Overtime in Malaysia is governed by the Employment Act 1955. Getting it right matters — underpaying overtime is a common cause of labour disputes. Here is how it works.
Who is entitled to overtime pay?
The Employment Act now covers all employees, but the overtime provisions apply to employees whose monthly wages do not exceed RM4,000, and to manual workers regardless of wage. Employees above that threshold may still be paid overtime by contract, but it is not a statutory right.
The ordinary rate of pay (ORP)
Overtime is built on the ordinary rate of pay:
ORP (per day) = monthly wage ÷ 26
Hourly rate = ORP ÷ normal hours per day (usually 8)
The overtime rates
| When the work is done | Rate |
|---|---|
| Beyond normal hours on a normal working day | 1.5× hourly rate |
| Rest day — up to half normal hours | ½ day's wage |
| Rest day — more than half, up to normal hours | 1 day's wage |
| Rest day — beyond normal hours | 2.0× hourly rate |
| Public holiday — within normal hours | 3.0× (holiday pay + 2 extra days) |
| Public holiday — beyond normal hours | 3.0× hourly rate |
Worked example
An employee earns RM2,600 a month and works 2 hours of overtime on a normal day:
- ORP = RM2,600 ÷ 26 = RM100/day
- Hourly rate = RM100 ÷ 8 = RM12.50
- Overtime = 2 × RM12.50 × 1.5 = RM37.50
Is there a limit?
Overtime is capped at 104 hours per month under the Employment (Limitation of Overtime Work) Regulations.
Automate it
GajiHub reads punch records and computes overtime to these Employment Act rates automatically — including rest-day and public-holiday premiums — so payroll is right without manual maths. Pair it with our leave entitlements guide. Start free.
General information based on the Employment Act 1955; confirm specifics for your situation. Not legal advice.
