Minimum Wage in Malaysia (finalised version)

As I am sitting here typing this blogpost, JTK is organising a public announcement at Menara Perkeso informing the public on the latest from the minimum wage issue. Everything has been finalised and below are some points for your understanding:


The Minimum wage order does not apply to ‘domestic servants’ and ‘apprentices’ within the meaning of s.2 EA.

Implementation date:

1st January 2013 for employers having more than 5 employees

1st January 2013 for employers having less than 5 employees but are professionals listed under MASCO

1st July 2013 for employers having 5 or less employees

Employers can write in to the National Wages Consultative Council to apply for a deferment. A letter stating the grounds must be accompanied with the following:

  • SSM Forms
  • Audited profit and loss statement for past 3 years
  • Employee details (foreign and local) and last drawn salaries

Minimum wage:

Minimum wage means “the rates prescribed under the Minimum Wage Order” and DOES NOT include ANY ALLOWANCES!

Under the Minimum Wage Order, the following rates are prescribed:

  • Monthly rated employees – RM900 (PM)/RM800 (EastM)
  • Hourly rated employees – RM4.33/RM3.80
  • Daily rated employees – Minimum wage/month x 12
  •                                          52 weeks x no. of work days per week

If your employees are on RM0 basic and are paid solely based on trips, tonnage, commissions, etc those payments can be used and if it falls short of the rates prescribed under the MWO, the employer must top it up so it achieves the prescribed rates.

***I have an issue with the daily rated formula, will be posting this up when I have a little more free time.

Negotiating to restructure wages:

Because of our current wage system, the Ministry is allowing us to negotiate and restructure it ONCE and BEFORE THE IMPLEMENTATION date. The restructuring process is subjected to the consent of the individual employees or trade unions. The purpose of this is so the company can consolidate an allowance into the basic salary of the employee in order to achieve the rates prescribed under the Order. Upon consolidation, it forms a clean wage and the allowances previously given will no longer be there. 

In the restructuring process, it is important to adhere to the following guidelines:

  • The restructuring cannot result in a lower remuneration package from the current one
  • Restructuring can only be made from monies payable for work done under s.2 EA
  • Restructuring cannot involve payments under s.2 (a) – (f) EA.
  • Restructuring cannot involve payments given due to the nature of work (i.e. cold allowance, hot allowance, etc)
  • Service charge for hotels can be restructured
  • Special gratuitous payments for plantations of RM200 can be restructured
  • Safety incentives for securities can be restructured
  • Housing allowance (not the value of it) can be restructured


The minimum wage rate for probationers can be reduced by 30% for 6 months from the date of their probation period


Any other orders before the coming into force of the Minimum wage order is revoked on the date the minimum wage order comes into force.


Apart from the above, there are a few legal issues that you might come across in your implementation process. Please feel free to contact me so I can further elaborate into the finer points.