Who Is Covered by the Employment Act 1955 After the 2022 Amendments?

Since 1 January 2023, the Employment Act 1955 applies to all employees in Peninsular Malaysia and Labuan regardless of salary, but employees earning above RM4,000 per month are excluded from certain monetary provisions such as overtime and termination benefits.

What changed under the Employment (Amendment) Act 2022?

Before the amendments, the Employment Act 1955 (EA) generally covered only employees earning RM2,000 and below, together with manual labourers and certain other categories in the First Schedule. The Employment (Amendment) Act 2022, in force from 1 January 2023, expanded the First Schedule so that the EA now applies to every employee under a contract of service, irrespective of wages.

This means statutory minimums on annual leave, sick leave, hospitalisation leave, maternity and paternity leave, rest days, public holidays and protection against sexual harassment now apply to executives, managers and professionals — categories that were previously outside the Act.

Which provisions still depend on the RM4,000 threshold?

Employees whose wages exceed RM4,000 per month are excluded from specific monetary entitlements under the amended First Schedule. The main exclusions are overtime payments for work beyond normal hours, overtime and allowances for work on rest days and public holidays, shift work allowances, and termination, lay-off and retirement benefits under the Employment (Termination and Lay-Off Benefits) Regulations 1980.

Manual labourers and employees engaged in the operation or maintenance of mechanically propelled vehicles remain fully covered regardless of wages. Employers should audit job classifications carefully, because misclassifying a manual worker as an exempt executive can create back-payment exposure.

What should employers do now?

Employment contracts, handbooks and payroll systems drafted before 2023 frequently assume the old RM2,000 coverage line. Employers should review contracts for compliance with statutory leave minimums, confirm that overtime eligibility is assessed against the RM4,000 line, and ensure that policies on flexible working, sexual harassment and pregnancy-related termination reflect the amended Act.

Non-compliance with core EA provisions is an offence, and the Labour Department (JTK) can hear monetary claims under section 69 of the Act. Prevention through a contract audit is far cheaper than defending a claim.

Key Takeaways for Employers

• All employees in Peninsular Malaysia and Labuan are covered by the EA since 1 January 2023, regardless of salary.
• Overtime, rest day and public holiday premiums and statutory termination benefits generally apply only to employees earning RM4,000 and below (plus manual labour categories).
• Statutory leave, maternity and paternity entitlements and sexual harassment provisions apply to every employee, including senior management.
• Pre-2023 contracts and handbooks should be audited and updated for compliance.
• Sabah and Sarawak are governed by their own Labour Ordinances, which have been substantially aligned but remain separate statutes.

Frequently Asked Questions

Does the Employment Act 1955 apply to managers and executives?

Yes. Since 1 January 2023 the Act applies to all employees regardless of salary, although those earning above RM4,000 per month are excluded from certain monetary provisions such as overtime.

Does the Employment Act apply in Sabah and Sarawak?

No. Employment in Sabah and Sarawak is governed by the Sabah Labour Ordinance and Sarawak Labour Ordinance respectively, which were amended in 2025 to largely mirror the Employment Act.

What happens if an employment contract gives less than the Act?

Under section 7 of the Employment Act, any contractual term less favourable than the Act is void to that extent and the statutory minimum applies.