Unpaid Leave Malaysia: How to Calculate Deductions
Unpaid leave in Malaysia refers to any period of absence from work where the employee does not receive salary. Unlike paid annual leave or sick leave, unpaid leave is not a statutory entitlement under the Employment Act 1955. It is typically granted at the employer’s discretion when an employee has exhausted all paid leave entitlements or requires time off for reasons not covered by statutory leave provisions.
Unpaid Leave Calculation Method
The formula for calculating unpaid leave deductions is based on the employee’s daily rate and the number of unpaid leave days taken.
Unpaid Leave Deduction = Daily Rate x Number of Unpaid Leave Days
To determine the daily rate:
Daily Rate = Monthly Salary / Number of Working Days in the Month
For example, if an employee earns RM3,000 monthly and there are 22 working days in the month, the daily rate is RM3,000 / 22 = RM136.36. If the employee takes 3 days of unpaid leave, the deduction is RM136.36 x 3 = RM409.09.
Some companies use 26 as the standard divisor (representing average working days per month) instead of the actual working days in a specific month. The method used should be stated clearly in the employment contract or company policy to avoid disputes.
The remaining salary after deduction is the amount the employee receives for that month. Statutory deductions such as KWSP, PERKESO, and PCB are calculated based on the adjusted gross salary after unpaid leave deductions.
Importance of Accurate Unpaid Leave Calculations
Precise calculation of unpaid leave deductions protects both the employer and employee from payroll errors and potential disputes.
For employers, accurate calculations ensure:
- Payroll compliance - Correct salary deductions prevent underpayment or overpayment, both of which can create legal and financial issues
- Budget management - Tracking unpaid leave helps estimate workforce costs and plan staffing levels accordingly
- Record keeping - Proper documentation of unpaid leave supports compliance with the Employment Act 1955 which requires employers to maintain accurate employment records
- Benefits administration - Unpaid leave may affect calculations for KWSP contributions, PERKESO, annual leave accrual, and other benefits
For employees, understanding the calculation ensures they receive fair pay for the days they have worked and can plan their finances accordingly when taking unpaid leave.
Salary Deduction Rules for Unpaid Leave
The Employment Act 1955 provides specific guidelines on salary deductions, including those related to unpaid leave.
Under Section 24 of the Employment Act 1955, employers can only deduct wages under specific circumstances permitted by law. Deductions for authorized unpaid leave are permitted, but the total deductions (including statutory deductions) from any single wage period should not exceed 50% of the wages due to the employee for that period.
Salary deductions for unpaid leave must be proportionate to the number of days absent. The employer cannot deduct more than the equivalent daily rate for each day of unpaid leave taken. All deductions must be documented and reflected accurately in the employee’s payslip.
If an employee disputes the deduction amount, they can raise the matter with their HR department first. If the dispute is not resolved, the employee can file a complaint with the Jabatan Tenaga Kerja (Labour Department) for mediation.
Treatment of Weekends and Public Holidays
A common question about unpaid leave is whether weekends and public holidays that fall within the unpaid leave period are counted as unpaid days.
Unpaid leave in Malaysia does not include weekends (Saturday and Sunday for most companies) as these are non-working days. Similarly, gazetted public holidays that fall within the unpaid leave period are typically not deducted from the employee’s salary, as they are paid holidays under the Employment Act 1955.
For example, if an employee takes unpaid leave from Monday to Friday (5 days), only 5 working days are deducted, not 7 calendar days. If a public holiday falls on a Wednesday within that period, only 4 days of unpaid leave are deducted, as the public holiday is a paid day.
However, this treatment may vary depending on the company’s policy and the employee’s work schedule. Shift workers or employees with non-standard work weeks should refer to their employment contract for the specific rules that apply to them.
Common Reasons Employees Take Unpaid Leave
Employees in Malaysia take unpaid leave for various reasons, typically after exhausting their paid leave entitlements.
- Personal or family emergencies - Illness, accidents, or bereavement that requires more time than available paid leave
- Extended maternity or paternity leave - Some parents choose to extend their statutory leave period with additional unpaid days
- Medical reasons - Employees who have used all their paid sick leave may need additional recovery time
- Personal development - Attending courses, workshops, or pursuing further education not covered by employer-sponsored training
- Sabbatical or extended travel - Some employees negotiate unpaid leave for personal enrichment or travel
- Family obligations - Relocation, important family events, or caring for elderly parents
Employers are not obligated to approve unpaid leave requests. The decision is typically at the employer’s discretion, based on operational needs and the employee’s circumstances. Employees should submit unpaid leave requests in writing and obtain written approval before taking the leave to avoid any misunderstandings.
Impact of Unpaid Leave on Employee Benefits
Taking unpaid leave can affect several aspects of an employee’s benefits and entitlements beyond just their monthly salary.
- KWSP contributions - Contributions are calculated on the reduced gross salary for the month, resulting in lower contributions for both employer and employee
- PERKESO and EIS - Contributions are similarly calculated on the reduced salary amount
- Annual leave accrual - Extended unpaid leave may affect annual leave entitlement if the company policy ties leave accrual to actual days worked
- Bonus calculations - Performance bonuses or annual bonuses may be prorated based on actual working days, excluding unpaid leave periods
- Probation period - Unpaid leave taken during probation may extend the probation period by the number of days absent
Employees considering unpaid leave should discuss these implications with their HR department before submitting their application. Understanding the full financial impact helps in making an informed decision. Perlu diketahui bahawa polisi cuti tanpa gaji juga berbeza mengikut sektor. Pekerja dalam sektor kerajaan menikmati faedah cuti yang lebih baik berbanding kebanyakan syarikat swasta.