Before 1 Jan 2023, the maximum working hours per week for non-shift and shift employees is 48 hours. From 1 Jan 2023 onwards, maximum working hours per week will be reduced to 45 hours, for all employees under the scope of EA 1955, irrespective of whether they are non-shift employees or shift employees. Apart from that, the other existing provisions in the EA 1955 that governs working hours and shift work remain unchanged.
Reduced Maximum Working Hours For Non-Shift And Shift Employees
This amendment allowed the law to permit that, by agreement between employers and employees, where the number of hours of work on one or more days of the week is less than 8 hours (for example, some employees are required to work a half day on Saturday or some are not even required to work on Saturday), on the remaining days of the week, the restriction of 8 hours may be exceeded; nevertheless, no employee may be required to work for more than 9 hours in a single day or for more than 45 hours in a single week.
Aside from reducing the maximum working hours per week to 45 hours, the other existing provisions on working hours under section 60A(1) of EA 1955 remains status quo. Employers are reminded that, subject to certain provisions an employee shall not be required to work
- more than 5 consecutive hours without a period of leisure of at least 30 mins
- more than 8 hours in one day
- in excess of a spread over period of 10 hours in one day
- Maximum number of hours of work for non shift employees is 12 hours per day. The limit of 8 hours per day is for normal working hours and 12 hour limit will be inclusive of the overtime.
Overtime limit
The existing overtime limit is 104 hours per month in the aggregate. For the purposes of determining the overtime limit, work done on any rest day or public holiday or any day substituted for a public holiday is taken into account.
There are 4 scenarios shared by Malaysian Employers Federation, 3 of which are for non-shift employees, and 1 for shift employees. With the understanding that businesses may have different working hours arrangements, the scenarios below are examples relevant to an average businesses:
Scenario 1: Non-Shift Employees Working On An 8 Hours Per Day (Excluding Break), 5 Days Per Week
This is within the requirements of EA 1955, because the maximum 8 hours per day and correspondingly with total hours of work per week of 40 hours is within the limit of maximum working hours of 45 per week.
Overtime limit remains at the maximum 4 hours per day on the working days.
scenario 2a: Non-Shift Employees Working On 8 Hours Per Day (Excluding Break), 6 Days Per Week
While the 8-hour limit is adhered to for 5 days in the week, the Company can observe a further 5 hours on the 6th day, to ensure compliance to the maximum 45 working hours per week.
Overtime limit remains at the maximum 4 hours per day on 5 working days.
Scenario 2b: Non-Shift Employees Working On Less Than 8 Hours Per Day (Excluding Break), 6 Days Per Week
While the 8-hour limit is adhered to for 5 days in the week, the Company can observe a further 5 hours on the 6th day, to ensure compliance to the maximum 45 working hours per week.
Overtime limit remains at the maximum 4 hours per day on 5 working days.
Scenario 3: Non-Shift Employees Working On A 9 Hours Per Day (Excluding Break), 5 Days Per Week
By agreement under the employment contract, if the number of hours of work in one or more days is less than 8 hours, the limit of 8 hours may be extended to a maximum of 9 hours on the remaining days, subject always to the maximum of 45 hours per week.
Scenario 4: Shift Employees' Possible Shift Roster Adjustment
“Shift work” is defined as “…work which by reason of its nature requires to be carried on continuously or continually, as the case may be, by two or more shifts.”
Employees engaged in shift work may be required to work for more than eight (8) hours per day, subject to the requirement or more than 45 hours per week. It is provided that the average number of hours worked over three (3) weeks does not exceed 45 hours per week.
Working hours may need to be adjusted to ensure compliance with the new amendments. This may include extending the lunch break, or what is termed as “period of leisure” in the EA 1955 so that the normal hours of work is 7.5 hours on six (6) working days a week. Companies will be liable to pay overtime if their working hours exceed 45 hours per week.
- Total working hours over 3 weeks: 60 hours + 60 hours + 15 hours = 135 hours.
- Average working hours per week: 135 hours/ 3 weeks = 45 hours.
- Referring to the table above and as a further explanation of paragraph above, although a shift worker’s hours of work is 12 hours, no overtime is payable.
Calculation of Over Time
There is no amendment to section 60l on the formulae for calculation of overtime. The basis of overtime calculation is on the employee's ordinary rate of pay (ORP). ORP means wages as defined in section 2 EA 1955, which an employee is entitled to receive under the terms of his contract of service for the normal hours for one day, but does not include any payment made under an approved incentive payment scheme or any payment for overtime, or for work done on a rest day or any gazetted public holiday granted by the employer under the contract of service or any day substituted for the gazetted public holiday.
