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PTO and Sick Leave Entitlements in Malaysia: A Guide for Overseas Employers

Employee benefits such as sick leave and PTO vary between countries, and is one of the areas to look into prior to hiring employees overseas.  Often, leave entitlements for overseas employees will be different to those in your home country.

Overseas employers often wonder how they can easily learn about and comply with leave entitlements in a foreign country.  If you are employing in Malaysia, we have put together a quick guide of the leave entitlements and how they are calculated.

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Sick Leave in Malaysia

The sick leave entitlement in Malaysia requires that the employee be examined by a medical practitioner to confirm the illness, and this is done at the expense of the employer.

Once the exam is completed, the amount of sick leave days allowed are:

  • 14 days every year if the employee has been employed for less than two years.
  • 18 days every year if the employee has been employed for two years or more but less than five years.
  • 22 days every year if the employee has been employed for five years or more.

These leave entitlements apply for illnesses without hospitalization.  If the illness requires hospitalisation, a total number of 60 days will be provided for each employee. This includes the paid sick leave days as stated above.

The employee will be paid their full rate for every day of sick leave, including the hospitalization days.

Case Example: Paid Time Off (PTO) in Malaysia

A client of ours with employees in Malaysia was inquiring about the PTO rules for non-holiday leave, and if there is PTO accrual under Malaysian law.

We responded with the information provided by our Malaysian employer of record, and told them that PTO is paid at the full salary rate, and can be prorated based on number of months worked if they have yet to reach a full year of service.

We advised them that PTO can be taken in Malaysia as annual leave according to the following formula:

  • Eight days for every 12 months of continuous service with the same employer (employed for less than two years). 
  • 12 days for every 12 months of continuous service with the same employer (employed for more than two years, but less than five years). 
  • 16 days for every 12 months of continuous service with the same employer (employed for five years or more). 

It should be noted that these annual leave days do not include sick or maternity leave, and the employee has the right to forego annual leave and receive additional payment for those days.

In addition, the annual leave can be accrued if not taken, but must be used within 12 months after the applicable 12 month service period.

Public Holidays in Malaysia

It seems that observing public holidays should be fairly straightforward, but not so in Malaysia.  There are 11 paid public holidays for all employees, but there is an unusual rule that permits employers to not observe a given holiday.

However, if they require their employees to work on the holiday, they have to grant a paid holiday on any other day of their choosing.  Also, if a holiday falls on a rest day (e.g. Sunday) then Monday becomes the paid holiday.

Shield GEO Solution

If you are trying to manage the employment of overseas workers (either residents or expats) there is an inherent challenge overseeing leave from your home office.

How will you know when to grant leave and how it is accrued or paid out?

What are the rules for paying out leave upon termination, and how is it calculated?

If the public holidays are different than at home, how do you keep your employees aligned with ongoing projects or communications?

This is where the Shield GEO solution can help, by using our in country experts and local employer of record to administer the entire spectrum of employment, payroll, leave, and termination rules.  We become your resource as the local employer, giving you the peace of mind that you are compliant with local rules and that your employees are given all leave entitlements and PTO required under foreign laws.

 Need more information about employing in a new country? Learn more about:

Looking to hire an employee in Malaysia? Get in touch.

The information in this article is subject to changes in local legislation.

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