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Malaysia Employment Act 1955 (Act 265): A Guide for Employers

KOR HUI PING   -   May 21, 2026 11:00

Malaysia Employment Act 1955 (Act 265): Recap Key Changes Guide for Employers


Malaysia’s employment regulations have undergone major changes following the implementation of the Employment (Amendment) Act 2022 following the implementation of the Employment (Amendment) Act 2022, which amended the principal Act 265. While many employers are aware of the major updates, a significant number of businesses are still uncertain about how these amendments affect their day-to-day HR operations.

From working hours and leave entitlements to foreign worker management and compliance obligations, the amended Employment Act has reshaped workforce management standards across Malaysia.

For companies that have not reviewed their HR policies recently, this is the right time to reassess internal practices and ensure full compliance with the latest labour regulations.

What is the Employment Act 1955 (Act 265)?


The Employment Act 1955 is the primary labour legislation governing employer-employee relationships in Peninsular Malaysia and the Federal Territory of Labuan.

The Act establishes minimum standards relating to working hours, leave entitlements, wage payments, employee welfare, and employer responsibilities.

The Employment (Amendment) Act 2022 introduced several significant updates aimed at improving employee protection while aligning Malaysia’s labour standards with modern employment practices.

The amendments officially came into effect on 1 January 2023.

Major Changes Under the Employment (Amendment) Act 2022

Overview of Key Amendments with effective from 1 January 2023.

No.

Employment Area

Previous Standard

Current Standard

1

Weekly Working

Hours

48 hours

45 hours

2

Maternity Leave

60 days

98 days

3

Paternity Leave

No statutory

entitlement

7 days paid leave

4

Employee Coverage

Mainly employees earning RM2,000 and below, including certain categories of manual labour workers

Expanded protection to most employees regardless of salary level, although certain overtime provisions may not apply to employees earning above RM4,000

5

Flexible Working

Arrangement

No formal statutory right for employees to request flexible working arrangements

Employees may formally apply for changes to working hours, working days, or place of work under the Employment (Amendment) Act 2022


  1. Reduction of Weekly Working Hours


One of the most significant changes is the reduction of maximum weekly working hours from 48 hours to 45 hours.

This adjustment impacts workforce scheduling, payroll calculations, overtime structures, and shift management. Employers who continue operating under outdated schedules may face compliance risks if total working hours exceed the statutory limit.

Businesses are encouraged to review employment contracts, HR handbooks, shift arrangements, and attendance systems to ensure alignment with current labour regulations.

For industries operating multiple shifts or manpower-intensive operations, workforce restructuring may be necessary to maintain operational efficiency while remaining compliant.

  1. Increased Maternity Leave Protection

Paid maternity leave has officially increased from 60 days to 98 days for eligible female employees.

The amendment reflects Malaysia’s growing emphasis on employee welfare and work-life balance practices. In addition to the extended leave period, the law also provides stronger protections against the termination of pregnant employees except under limited circumstances permitted by law.

For employers, this means HR policies and internal employment documentation should be updated to reflect the revised entitlement and compliance obligations.

  1. Introduction of Paid Paternity Leave


The amended Employment Act also introduced paid paternity leave for eligible married male employees.

Under the updated regulation, employees are entitled to 7 consecutive days of paid leave, subject to eligibility conditions stated under the Act.

The inclusion of paternity leave demonstrates the government’s increasing focus on family wellbeing and modern workforce expectations.


  1. Expansion of Employee Coverage


Previously, many employers assumed that only lower-income employees were protected under the Employment Act.


Following the amendments, the scope of protection has expanded significantly. Most employees are now covered under the Act regardless of salary level. However, certain provisions relating to overtime payments and rest day entitlements may not apply to employees earning more than RM4,000 per month.


This change increases employer responsibility in areas such as employment documentation, leave administration, workplace policies, and termination procedures.

As a result, businesses should no longer rely on outdated assumptions regarding employee eligibility under labour laws.

  1. Flexible Working Arrangements (FWA)


The amended Act also introduced formal provisions allowing employees to apply for Flexible Working Arrangements (FWA).


Under Sections 60P and 60Q of the Act, employees are allowed to apply for flexible working arrangements in formal writing, including adjustments to working hours, days and workplace location.


The ministry stressed that employers implementing FWA must not reduce statutory employee benefits such as overtime pay, rest days, public holiday entitlements, annual leave and sick leave.


While employers are not automatically required to approve every request, companies are now expected to establish proper procedures for reviewing and responding to applications.

The introduction of FWA reflects changing workplace expectations following the post-pandemic shift toward hybrid and remote work environments.


JTKSM has also issued the 2024 FWA Implementation Guidelines to assist organizations in adopting structured and sustainable flexible work policies. It can be downloaded at the link below:-


Foreign Worker Compliance Responsibilities


For companies employing foreign workers in Malaysia, employers must ensure proper management of employment records, work permits, regulatory approvals, and workforce documentation.


Failure to comply with labour regulations may result in operational disruption, labour investigations, financial penalties, or licensing complications.


Businesses may refer to below link for references on Steps-by-Steps guidelines in hiring foreign workers and to ensure compliances with several government bodies, including the Ministry of Human Resources (MOHR), the Department of Labour (JTKSM), the Ministry of Home Affairs (KDN), and the Immigration Department.


Conclusion


Many businesses only review Human Resource compliance after encountering employee complaints, payroll disputes, labour inspections, or permit renewal issues.


Employers who fails to comply to latest Employment Act 1955 (Act 265) may face operational inefficiencies, compliance complications, and unnecessary legal exposure. Companies that proactively update their HR policies, employment documentation, and workforce procedures will be better prepared for long-term business growth.

As employment regulations continue evolving, maintaining compliance is no longer just an administrative responsibility. It has become an essential part of responsible business management and sustainable workforce planning.

Businesses that conduct regular HR reviews today are more likely to remain competitive, compliant, and operationally stable in the future.

About Us


At Agensi Pekerjaan Derasniaga Sdn Bhd, we assist businesses in areas such as Human Resource compliance, recruitment coordination, foreign worker management, documentation handling, and workforce administration. By simplifying complex Human Resource processes, businesses can reduce compliance-related risks while maintaining smoother day-to-day operations.

We work closely with companies to ensure workforce practices remain aligned with current labour requirements and operational needs.



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