The ORP for an employee employed on a monthly rate of pay is calculated according to the following formulae
monthly rate of pay
26 days
The ORP for an employee employed on a weekly rate of pay is calculated according to the following formulae
weekly rate of pay
26 days
Calculation Examples for Monthly Rated Employee
Monthly rate of pay: 1500
Work hour: 8am to 5pm
Break: 2pm to 3pm
Normal hours of work per day: 8 hours
ORP = 1500 ÷ 26 = 57.69
HRP = ORP (57.69)÷ 8 = 7.21
Normal OT rate = 1.5 x HRP (7.21) = 10.81
Rest Day OT rate = 2.0 x HRP (7.21) = 14.42
PH OT rate = 3.0 x HRP (7.21) = 21.63
Example 1 – Work on Normal Day
The employee worked on Monday (Normal Day) from 8am until 7pm.
Normal OT hour = 2 hours
Normal OT Amount = 2 hours x 1.5 x HRP (7.21) = 21.63
Example 2 – Work on Rest Day for less than or equal to 4 hours (Half Day)
The employee worked on Sunday (Rest Day) from 8am until 12pm.
Rest Day Pay = 0.5 day
Rest Day Pay Amount = 0.5 x ORP (57.69)
= RM 28.84
Example 3 – Work on Rest Day for more than 4 hours, less than 8 hours
The employee worked on Sunday (Rest Day) from 8am until 2pm.
Rest Day Pay = 1 day
Rest Day Pay Amount = 1 x ORP (57.69)
= RM 57.69
Example 4 – Work on Rest Day for more than 8 hours
The employee worked on Sunday (Rest Day) from 8am until 7pm.
Rest Day Pay = 1 day
Rest Day OT hour = 2 hours
Rest Day Pay Amount = 1 x ORP (57.69)= RM 57.69
Rest Day OT Amount = 2 hours x 2.0 x HRP (7.21) = 28.84
TOTAL = 86.53
Example 5 – Work on Public Holiday for less than 8 hours
The employee worked on Public Holiday from 8am until 12pm.
PH Pay Amount = = 2 x ORP (57.69) = 115.38
Example 6 – Work on Public Holiday for more than 8 hours
The employee worked on Public Holiday from 8am until 7pm.
Public Holiday Pay = 1 day
Public Holiday OT hour = 2 hours
PH Pay Amount = 2 x ORP (57.69) = 115.38
PH OT Amount = 2 hours x 3.0 x HRP (7.21) = 43.26
TOTAL : 158.64
Summary of the OT calculation
Normal Day Overtime Payment:
- For any overtime work carried out in excess of the normal hours of work, on a normal working day the employee shall generally be paid at a rate not less than 1.5 times his Hourly Rate of Pay (HRP)
Rest Day Overtime Payment:
- If an employee on a monthly pay basis is required to work on their rest day, they are entitled to additional compensation.
- which does not exceed half his normal hours of work, wages equivalent to half the ordinary rate of pay for work done on that day, or
- which is more than half but which does not exceed his normal hours of work, one day’s wages at the ordinary rate of pay for work done on that day
- For any work carried out in excess of the normal hours of work on a rest day by an employee mentioned in paragraph (a) or (b), he shall be paid at a rate which is not less than two times his hourly rate of pay.
Holiday Overtime Payment:
- If an employee on a monthly pay basis is required to work on a paid holiday, they are also entitled to additional compensation:-
- two days’ wages at the ordinary rate of pay, regardless that the period of work done on that day is less than the normal hours of work
- For this, they should receive their holiday pay for the day and, in addition, receive two days' wages at the ordinary rate of pay for the work done on the holiday.
- This means they are paid twice their usual daily wage for hours worked on the holiday.
- For any overtime work carried out by an employee in excess of the normal hours of work on a paid public holiday, the employee shall be paid at a rate which is not less than three times his hourly rate of pay.
Is allowance included in OT calculation in Malaysia?
When we calculate ORP (Ordinary Rate of Pay), we refer to the definition of wages in Section 2 of EA 1955 that defines: –
“wages” means basic wages and all other payments in cash payable to an employee for work done in respect of his contract of service which includes payments such as Shift Allowance, Call Back Allowance, Attendance Allowance, and Acting Allowance are subject to Wages, and they must be considered in overtime calculation.
that does not include and need not be added to the wages are as below
(a) the value of any house accommodation or the supply of any food, fuel, light or water or medical attendance, or of any approved amenity or approved service;
(b) any contribution paid by the employer on his own account to any pension fund, provident fund, superannuation scheme, retrenchment, termination, lay-off or retirement scheme, thrift scheme or any other fund or scheme established for the benefit or welfare of the employee;
(c) any travelling allowance or the value of any traveling concession;
(d) any sum payable to the employee to defray special expenses entailed on him by the nature of his employment;
(e) any gratuity payable on discharge or retirement; or
(f) any annual bonus or any part of any annual bonus
We’d like to start by citing our source: The Employment Act 1955 PDF.
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