EMPLOYMENT & HR LAW
How overtime pay is calculated in Malaysia — without overpaying or underpaying
Get the ordinary-rate formula, the 1.5× / 2× / 3× rates for normal days, rest days and public holidays, the RM4,000 wage threshold that decides who is even entitled, and the 104-hour monthly cap most payroll teams never track — all under the Employment Act 1955.
Under the Employment Act 1955, overtime pay in Malaysia is built from two figures: the Ordinary Rate of Pay (ORP) = monthly wages ÷ 26, and the Hourly Rate of Pay (HRP) = ORP ÷ normal daily hours. Work beyond normal hours on a normal day is paid at not less than 1.5× the hourly rate; rest days and public holidays pay more. The statutory rates apply to employees earning RM4,000 a month or less (plus certain manual and specified workers).
- The base formula is fixed by law. The Ordinary Rate of Pay is the monthly salary divided by 26, and the Hourly Rate of Pay is that figure divided by the normal hours of work in a day, per CCS & Co.
- Overtime on a normal working day is at least 1.5× the hourly rate. Rest days and public holidays are paid at higher multiples — up to 2× and 3× the hourly rate respectively.
- Not every employee is entitled. Since 1 January 2023 the Act covers all employees, but the overtime, rest-day and public-holiday pay provisions do not apply to those earning more than RM4,000 a month unless they are “specified employees”, per ACCA.
- Normal hours were cut from 48 to 45 a week. The Employment (Amendment) Act 2022 reduced the maximum weekly working hours to 45, and capped a normal working day at 8 hours.
- There is a hard monthly ceiling of 104 overtime hours. The Employment (Limitation of Overtime Work) Regulations 1980 fix the limit at “a total of one hundred and four hours in any one month” — a cap most attendance systems never total up.
Want your payroll and HR team trained to calculate overtime correctly and defensibly? WhatsApp Carriera about HRD Corp-claimable Employment Act & payroll training for your team.
Overtime is where a lot of well-run Malaysian companies quietly leak money — or quietly break the law. Pay it on the wrong base and you either over-reward staff by thousands a year or expose yourself to a Labour Department claim. The rules themselves are not complicated, but they are precise: a fixed divisor, a small set of multipliers, and a threshold that decides who is even covered. This guide sets out the exact formula, every rate, and the limits, with the source for each figure.
Which employees are legally entitled to overtime pay
Who is legally entitled to overtime pay in Malaysia?
Statutory overtime pay in Malaysia applies to employees whose wages do not exceed RM4,000 a month, plus a defined group of manual and “specified” workers regardless of pay. Since 1 January 2023 the Employment Act covers all employees, but the specific pay-rate provisions for overtime, rest days and public holidays were kept behind that RM4,000 threshold.
The Employment (Amendment) Act 2022, in force on 1 January 2023, extended the Employment Act 1955 to all employees regardless of wages — but with a carve-out. As Rahmat Lim & Partners summarises it, “the Amendment Act will apply to all employees regardless of their wages or work types save for certain sections which will not be applicable to employees earning more than RM4,000 per month.” The overtime rules are one of those carved-out sections.
Concretely, the provisions that do not apply to an employee earning above RM4,000 a month are the calculation of pay for rest-day work (s.60(3)), overtime work (s.60A(3)), shift allowance (s.60C(2A)), public-holiday work (s.60D(3)) and statutory termination and lay-off benefits (s.60J), per ACCA. For an above-threshold employee, overtime is a matter of contract, not statute.
There is an important exception. Even above RM4,000, the overtime provisions still apply to employees who fall within the “specified employees” in paragraph 2 of the First Schedule — broadly, those engaged in manual labour, operating or maintaining mechanically propelled vehicles, or supervising manual workers, per Rahmat Lim & Partners. A factory operator earning RM4,500 is still entitled to statutory overtime; an office executive on the same salary generally is not. Note too that the Employment Act 1955 governs Peninsular Malaysia and Labuan, while Sabah and Sarawak apply their own Labour Ordinances with broadly similar overtime rules.
This threshold is the single most common mistake we see employers make — and it works both ways. It sits inside the wider set of duties covered in our Employment Act employer guide, and it interacts with the statutory deductions you already run in Malaysian payroll.
Ordinary rate, hourly rate, and the ÷ 26 divisor
What is the “ordinary rate of pay”, and how do you get the hourly rate?
The Ordinary Rate of Pay (ORP) for a monthly-paid employee is the monthly wage divided by 26. The Hourly Rate of Pay (HRP) is the ordinary rate of pay divided by the employee’s normal hours of work in a day. Every overtime figure in Malaysia is built from these two numbers, so getting the divisor right matters more than any single multiplier.
