Leave Policy in Malaysia

Malaysia's primary leave framework is established by the Employment Act 1955 (Act 382), most recently amended in 2022. The Act sets statutory minimums for annual leave, sick leave, maternity leave, paternity leave, and public holidays, and applies to all manual workers regardless of salary as well as non-manual workers earning up to $492 (RM2,000) per month. These statutory entitlements represent a legal floor, and employers may offer more generous terms through company policy, but cannot fall below the thresholds the Act prescribes.

For employers managing Malaysian headcount, compliance with Act 382 requires accurate tracking of leave balances that scale with employee tenure, adherence to extended maternity leave provisions introduced by the 2022 amendment, and observance of federal public holiday obligations. Gloroots supports this compliance burden through its Employer of Record service, which maintains employment records and monitors statutory leave entitlements on behalf of employers operating in Malaysia.

Leave Policy at a Glance

Overview and Legal Basis for Leave in Malaysia

Malaysia's primary leave statute is the Employment Act 1955 (Act 382). Section 60E governs annual leave entitlements. Section 60D covers public holidays and premium pay for work on those days. Public holidays are gazetted under the Holidays Act 1951 (Act 369).

East Malaysia operates under separate legislation. Sabah follows the Labour Ordinance (Cap. 67) and Sarawak follows the Public Holidays Ordinance (Cap. 8). Employers with staff in those states must apply the correct regional rules.

The Employment Act covers two employee groups: non-manual workers earning $492 (RM2,000) per month or less, and all manual workers regardless of salary. Non-manual employees earning above $492 (RM2,000) per month rely on their employment contracts for leave terms. The Employment Act 1955 (Amendment) 2022, effective 1 January 2023, introduced key changes to these thresholds and entitlements.

The Act covers the following leave categories:

• Annual leave

• Public holidays

• Sick leave and hospitalisation leave

• Maternity leave

• Paternity leave

Employers using a how does EOR work model can standardise compliance across Peninsular and East Malaysia without maintaining separate legal entities.

Annual Leave (Earned / Privilege Leave)

Annual leave entitlements in Malaysia are set by Section 60E of the Employment Act 1955. Entitlement scales with length of service: 8 days per year for the first two years, 12 days from year three to five, and 16 days after five years.

New hires and departing employees receive prorated leave. The formula is: (Completed Months / 12) x Annual Entitlement. Fractions of 0.5 or above round up; fractions below 0.5 are disregarded.

Unused leave must be taken within 12 months of accrual or it is forfeited under Section 60E. Many employers allow a carry-forward of 5 to 10 days into Q1 of the following year, with a 31 March deadline. This is a company policy practice, not a statutory right.

Key rules on leave usage and payment:

• Encashment of unused annual leave is paid at the ordinary rate of pay, subject to company policy.

• Resigned employees may offset their notice period with unused leave days or receive encashment of the remaining balance.

• Probationary employees are generally not entitled to paid annual leave unless they are covered by the Employment Act.

• Employers may reject leave requests for insufficient notice or scheduling conflicts. The Industrial Court and Ministry of Human Resources discourage forced leave.

Non-EA employees earning above $492 (RM2,000) per month as non-manual workers are not covered by Section 60E. Their leave terms are contractual. Market practice for this group is 12 to 20 days per year, increasing with seniority.

Public Holidays

Malaysia observes 11 federal public holidays per year under the Employment Act 1955, Section 60D. Five are fixed and non-replaceable: National Day (31 August), Malaysia Day (16 September), Labour Day (1 May), the Birthday of the Yang di-Pertuan Agong (first Monday of June), and the Birthday of the Ruler or Federal Territory Day. Employers select the remaining six from the gazetted federal or state list.

The 2026 federal public holiday schedule is gazetted under GN-33499 to GN-33501 (28 August 2025). Dates for Islamic calendar-based holidays, including Hari Raya Aidilfitri, Hari Raya Haji, Awal Muharram, Prophet Muhammad's Birthday, and Nuzul Al-Quran, are tentative pending official moon-sighting announcements.

When a public holiday falls on a rest day, the next working day becomes the replacement holiday under Section 60D. A public holiday that falls during an employee's annual leave is not deducted from the leave balance.

Employees required to work on a public holiday must receive a minimum of three times their ordinary hourly rate. Overtime hours worked on a public holiday are also paid at three times the ordinary rate. State-specific holiday variations apply in certain states; see the State or Regional Variations section for details. This table requires annual review once the official gazette is published. For a comparable Asia-Pacific reference, see the leave policy in Hong Kong.

Sick Leave

Malaysia's Employment Act 1955, as amended in 2022 and effective 1 January 2023, separates ordinary sick leave from hospitalization leave. These are distinct entitlements and the days do not overlap.

Ordinary sick leave entitlement by length of service:

• Less than 2 years of service: 14 days per year

• 2 to 5 years of service: 18 days per year

• More than 5 years of service: 22 days per year

Hospitalization leave is 60 days per year for all employees, granted in addition to ordinary sick leave. Combined annual entitlements are therefore: less than 2 years, 74 days; 2 to 5 years, 78 days; and more than 5 years, 82 days.

