If you’re an employer or employee in Malaysia, it’s important to understand how to calculate the ordinary rate of pay and rate of pay for work done outside of normal hours of work. According to the Employment Act 1955 (Act 265), the ordinary rate of pay is defined as the rate of pay that an employee receives for work done during normal hours of work divided by the number of working days in a month. Here’s how you can calculate the ordinary rate of pay:
Ordinary rate of pay = monthly rate of pay / 26 days = RM per working day
To calculate the weekly rate of pay, divide the monthly rate of pay by 6 days. To calculate the hourly rate of pay, divide the ordinary rate of pay by the number of normal hours of work.
If you’re an employee who works outside of normal hours of work, you may be entitled to overtime pay. Overtime is defined as work done on working days but outside of normal hours of work. The overtime rate of pay on a working day shall be no less than one and a half (1.5) times the hourly rate of pay. Here’s how you can calculate the overtime rate of pay per hour on a working day:
Overtime Rate of Pay Per Hour on a Working Day = Hourly Rate of Pay x 1.5
If you work on rest days or public holidays, you may be entitled to a different rate of pay. The hourly rate of pay for work done on rest days differs from the rates on working days. The rate of pay for work done on public holidays must be at least twice (2 times) the ordinary rate of pay on working days. The overtime rate of pay on public holidays shall be no less than thrice (3 times) the ordinary rate of pay on working days.
By following these guidelines, you can ensure that you’re calculating the ordinary rate of pay and rate of pay for work done outside of normal hours of work correctly and in compliance with Malaysian labour laws.
To gain additional information or seek any help, contact us at Zentrusted.
This content is for informational purposes only and does not constitute professional advice. Always refer to the official websites/guidelines/regulations of the relevant authorities for detailed information and consult with a professional for personalized guidance.