Overtime Entitlement under Malaysia’s Employment Act 1955

Who is Entitled to Overtime Pay?

The Employment Act 1955 applies automatically to the following categories of employees:

1. Employees earning RM4,000/month or less (basic salary, excluding allowances or bonuses).
2. Manual labourers, regardless of salary level.
3. Employees engaged in the operation or maintenance of mechanically propelled vehicles, whether for private use or the transport of passengers or goods.
4. Supervisors of manual labourers.
5. Employees engaged in transport services, such as drivers, conductors, etc.
6. Employees responsible for the care of children, the elderly, the sick, or infirm, excluding domestic servants.

Employees falling into these categories are entitled to overtime pay under the Act.

Who is NOT Automatically Entitled?

Employees not covered by the Act for overtime entitlements include:

• Employees earning more than RM4,000.00 per month, unless they fall into the special categories above.
• Executive, managerial, or professional staff earning above RM4,000.00 per month.
• Domestic servants.
• Specific categories of employees in the sectors listed under special regulations (see below).

When Must Overtime Be Paid?

Employers must pay overtime only when the employee is required to work beyond the statutory limits and:

• The work is approved or instructed by the employer.
• The overtime hours are recorded and verified.

The Act does not mandate overtime pay for voluntarily extended hours unless pre-agreed.

Applicable Overtime Rates (per Employment Act)

Hourly rate is calculated as:

(Monthly Salary ÷ 26 days ÷ Normal hours per day)

Sector-Specific Exceptions

Some sectors are exempted or subject to different overtime provisions under separate regulations or collective agreements:

Banking, Finance & Insurance

• Employees in these sectors may be governed by sectoral regulations, where different working hours and overtime rules may apply.
• Often, executive-level or specialist staff are not eligible for overtime pay unless stated in a Collective Agreement or contract.

Hotel, Catering & Hospitality Industry

• Employees may be required to work on shifts or flexible hours, with specific regulations on rest days and overtime.
• Entitlement to overtime depends on the nature of the work and salary level.

Road Transport Sector

• Employees involved in the operation or maintenance of transport vehicles (e.g., drivers, mechanics) are covered regardless of salary, but actual hours of work and overtime may follow separate rules issued under sector-specific Exemption Orders.

Mechanically Propelled Vehicles for Transport of Goods/Passengers

• Employees operating such vehicles are entitled to overtime pay even if they earn more than RM4,000.00 per month.

Good Practices for Employers

• Clearly define normal working hours and overtime conditions in employment contracts.
• Maintain accurate records of work hours and overtime approval.
• Refer to relevant Collective Agreements, Sectoral Orders, or employment guidelines for exceptions.