Hospitalization leave requires a medical certificate from a registered medical practitioner confirming that the employee is hospitalized or requires outpatient treatment necessitating hospitalization. Ordinary sick leave requires a standard medical certificate. Unused sick leave days do not carry forward; any balance lapses at year end.

Casual Leave

Casual leave is not mandated under Malaysia's Employment Act 1955. It is a discretionary benefit that many employers offer as a matter of workplace practice.

Most employers grant one to three days per year for urgent personal matters that cannot be planned in advance. Unlike annual leave, casual leave is not scheduled ahead of time and generally does not carry forward to the next year.

Approval rests entirely with the employer. Some organisations absorb casual leave within the annual leave balance rather than tracking it separately. This differs from annual leave, which covers planned absences, and sick leave, which requires a medical certificate.

Maternity Leave

Under the Employment Act 1955, as amended effective 1 January 2023, eligible employees are entitled to 98 consecutive days of fully paid maternity leave. This raised the previous entitlement from 60 days and aligns Malaysia with the ILO Maternity Protection Convention 2000 (No. 183).

Maternity allowance is paid at the employee's full ordinary rate of pay for all 98 days. The entitlement applies only to a female employee's first five surviving children.

To qualify, an employee must have been employed by the same employer for at least 90 days in the nine months before confinement. The Employment Act defines confinement to include delivery after at least 22 weeks of gestation, whether the child is born alive or dead. A miscarriage after 22 weeks therefore attracts the full 98-day leave and allowance.

Nursing break entitlements are not specified in the Employment Act and depend on individual company policy. For a regional comparison of statutory maternity provisions, see the leave policy in Philippines.

Paternity Leave

Married male employees in Malaysia's private sector are entitled to 7 consecutive days of fully paid paternity leave per birth under the Employment Act 1955, as amended effective 1 January 2023.

This entitlement applies to the first 5 births only. Twins count as one birth. Rest days and public holidays falling within the 7-day period are included in the count, not added on top.

Leave begins on the date of the wife's confinement. Employers must be notified at least 30 days before the expected delivery date. The employee must have completed 12 months of continuous service to qualify.

Public sector employees are governed by separate provisions under Public Service Department circulars. For employees not covered by the Employment Act, paternity leave is contractual. Market practice in those cases typically mirrors the statutory 7-day entitlement.

Adoption and Surrogacy Leave

The Employment Act 1955 does not mandate adoption leave. Entitlements are set entirely by employer policy.

Common practice in the private sector provides a minimum of 60 days of adoption leave. The first 30 days are typically paid at full salary. The remaining days are offered at reduced pay or unpaid, depending on the employer's policy.

Eligibility conditions typically include a minimum period of continuous employment and documented proof of the adoption process, such as a court order or adoption certificate. Most policies also set an age limit for the adopted child, defined per company policy.

Surrogacy leave has no basis in the Employment Act 1955 and is entirely at employer discretion. Female employees covered by the Employment Act who adopt should also refer to the maternity leave provisions, which may apply in relevant circumstances.

Bereavement Leave

Bereavement leave is not mandated under Malaysia's Employment Act 1955. Employers set their own policies at their discretion.

Common practice is to grant 2 to 5 days of paid leave for the death of an immediate family member, including a spouse, child, parent, or sibling. Some employers extend this to grandparents or other close relatives.

Employers may require a death certificate or funeral notice as supporting documentation. The entitlement, duration, and covered relationships should be stated clearly in the employment contract or HR policy.

Other Leave Types

Several additional leave types apply in Malaysia, some statutory and others based on common employer practice.

• Childcare leave: Employees with children aged 6 or younger are entitled to a minimum of 6 days per year under the Employment Act 1955 (2022 Amendment). This is a statutory entitlement.

• Marriage leave: Not required under the Employment Act 1955. Common practice is 1 to 3 days of paid leave, with a marriage certificate typically required. Some employers extend this to weddings of close family members.

• Hajj leave: Not mandated by law. Many employers grant 30 to 40 days of unpaid or partially paid leave for Muslim employees performing the pilgrimage to Mecca. This practice is widely observed given Malaysia's Muslim-majority population.

• Replacement leave: Granted when employees work on rest days or public holidays, as an alternative to premium pay. Not required under the Employment Act 1955 but common across employers.

Flexible working arrangements became a formal right under Part XIIC of the Employment Act 1955 (Amendment) 2022, effective 1 January 2023. Employees may apply in writing to change their working hours, working days, or place of work. Employers must respond within 60 days with written approval or a rejection that states reasons.

State or Regional Variations in Leave Entitlements

Malaysia's 13 states and 3 federal territories each observe additional state-specific public holidays, including ruler birthdays, state foundation days, and religious observances. This brings the total number of public holidays to between 14 and 16 per year, depending on the state. New Year's Day is not observed in Johor, Kedah, Kelantan, Perlis, and Terengganu. East Malaysia operates under separate legislation. Managing compliance across these variations is a core function of Gloroots EOR services.

