ATTENTION! Malaysia’s Labour Rule Changes: Minimum Wage Order 2024

ATTENTION!

Malaysia’s Labour Rule Changes: Minimum Wage Order 2024

The Minimum Wage Order 2024 was gazetted on 4 December 2024. [Reference Link: https://lom.agc.gov.my/ilims/upload/portal/akta/outputp/2541500/PUA%20376.pdf] and it will come into force in two stages:

1) Stage 1: Effective 1 February 2025

The minimum monthly wages of RM1,700 will apply to the following employers:

• Employers who have five employees or more; and
• Employers categorized as conducting professional activities under the Malaysia Standard Classification of Occupations 2020 (“MASCO Employers”) regardless of the number of employees they have.

2) Stage 2: Effective 1 August 2025

The minimum monthly wages of RM1,700 will apply to ALL employers regardless of number of employees.

How will this affect your Labuan Company as an employer?

This requirement is applicable to all employers in Malaysia, including Labuan Company.

If you fall under the stage 1 category above, then you need to ensure the following are in order:

1. Review all employees’ salary to ensure their minimum wage is at least RM1,700.
2. If you are paying employees on daily or hourly basis, make sure the minimum wage is as follows:

The breakdown of the minimum wage rates by monthly rate, daily rate and hourly rate is as follows:

Minimum Wages
Monthly	Daily			Hourly (Each hour)
RM 1,700	Number of days worked in a week			RM 8.72
	6 days	5 days	4 days
	RM 65.38	RM 78.46	RM 98.08

If your employee is not paid on a basic salary but is paid a salary only based on piecework, tonnage, assignment, journey or commission, the monthly salary rate payable to the employee shall not be less than the current monthly minimum salary of RM1,700.

How Often Does the Minimum Wage in Malaysia Increase?

The minimum wage in Malaysia is reviewed by the government every two years. This means there’s a potential for an increase (or adjustment) at least biennially.

The review process considers various factors, including:

• Cost of living: Rising inflation and living expenses can prompt the government to raise the minimum wage to ensure workers can afford basic necessities.
• Economic conditions: Overall economic growth and business sustainability are also factored in. The government aims to find a balance that protects workers while not hindering business development.
• National Wages Consultative Council (NWCC): This council, established by law, plays a crucial role in advising the government on minimum wage revisions. They gather data and hold consultations with various stakeholders like employers and worker unions.

 

Penalties for Non-Compliance

Employers who fail to comply with the minimum wage order may face serious consequences. Penalties range from RM1,000 to RM20,000, or imprisonment for up to five years. Hence, it is crucial for employers to adhere to the new wage laws to avoid these penalties.

Thank you
Admin Team