How to Calculate Overtime in Malaysia

In Malaysia, OT stands for Overtime, which refers to any hours worked beyond the standard working hours defined under the Employment Act 1955. For most employees, standard working hours are either 8 hours per day or 48 hours per week.

Any work performed beyond this limit is considered overtime, entitling employees to additional compensation. Overtime is a legal requirement and applies to employees earning less than RM2,000 a month or to manual labourers, irrespective of their wages.

How to Calculate Overtime in Malaysia?

To calculate overtime in Malaysia, first determine the employee’s hourly rate by dividing their monthly salary by 26 (the number of working days in a month) and then by 8 (the standard working hours per day). The employee is entitled to 1.5 times their hourly rate for overtime on regular working days.

For overtime on rest days, the rate is two times the hourly rate, and for public holidays, the rate is three times the hourly rate. The formula is Overtime Pay = Hourly Rate × Overtime Hours × Overtime Rate (1.5, 2, or 3, depending on the day). Allowances are typically excluded from overtime calculations unless specified in the employment contract.

What Is The Overtime Calculation Formula In Malaysia?

The formula is Overtime Pay = Hourly Rate × Overtime Hours × Overtime Rate (1.5, 2, or 3, depending on the day). Allowances are typically excluded from overtime calculations unless specified in the employment contract

Employees are entitled to 1.5 times their hourly rate for any overtime on regular days. Employees are paid double their hourly rate for overtime on rest days, and for public holidays, they receive triple their hourly rate. The formula to calculate overtime is:

Overtime Pay = Hourly Rate × Overtime Hours × Overtime Rate

The overtime rate is 1.5, 2, or 3, depending on the type of day (regular, rest day, or public holiday).

How To Calculate Overtime For Monthly Salary Employees?

For monthly salaried employees, the hourly rate is derived by dividing the monthly salary by 26 (the number of working days in a month) and then by the standard eight working hours per day. Once the hourly rate is determined, the overtime pay is calculated based on the number of extra hours worked and the applicable overtime rate (1.5 for normal days, 2 for rest days, and 3 for public holidays).

For example, if a monthly salary is RM2,600, the hourly rate would be RM2,600 ÷ 26 ÷ 8 = RM12.50. For an overtime rate of 1.5 on a normal workday, the employee would earn RM12.50 × 1.5 = RM18.75 per overtime hour.

What Is The Overtime Rate On Rest Day In Malaysia?

In Malaysia, the overtime rate on a rest day is double the employee’s hourly rate. This means that if employees are required to work on their designated rest day, they will be compensated twice their regular hourly wage for every hour worked. This is per the Employment Act 1955, which ensures that employees receive fair compensation for work performed on rest days.

Does Overtime Calculation In Malaysia Include Allowance?

In Malaysia, the overtime calculation applies to the basic salary and does not include allowances such as transport, meals, or housing allowances unless otherwise specified in the employee’s contract. Overtime is calculated based on the hourly rate derived from the basic salary, and additional allowances are typically excluded from this computation. However, in some cases, companies may choose to include certain allowances in their overtime calculations, depending on internal policies or contractual agreements.

What is Employment Act 1955?

The Employment Act of 1955 is a key piece of labour legislation in Malaysia that outlines employers’ and employees’ rights and obligations. It sets the framework for minimum employment standards, covering wages, working hours, rest days, overtime, maternity leave, and termination benefits.

The Act primarily applies to employees earning less than RM2,000 per month and manual labourers, although certain provisions may extend to other groups. It protects workers from unfair treatment and ensures that employers meet their obligations regarding fair compensation and working conditions.