breach of a contractual term by the employee, misconduct by the employee, or closure of the employer’s business. 

Employer obligations during maternity leave

• Notification: Employers must inform employees about their maternity leave entitlements and procedures for applying for leave.
• Payment: Employers are required to pay employees their full wages during the maternity leave period, adhering to the 98-day entitlement.
• Job security: Employers must ensure that the employee’s position is secured during her maternity leave and that she can return to her job or a similar position after her leave ends. 
• Reinstatement: Upon returning from maternity leave, employees should be reinstated to their previous job or a comparable position, with the same pay and benefits.

5. Paternity Leave

Paternity leave entitlements have been defined under Section 60FA of the EA. According to the latest regulations, married male employees are entitled to 7 consecutive days of paid paternity leave for each childbirth. 

This provision reflects a growing recognition of the importance of father involvement in the early stages of a child’s life and aims to support families during significant transitions. 

Eligibility for paternity leave

To be eligible, certain conditions must be met:

• The male employee must be a married male.
• He must have been employed by the employer for at least 12 months immediately before the start of paternity leave. 
• He must notify his employer about his spouse’s pregnancy at least 30 days before the expected date of confinement. 
• If the 30-day notice is not feasible, he should inform the employer as soon as possible after the birth. 
• The entitlement is limited to a maximum of 5 confinements, regardless of the number of spouses. It ensures that the leave benefits are clearly defined and manageable for employers. 

Employers' obligations for paternity leave

• Clear communication: Employers should clearly communicate their paternity leave policies to all employees.
• Application process: Provide information on how employees can formally apply for paternity leave. 
• Documentation: Ensure that necessary documentation is in place for leave requests.
• Encouragement to submit requests: Employees should be encouraged to submit their leave requests, specifying their anticipated dates of absence. 
• Workload planning: Plan for workload adjustments during the employee’s absence to maintain productivity. 
• Open dialogue: Foster an open dialogue about paternity leave to create a supportive work environment that values family commitments and operational continuity. 

 

Who is Entitled to Leave?

Under the EA in Malaysia, different categories of employees are entitled to leave benefits, including full-time, part-time and contract workers. It reflects a commitment to fair treatment in the workplace. Here’s a breakdown of eligibility criteria:

Full-time employees

These workers enjoy the most comprehensive leave entitlements under the EA. These benefits include:

• Annual leave
• Sick leave
• Public holidays
• Maternity or paternity leave

 

Part-time employees

Part-time employees are also entitled to leave benefits, but these are typically prorated based on their working hours. For example:

• Annual leave
• Sick leave
• Public holidays

 

Contract workers

Workers on fixed-term contracts have the same leave rights as full-time employees, provided their contracts are covered by the EA. This includes:

• Annual leave
• Sick leave
• Public holidays and other leaves

 

Protection for foreign workers

The EA provides specific protections for foreign workers to ensure they are treated fairly and receive the same leave entitlements as their Malaysian counterparts. This includes the right to annual leave, sick leave and other relevant benefits.

Employers must be aware of these regulations to comply with labor laws and foster an inclusive work environment. 

 

How is Leave Calculated?

Figuring out how leave works can feel a bit tricky, but it’s super important for keeping your workplace running smoothly. Here’s the breakdown of the different types of leave, how they’ve calculated based on how long someone has been with you and what happens when someone takes unpaid leave. 

1. Annual Leave Calculation

When calculating annual leave for employees, consider their length of service:

New hires

For employees who have just joined your company, their annual leave should be calculated on a pro-rata basis. This means, if they haven’t completed a full year, their leave will be proportionate to the number of months they’ve worked.

Annual leave entitlement = (Months Worked/ 12 Months) x Total Annual Leave

For instance, if a new employee is entitled to 12 days of annual leave for a full year, and they work for only 6 months, the calculation would be: 

(6 Months/ 12 Months) x 12 days = 6 days.

Employees with longer service

As employees gain more years of service, their annual leave entitlement typically increases. For instance, employees with 2-5 years of service may get 16 days of annual leave, while those over 5 years might receive up to 18 days. 

