What are the overtime rates according to the employment act?

The PayrollPanda App automatically calculates overtime, for more info you can refer to this help article.

Rules explained in this article apply to employees covered under the Employment Act (e.g. wages not exceeding RM2,000, manual labourers), but can also be used as guidelines for other staff.

Different rates apply whether the overtime is during or outside normal working hours and during normal work days, rest days or public holidays.


Overtime on normal work days

For any overtime work carried out in excess of the normal hours of work, the employee shall be paid at a rate not less than one and half times his hourly rate of pay.

In the PayrollPanda app, you can use the preset overtime item: Overtime (Normal) x1.5.


Overtime on rest days

Every employee is allowed a rest day of one whole day per week. Where an employee is allowed more than one rest day in a week (employees working on 5-day week), the last of the rest days shall be the rest day for overtime purposes. So for employees working Monday to Friday the rest day will be Sunday.

A daily-rated worker who works on a rest day during normal working hours shall be paid as follows:

(i) 1 day's wages if the work does not exceed half his normal hours of work; or

(ii) 2 days' wages if the work is more than half but does not exceed his normal hours of work.

A monthly-rated worker who works on a rest day during normal work hours shall be paid as follows:

(i) 1/2 day's wages if the work does not exceed half his normal hours of work, or

(ii) 1 day's wages if the work is more than half but does not exceed his normal hours of work.

For overtime work on a rest day outside normal working hours, an employee shall be paid at a rate which is not less than two times his hourly rate of pay.

In the PayrollPanda app, you can use the preset overtime item: Overtime (Rest-day) x2.


Overtime on public holidays

If working during normal working hours on a public holiday, in addition to the holiday pay he is entitled to for that day, an employee is entitled to two days’ wages at the ordinary rate of pay.

In the  PayrollPanda app, use the preset overtime item: Overtime (Rest-day) x2 (as the employee is already receiving his normal holiday pay through his monthly salary so only the additional x2 rate needs to be added).

For any overtime work carried out by an employee outside normal working hours on a public holiday, the employee shall be paid at a rate which is not less than 3 times his hourly rate of pay.

In the PayrollPanda app, you can use the preset overtime item: Overtime (Public) x3.

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