Calculating overtime in Malaysia involves determining the number of hours worked beyond the regular working hours and applying the appropriate overtime rate as per the country’s labor laws.
If you’re an HR executive looking for information about calculating OT or an employee looking for an answer about the OT rate, please read on. Please also make sure to read about replacement holidays in Malaysia whenever overtime is done during compulsory public holidays.
OT Calculation in Malaysia
How to calculate overtime in Malaysia?
In Malaysia, the calculation of overtime pay is governed by the Employment Act 1955. Here is how to calculate overtime in Malaysia:
- Determine if the employee is eligible for overtime: According to the Employment Act, employees who earn a monthly salary of less than RM2,000 or are engaged in manual labor, supervisory, or technical work are eligible for overtime pay.
- Determine the overtime rate: The overtime rate is usually 1.5 times the employee’s hourly rate for each hour worked beyond the normal working hours. However, some companies may have their own policies that offer a higher overtime rate, such as 2 times the hourly rate on rest days or public holidays.
- Calculate the overtime hours: Subtract the employee’s normal working hours from the total hours worked in a day or week to determine the overtime hours. For example, if the normal working hours are 8 hours and an employee works for 10 hours in a day, there would be 2 hours of overtime.
- Calculate the overtime pay: Multiply the overtime hours by the overtime rate to calculate the overtime pay. For example, if the employee’s hourly rate is RM10 and the overtime rate is 1.5 times, the overtime pay for 2 hours would be RM10 x 1.5 x 2 = RM30.
- Consider additional factors: Some companies may offer additional benefits for working overtime, such as meal allowances or transportation allowances. These should also be included in the calculation of overtime pay, if applicable.
It is important to note that different industries or collective agreements may have different rules and rates for overtime pay. It is advisable to refer to the specific employment contract or collective agreement for accurate calculations.
What is the correct way to calculate overtime in Malaysia?
In Malaysia, the correct way to calculate overtime depends on the type of employment and the provisions stated in the Employment Act 1955. Here are the general guidelines for calculating overtime:
For employees covered under Part II of the Employment Act:
- For work performed on normal working days, overtime is calculated at 1.5 times the hourly rate for the first two hours and 2 times the hourly rate for subsequent hours.
- For work performed on rest days or public holidays, overtime is calculated at a rate of 2 times the hourly rate for the entire duration.
For employees covered under Part III of the Employment Act (non-manual work):
- For work performed on normal working days, overtime is calculated at a rate of 1.5 times the hourly rate for the first hour, and 2 times the hourly rate for subsequent hours.
- For work performed on rest days or public holidays, overtime is calculated at a rate of 2 times the hourly rate for the entire duration.
It’s important to note that some employees may be exempted from overtime pay if they fall under certain categories or salary thresholds as defined in the Employment Act. Additionally, collective agreements or employment contracts may provide for different overtime rates or conditions.
It is advisable for both employers and employees to refer to the Employment Act and consult with legal professionals or the Department of Labor for specific details and clarifications regarding overtime calculation.
What is the simple overtime formula?
The simple overtime formula is typically calculated by multiplying the employee’s overtime hours by the overtime rate and adding it to the employee’s regular wages. The formula is as follows:
Overtime Pay = (Overtime Hours) x (Overtime Rate) + (Regular Wages)
Is salary calculated 26 days or 30 days in Malaysia?
In Malaysia, the salary is typically calculated based on a monthly basis, which is considered to be 30 days. However, it ultimately depends on the company and the terms of the employment contract.
Some companies may calculate salary based on a 26-day work month, especially for positions that have weekends and public holidays off. It would be best for you to refer to the employment contract or consult with the employer to confirm the specific terms and calculation method.
What is the maximum overtime per day in Malaysia?
In Malaysia, the maximum overtime per day is generally limited to 4 hours. However, it is important to note that there may be exceptions based on specific industries and collective agreements.
What happens if I do too much overtime in Malaysia?
In Malaysia, the Employment Act 1955 regulates the working hours and overtime of employees. According to this law, an employee cannot work more than 104 hours of overtime in a month. If an employee works beyond this limit, the employer may face legal consequences, including fines or imprisonment.
The employee may also experience negative health effects due to overwork, such as stress, fatigue, and an increased risk of physical and mental health problems.
What are the dangers of working too much overtime?
While you’re happily calculating your overtime to get more money, you should know there is the danger of working too much overtime. Here are some of them:
- Health issues: Working too much overtime can lead to stress, fatigue, and lack of sleep. These can result in serious health problems such as heart disease, high blood pressure, diabetes, and other chronic conditions.
- Mental health: Overworking can result in mental health issues like depression, anxiety, and burnout. The constant stress and lack of downtime can lead to feelings of overwhelm and hopelessness.
- Decreased productivity: Ironically, working more hours can actually decrease productivity. Over time, the mind becomes fatigued and less able to focus, leading to decreased performance and quality of work.
- Poor work-life balance: Working too much overtime can impede on personal time, leading to a poor work-life balance. This can strain relationships and decrease overall life satisfaction.
- Increased risk of accidents: Fatigue and stress from overworking can lead to a lack of concentration, increasing the risk of accidents and mistakes at work.
- Neglected personal needs: Overwork can lead to neglecting personal needs such as nutrition, exercise, and social interaction. This can have negative impacts on physical and mental health.
- Lower morale: Working excessive hours can lead to burnout and lower morale, which can affect not only the individual, but also the overall work environment.
- Possible addiction: Some people may use work as a coping mechanism for dealing with other issues, which can lead to workaholism, a type of behavioral addiction.
- Decreased creativity: Overworking can lead to mental fatigue which can decrease a person’s ability to think creatively and come up with innovative solutions.
- Increased stress levels: Overworking leads to increased stress levels which can have a negative impact on both physical and mental health.