How to calculate overtime in Malaysia (Employment Act) — with worked examples
The formulas behind overtime pay in Malaysia, worked through for a monthly-rated employee — plus rest days, public holidays and who is entitled.
Overtime is one of the most common sources of payroll disputes in Malaysia, usually because the base rate was wrong rather than the multiplier. This guide explains the Employment Act formulas and works through examples.
Check your contracts and the latest law
This guide summarises the Employment Act 1955 as amended (in force since 1 January 2023). Contracts may be more generous than the Act, never less. Confirm edge cases with the Department of Labour (JTK) or an employment adviser.
Who is entitled to overtime?
Since 2023 the Employment Act covers all employees, but the overtime provisions don't apply to employees earning more than RM4,000 a month, unless they are manual workers or otherwise listed in the First Schedule. For employees above RM4,000, overtime depends on their contract.
Normal hours are capped at 45 hours a week. Overtime is work beyond the employee's normal hours of work.
Step 1: Ordinary rate of pay (ORP)
For a monthly-rated employee:
ORP = monthly wages ÷ 26
For example, RM3,120 a month ÷ 26 = RM120 a day.
For daily-rated employees, the ORP is their daily wage; for piece-rated employees it's based on average earnings.
Step 2: Hourly rate of pay (HRP)
HRP = ORP ÷ normal hours of work per day
With an 8-hour normal day: RM120 ÷ 8 = RM15 an hour.
Step 3: Apply the overtime rate
| When the overtime is worked | Minimum rate | Example at HRP RM15 |
|---|---|---|
| Normal working day | 1.5 × HRP | RM22.50 per hour |
| Rest day (beyond normal hours) | 2 × HRP | RM30.00 per hour |
| Public holiday (beyond normal hours) | 3 × HRP | RM45.00 per hour |
Example: 10 hours of overtime on normal working days in a month = 10 × RM22.50 = RM225.
Working on a rest day
For a monthly-rated employee who works on their rest day (for work within normal hours):
- Up to half their normal hours: half a day's wages at the ORP
- More than half, up to their normal hours: one day's wages at the ORP
- Beyond normal hours: 2 × HRP for each extra hour
Daily-rated employees receive one day's wages for up to half their normal hours and two days' wages for more than half. Rest day work is paid in addition to the monthly wage.
Working on a public holiday
An employee required to work on a public holiday is entitled to two days' wages at the ORP for work within normal hours, in addition to their holiday pay, and 3 × HRP for each hour beyond normal hours.
Example: our RM3,120 employee works 8 normal hours plus 2 extra hours on a public holiday: 2 × RM120 = RM240, plus 2 × RM45 = RM90 — RM330 on top of their monthly salary.
Limits and good practice
- Overtime is limited to 104 hours a month under the Employment (Limitation of Overtime Work) Regulations, unless the Director General approves otherwise.
- Overtime must be paid with the wages for the wage period, within 7 days of its end.
- Overtime pay is not subject to EPF (KWSP excludes overtime from EPF wages), but it counts for SOCSO and EIS and is taxable for PCB.
- Get overtime approved in advance and record actual hours — disputes are usually about evidence.
Overtime in altomateHR
- Overtime requests and approvals in the employee app, with geofenced or WiFi-verified attendance as evidence.
- Your own overtime types — rename or re-rate the built-in normal, rest-day and public-holiday types, or add one such as Night shift.
- Payslips with an Overtime table showing hours and pay for each rate.
- Changing a rate flags draft runs to re-run; approved months keep what was filed.
See what's new in overtime and payroll runs.
FAQ
What is the overtime rate in Malaysia?+
Under the Employment Act, at least 1.5 times the hourly rate of pay on a normal working day, 2 times on a rest day and 3 times on a public holiday, for hours beyond normal hours of work.
How do I calculate the hourly rate for a monthly-rated employee?+
Divide the monthly wage by 26 to get the ordinary rate of pay, then divide by the employee's normal hours of work per day.
Are employees earning more than RM4,000 entitled to overtime?+
Not under the Employment Act, unless they are manual workers or otherwise covered by the First Schedule. Their overtime depends on their contract.
Is there a limit on overtime hours in Malaysia?+
Yes. Overtime is generally limited to 104 hours a month.
Is overtime subject to EPF and PCB?+
Overtime pay is not subject to EPF, as KWSP excludes overtime from wages for EPF. It is counted for SOCSO and EIS, and it is taxable income for PCB.
.