Employment Act 1955

Why this Act still drives HR decisions

The Employment Act 1955 (Act 265) sets minimum conditions of service for covered employees. Most day-to-day issues — contracts, overtime claims, rest-day pay, annual leave, maternity protection, and notice of termination — start here.

Contracts and termination

• Certain contracts must be in writing and include how the contract may be terminated.
• Either party may end a contract with proper notice under the Act’s notice rules.
• Termination without notice is allowed in limited situations, including wilful breach.
• Misconduct must be handled carefully — employers may terminate for special reasons after due process.
• Wages due on normal or special termination must be paid within the statutory timelines.

Hours of work, rest days, and overtime

• Normal daily hours are subject to statutory limits under section 60A.
• Employees are entitled to a rest day; work on a rest day attracts higher pay rates.
• Overtime must be paid at not less than one and a half times the hourly rate of pay.
• “Hours of work” means time when the employee is at the employer’s disposal.
• Shift work and night work have additional controls employers must observe.

Leave entitlements employers often miscalculate

• Annual leave — paid entitlement based on completed years of service (starting from 8 days for shorter service bands, rising with tenure).
• Sick leave — statutory paid sick leave, separate from annual leave.
• Public holidays — paid holiday rules and substitution practices must be applied correctly.
• Paternity leave — recognised under the Act’s leave framework for eligible employees.
• If sick leave or maternity leave falls during annual leave, those days are treated under the relevant leave type, not as annual leave consumed.

Maternity protection

• Eligible female employees are entitled to maternity leave and maternity allowance for each confinement.
• Allowance is generally tied to ordinary rate of pay for the eligible period.
• Terminating a female employee during maternity leave is an offence (except limited situations such as business closure).
• There are restrictions on terminating pregnant employees except on specified grounds, with the burden of proof on the employer in key situations.
• Notification failures can affect allowance eligibility — process discipline matters.

Flexible working and foreign employees

• Employees may apply for flexible working arrangements to vary hours, days, or place of work.
• Employers must handle such applications under the Act’s process expectations.
• Foreign employee terminations carry notification duties to the Director General.
• There are restrictions on terminating local employees to replace them with foreign employees.

Employer action list

• Audit contracts for notice, hours, and leave language
• Align payroll overtime formulas with statutory multipliers
• Keep clean leave and attendance records
• Train managers on maternity and termination restrictions
• Document every high-risk exit before letters are issued

Need this translated into workplace practice?

CXCons designs HRDC-aligned programs on Employment Act compliance for HR teams, supervisors, and business owners in Malaysia.