Minimum Wage in Malaysia: What Employers Must Pay in 2026

The national minimum wage in Malaysia is RM1,700 per month in basic salary, and as of 2026 it applies to all employers nationwide with no remaining exemption for small businesses.

What is the current minimum wage and who does it cover?

Under the Minimum Wages Order 2024, made pursuant to the National Wages Consultative Council Act 2011, the minimum wage rose from RM1,500 to RM1,700 per month. It took effect on 1 February 2025 for employers with five or more employees and employers in professional occupations, and was extended to all remaining employers from 1 August 2025. There is now a single national rate covering Peninsular Malaysia, Sabah, Sarawak and Labuan.

The rate applies to all private-sector employees — full-time, part-time, probationary, contract and foreign workers alike. The only excluded categories are domestic servants and apprentices under genuine apprenticeship contracts.

Can allowances be counted towards the minimum wage?

No. The minimum wage refers to basic wages only. Fixed allowances, commissions, overtime, bonuses and benefits in kind cannot be used to top up a basic salary below RM1,700. An employee paid RM1,500 basic plus a RM200 transport allowance is not compliant.

For employees paid daily or hourly, the Order prescribes equivalent daily rates depending on the number of working days per week, and a minimum hourly rate. Employers paying piece rates or commission-only structures must still guarantee that monthly earnings meet the floor.

What are the penalties for non-compliance?

Failure to pay the minimum wage is an offence under the National Wages Consultative Council Act 2011, carrying fines of up to RM10,000 per employee, with daily fines for continuing offences and higher penalties for repeat offenders. The Labour Department can also order back payment of the shortfall.

Beyond statutory penalties, underpayment claims commonly surface in Industrial Court proceedings and damage an employer’s credibility on other issues. A payroll audit identifying any employee whose basic wage falls below RM1,700 — including part-timers assessed on the hourly equivalent — is the practical starting point.

Key Takeaways for Employers

• Minimum wage is RM1,700 per month in basic salary; allowances and bonuses do not count.
• All employers are covered in 2026 — the phase-in grace period for micro-businesses ended on 1 August 2025.
• Foreign workers, part-timers and probationers are all entitled to the minimum wage.
• Penalties run up to RM10,000 per underpaid employee plus back payment.
• Review commission-based and daily-rated pay structures against the prescribed daily and hourly equivalents.

Frequently Asked Questions

Does the RM1,700 minimum wage apply to foreign workers?

Yes. The minimum wage applies equally to local and foreign employees in the private sector. Only domestic servants and apprentices are excluded.

Can an employer include a fixed allowance to reach RM1,700?

No. The minimum wage must be met by basic salary alone. Allowances, commissions and bonuses are excluded from the calculation.

Is there still an exemption for employers with fewer than five employees? No. The exemption ended on 1 August 2025. From that date all employers must pay RM1,700 regardless of headcount.