The divisor is not negotiable. For a monthly-rated employee the ordinary rate of pay is calculated as the “monthly rate of pay / 26”, and the hourly rate of pay is “the ordinary rate of pay divided by the normal hours of work”, per CCS & Co. The figure 26 represents the number of working days in a month for this purpose and is fixed by the Act — not by how many days your business actually opens.
Take an employee, Ali, earning RM2,600 a month and working a normal 8-hour day. His Ordinary Rate of Pay is RM2,600 ÷ 26 = RM100. His Hourly Rate of Pay is RM100 ÷ 8 = RM12.50. One hour of overtime on a normal working day is therefore RM12.50 × 1.5 = RM18.75 (example per CCS & Co).
The most expensive error here is using the wrong divisor — dividing the monthly salary by 30, by the actual calendar working days, or by 22. Each of those inflates or deflates every overtime payment for that employee, and the mistake repeats on every payslip until someone catches it.
Overtime on an ordinary working day
How much is overtime on a normal working day?
For work beyond normal working hours on a normal working day, a Malaysian employer must pay not less than 1.5 times the employee’s hourly rate of pay, under section 60A(3) of the Employment Act 1955. This is the baseline overtime multiplier; rest days and public holidays are paid at higher rates.
The rule is straightforward once the hourly rate is right. For any additional work performed beyond the normal working hours, the employee is compensated “at a rate not less than 1.5 times their Hourly Rate of Pay”, per CCS & Co. The word “normal” is doing real work: overtime only begins after the contractual normal hours, so an employee contracted for 7 hours a day is on ordinary pay for the eighth hour and on overtime only beyond that.
Working on the weekly rest day
How is work on a rest day paid?
Rest-day pay for a monthly-rated employee steps up in three bands: work up to half the normal hours is paid at half a day’s ordinary rate; work above half and up to the normal hours is paid at one full day’s ordinary rate; and work beyond the normal hours is paid at not less than 2× the hourly rate. Every Malaysian employee is entitled to at least one rest day a week.
For a monthly-rated employee, the three bands are set by section 60(3), per CCS & Co:
| Rest-day work (monthly-rated) | What the employer pays |
|---|---|
| Up to half the normal working hours | Wages equivalent to half the ordinary rate of pay for that day |
| Above half, up to the normal working hours | One day’s wages at the ordinary rate of pay |
| Beyond the normal working hours | Not less than 2× the hourly rate of pay for each hour past normal hours |
Rest-day pay bands for a monthly-rated employee under s.60(3), Employment Act 1955, per CCS & Co.
The band structure catches employers out because it is not a flat multiplier. On a rest day a monthly-rated employee who works even one hour is owed half a day’s ordinary pay, and the 2× hourly rate only kicks in once they pass their normal daily hours. Confusing the “rest day” with a scheduled off day is a separate trap — only the statutory weekly rest day carries these premiums.
Working on a gazetted public holiday
How is work on a public holiday paid?
An employee who works on a paid public holiday in Malaysia is entitled to two days’ wages at the ordinary rate of pay — even if the work is less than the normal hours — on top of the holiday pay they already receive. Work beyond the normal hours on that public holiday is paid at not less than 3× the hourly rate of pay.
Public-holiday work carries the highest premium in the Act. The employee receives “two days’ wages at the ordinary rate of pay, regardless that the period of work done on that day is less than the normal hours”, and for hours beyond normal is paid “at a rate which is not less than three times his hourly rate of pay”, under section 60D(3), per CCS & Co.
| Public-holiday work | What the employer pays (in addition to holiday pay) |
|---|---|
| Any work within the normal working hours | 2 days’ wages at the ordinary rate of pay |
| Work beyond the normal working hours | Not less than 3× the hourly rate of pay for each hour past normal hours |
Public-holiday pay under s.60D(3), Employment Act 1955, per CCS & Co.
Every overtime rate in one table
What are all the Malaysian overtime rates in one place?
Across the Employment Act, Malaysian overtime runs on four rates: 1.5× the hourly rate on a normal working day, 2× for hours beyond normal on a rest day, and 3× for hours beyond normal on a public holiday, with rest days and public holidays also carrying a fixed day-rate component. The table below is the whole system on one page.
| When the work happens | Provision | Rate (monthly-rated employee) |
|---|---|---|
| Beyond normal hours, normal working day | s.60A(3) | ≥ 1.5 × hourly rate of pay |
| Rest day — up to half normal hours | s.60(3) | ½ day’s ordinary rate of pay |
| Rest day — above half, up to normal hours | s.60(3) | 1 day’s ordinary rate of pay |
| Rest day — beyond normal hours | s.60(3) | ≥ 2 × hourly rate of pay |
| Public holiday — within normal hours | s.60D(3) | 2 days’ ordinary rate of pay |
| Public holiday — beyond normal hours | s.60D(3) | ≥ 3 × hourly rate of pay |
Consolidated overtime and premium-pay rates under the Employment Act 1955, per CCS & Co. Base: ORP = monthly wage ÷ 26; HRP = ORP ÷ normal daily hours. Applies to employees earning ≤ RM4,000/month and specified workers.