Carry-Forward and Leave Encashment Rules

Under Section 60E of the Employment Act 1955, unused annual leave must be taken within 12 months of accrual. Leave not used within that window is forfeited. For annual leave entitlements, refer to the Annual Leave section above.

In practice, many employers permit a carry-forward of 5 to 10 days, with a deadline of 31 March in the following year. This is a company policy decision, not a statutory right. Employees should confirm the carry-forward terms in their employment contract.

Unused annual leave can be converted to cash at the employee's ordinary rate of pay. Encashment is subject to company policy and is most commonly applied when an employee resigns with a remaining leave balance.

Resigned employees have a second option: offsetting unused leave days against the notice period. For example, a 30-day notice obligation reduced by 10 remaining leave days results in a 20-day effective notice period. The employer must agree to this arrangement.

Sick leave and public holidays do not carry forward and cannot be encashed under any circumstances.

Best Practices for Managing Leave Compliantly in Malaysia

Compliant leave management in Malaysia requires clear record-keeping and written communication from day one of employment.

• Maintain separate leave registers for EA-covered and non-EA employees. Statutory minimums differ between categories, and mixing records creates audit risk.

• Document all leave entitlements in the employment contract and employee handbook. Distinguish statutory leave from any discretionary leave the company offers.

• Record every leave request and approval with timestamps. Retain supporting certificates (medical, marriage, bereavement) to satisfy Ministry of Human Resources audit requirements.

• Set annual leave at 15 to 20 days and offer discretionary marriage and bereavement leave above the statutory floor. Market-competitive entitlements reduce attrition and align with Industrial Court expectations. Using employer of record software automates balance tracking across both employee categories.

Managing Leave Policy in Malaysia with Gloroots

Malaysia's leave framework creates real administrative complexity for international employers. The dual EA and non-EA structure, the 2022 Employment Act amendments, and state-specific public holiday variations each require separate tracking and different compliance rules.

Gloroots manages statutory leave balance tracking by employee category, leave request workflows, and payroll integration for maternity and paternity allowances and public holiday premium pay. Compliance reporting is aligned with Employment Act 1955 requirements, giving your team accurate records without manual reconciliation.

Gloroots EOR services cover the full employment lifecycle in Malaysia, from contract issuance through leave administration and payroll filings. See pricing for country-specific cost details.

Frequently Asked Questions About Leave Policy in Malaysia

These questions cover the rules most commonly raised by employers and HR teams managing employees in Malaysia. For a regional comparison, see the leave policy in India.

Can unused annual leave be carried forward in Malaysia?

Under Section 60E of the Employment Act 1955, unused annual leave must be taken within 12 months of accrual. Leave not used within that window is forfeited by statute.

Many employers allow carry-forward of 5 to 10 days into Q1 of the following year, with a common cut-off of 31 March. This is a company policy benefit, not a statutory right.

Are public holidays counted against an employee's annual leave balance?

No. Under the Employment Act 1955, public holidays are entirely separate from annual leave. If a public holiday falls within a period of booked annual leave, the employee retains that day's annual leave credit and is not charged for it.

What is the pay rate for working on a public holiday in Malaysia?

Under Employment Act 1955 Section 60D, employees required to work on a public holiday must be paid at least three times their ordinary hourly rate. Overtime hours on a public holiday are also compensated at three times the ordinary rate, which is higher than the two-times rate that applies to rest day work.

Are part-time employees entitled to annual leave in Malaysia?

Yes. Part-time employees covered under the Employment Act 1955 receive prorated annual leave. The formula is: (Completed Months / 12) x Full Entitlement. Fractions of 0.5 or above round up; fractions below 0.5 are disregarded. Hours worked relative to the standard 40-hour week set the pro-ration base.

How many days of maternity leave is an employee entitled to in Malaysia?

Under the Employment Act 1955 (Amendment) 2022, effective 1 January 2023, female employees in the private sector are entitled to 98 consecutive days of fully paid maternity leave. This increased from the previous 60-day entitlement. The benefit applies to the first five surviving children and covers deliveries after 22 weeks of gestation, including stillbirths.

Is paternity leave statutory in Malaysia, and what are the limits?

Yes. The Employment Act 1955 (Amendment) 2022 introduced 7 consecutive days of fully paid paternity leave for married male employees with at least 12 months of continuous service.

The entitlement is capped at 5 births in total. Rest days and public holidays are counted within the 7 consecutive days.

Can an employer force employees to take annual leave in Malaysia?

Generally, no. Industrial Court and Ministry of Human Resources guidelines discourage employers from compelling employees to take annual leave for company convenience.

Employers may reject leave requests on valid grounds: insufficient notice, scheduling conflicts, or urgent operational demands. Any rejection must be documented and applied consistently across the workforce.