Employees earning up to RM4,000/month will be entitled to overtime payments. Here’s what employers need to know.

From 1 September 2022, when the new Employment Act (“EA”) amendments come into force (See: Employment Act to apply to all employees from 1 September 2022, some sections subject to increased salary threshold of RM4,000/month), all employees with wages up to RM4,000/month will be entitled to overtime payments. This is a significant change from the pre-amendment EA, where generally only employees with wages up to RM2,000/month were entitled to overtime payments.

This widened scope will have a major financial impact on many employers, who have already had to cope with the increased minimum wage from 1 May 2022 (See: Confirmed: New Minimum Wages Order effective 1 May 2022; employers with less than 5 employees exempted), and the Malaysian Employers Federation recently called on the government to defer the implementation of the EA amendments.

The practical effect of this change is that employees with monthly wages in the RM2,001-RM4,000 range who previously may have been used to occasionally working beyond their normal working hours to complete urgent tasks, or to attending to work matters on weekends or public holidays, will be entitled to overtime payments for doing so. However, overtime does not simply mean any work done outside of the 9-5 window. There are various, sometimes fairly technical, definitions and legal provisions that have to be considered in order to understand the legal definition of “overtime”.

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