Maximum hours — and the cap nobody totals up
What are the limits on overtime hours in Malaysia?
Normal working hours in Malaysia are capped at 8 hours a day and 45 hours a week since the 2022 amendment reduced the weekly limit from 48. On top of that, overtime itself is capped at 104 hours in any one month under the Employment (Limitation of Overtime Work) Regulations 1980 — a ceiling that applies per employee, and that most attendance systems never add up.
The weekly limit changed recently. Section 60A was amended to “reduce the maximum number of work hours in one week from 48 hours to 45 hours”, effective 1 January 2023, per ACCA. The statutory limit for regular working hours is now 45 hours per week and 8 hours per day, per CCS & Co.
The monthly overtime ceiling is the one employers forget exists. The Employment (Limitation of Overtime Work) Regulations 1980 state plainly that “the limit of overtime work … shall be a total of one hundred and four hours in any one month”, per the Ministry of Human Resources (JTKSM). That is a hard limit of 104 overtime hours per employee per calendar month, not an average.
Why it slips through: the breach is rarely a single dramatic week. As HR-systems provider TimeTec Cloud puts it:
“The breach rarely happens in one dramatic week. It accumulates quietly.” — TimeTec Cloud, on the 104-hour monthly overtime cap
Most attendance systems calculate overtime per day but never maintain a running monthly total per employee, so three hours on Monday, four on Wednesday and five on Saturday add up unnoticed until the cap is already breached, per TimeTec Cloud. For an employer, the exposure is real: the same source notes that a company whose workers repeatedly exceed the cap could face separate penalties for each affected employee, and its own attendance records become the evidence.
How Carriera helps — and what we don’t do
Where does Carriera fit on overtime and payroll?
Carriera does not process your payroll or give legal advice — a disputed overtime claim belongs with your payroll provider or employment lawyer. Where Carriera helps is training: as an HRD Corp Approved Training Provider, Carriera Academy runs claimable Employment Act and payroll courses that give your HR team the confidence to calculate overtime correctly, and our recruiters fill the roles when the workload says it is time to hire rather than pay overtime.
Persistent overtime is often a staffing signal, not just a payroll line. When a team is regularly pushing toward the 104-hour cap, the cheaper long-term answer is frequently another permanent hire — the same calculation we walk through in the true cost of hiring an employee in Malaysia. As an HRD Corp Approved Training Provider, Carriera Academy runs claimable Employment Act, HR and payroll training, funded from your existing levy — see how the funding works in our HRD Corp claim guide.
And when the numbers say hire, our recruitment team sources permanent white-collar talent for 50+ companies across sectors from logistics and freight to accounting and finance — so overtime becomes a considered decision, not a default.
Still have questions?
Overtime pay in Malaysia — employer FAQ
How do you calculate the hourly rate for overtime in Malaysia?
Who is entitled to overtime pay under the Employment Act 1955?
What is the overtime rate on rest days and public holidays in Malaysia?
What is the maximum overtime allowed per month in Malaysia?
Do I divide the monthly salary by 26 or by 30 for overtime?
Does Carriera process payroll or give legal advice on overtime?
Sources: the ordinary-rate (monthly ÷ 26) and hourly-rate formulas, the 1.5× normal-day rate, the three-band rest-day rates, the public-holiday rates (2 days’ wages plus 3× beyond normal hours), the 8-hour/45-hour limits and the worked example per CCS & Co; the 2022 amendment (weekly hours cut 48→45, effective 1 January 2023) and the RM4,000-threshold sections (s.60(3), 60A(3), 60C(2A), 60D(3), 60J) per ACCA; the universal-coverage rule and the “specified employees” exception per Rahmat Lim & Partners; the 104-hour monthly cap quoted verbatim from the Employment (Limitation of Overtime Work) Regulations 1980 per the Ministry of Human Resources (JTKSM); and the tracking-gap and compliance-risk commentary on the 104-hour cap per TimeTec Cloud. Verified 13 July 2026. This article is general information for employers, not legal advice; take advice on your specific facts before acting.
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