 

2. Sick Leave Calculation

Sick leave is calculated based on how long an employee has been with the company, and we’ve already touched on this in the previous topic. 

When an employee takes sick leave, those days are deducted from their total entitlement for the year. It’s important to keep track of this to ensure employees are aware of their remaining sick leave balance.

This way, you can maintain a transparent and supportive work environment while also managing leave effectively.

 

3. Public Holidays

Public holidays are standardized and don’t vary based on employee tenure. Your employees should receive paid time off on public holidays recognized by the government.

If a public holiday falls on a day off, you should designate the next working day as a holiday. 

 

4. Unpaid leave

Unpaid leave can have an impact on an employee’s annual leave accrual. This is why, as an employer, you’ll need to communicate clearly with employees about how unpaid leave affects their leave balances. 

When an employee takes unpaid leave, it typically means that they will not accumulate annual leave during that period.

For example, if an employee takes a month of unpaid leave, this could reduce their annual leave entitlement for that year. 

 

Other Commonly-granted Leaves

In addition to the standard leave types like annual, sick, and maternity leave, there are other forms of leave that can help maintain employee satisfaction and engagement. Here’s a closer look some commonly-granted leaves that can enhance your workplace policies:

1. Unpaid leave

Unpaid leave allows employees to take time off without pay, typically after they have exhausted their annual and sick leave entitlements. 

As an employer, it’s crucial to establish clear guidelines for how and when employees can request unpaid leave.

This leave can be taken for various reasons, such as personal matters, education, or travel. Ensuring a transparent process for requesting unpaid leave helps you manage staffing effectively while also showing support for employee’s needs. 

2. Emergency leave

Emergency leave is critical for situations that require immediate attention, such as medical emergencies or family crises.​

While the specific terms of this leave can vary, having a clear policy in place is vital. You should outline whether the leave is paid or unpaid and establish a protocol for employees to notify you promptly about their need for emergency leave. This ensures you can make the necessary arrangements to maintain productivity during their absence. 

3. Compassionate leave

Compassionate leave is an important benefit that provides employees with time off during periods of personal loss, such as the death of a family member or close friend.

As an employer, offering a specified number of paid or unpaid days for compassionate leave demonstrates empathy and support for your employees. 

Clear communication about this policy will help employees understand their entitlements during difficult times, fostering a more compassionate workplace culture.

4. Hajj leave

For Muslim employees, Hajj leave is a unique consideration that allows them to perform the pilgrimage to Mecca. Typically, this leave is unpaid and may be granted for around 30 days. 

As an employer, it’s essential to provide guidelines for how employees can apply for Hajj leave, including notice period and any documentation required. Being accommodating in this regard can enhance employee loyalty and commitment to the organization.

5. Replacement leave

Replacement leave is important for employees who work during their scheduled leave or on public holidays. Offering replacement leave not only compensates employees for their time but also ensures they have the opportunity to take a break later. 

As an employer, you should establish clear policies regarding how replacement leave is accrued and when employees can utilize it. This fosters a positive work environment where employees feel valued and appreciated for their contributions. 

 

Frequently Asked Questions (FAQs) 

1. How do employers handle overlapping leave requests from multiple employees?

Establish a fair leave policy that prioritizes requests based on first-come, first-served or specific criteria. Open communication and clear guidelines can help manage overlapping requests effectively. 

2. Can employers deny a leave request?

Yes, you can deny a leave request if it conflicts with business operations, but you should provide a valid reason. It’s essential to communicate clearly with the employee about the decision and explore alternative dates if possible. 

3. How to communicate leave policies to employees?

Make sure to provide a written leave policy in the employee handbook or during onboarding. Regularly discuss the policies during team meetings and ensure employees understand their entitlements and procedures for requesting leave. 

4. What records should employers maintain for employee leaves?

Maintain accurate records of all leave taken by employees, including dates and types of leave. This helps ensure compliance with the EA and provides transparency in case of disputes. 

 

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