Minimum Retirement Age Act in Malaysia (latest update)

Dear readers,

The Minimum Retirement Age Act 2012 will come into effect on 1st July 2013. Employers may further apply for a deferment of 6 months if they submit good reasons for deferment to be granted. Applications for deferment must be directed to the Ministry of Human Resource by 28th February 2013.

Some important points that you need to be aware of:

  • The Minimum Retirement Age Act is an Act specifically for the private sector in Malaysia.
  • The minimum retirement age stipulated under the Act is 60 years. The Minister may review and increase this at any time.
  • Employers are not allowed to prematurely retire an employee before the minimum retirement age. However, employees may opt for early retirement if the CA or contract provides for this option.
  • The Act will not be applicable to those who have been retired at the age of 55 years or more (before 1st July 2013) and subsequently reemployed.
  • The Minimum Retirement Age Act is an act to deter employers from prematurely retiring an employee. The definition of retirement is ‘termination of grounds of age’. Any other form of termination should not be considered under this Act. For example, if an employee on a fixed term contract is terminated, the proper avenue for him is to go under s.20 of the IRA if he feels that his termination was unlawful. The employee can only come under the Minimum Retirement Age Act if reasons of his termination is on grounds of age.
  • The Minimum Retirement Age Act falls under the governance of the Labour Department (Pejabat Buruh/Jabatan Tenaga Kerja) and not the Industrial Relations Department (Jabatan Perhubungan Perusahaan).

Those are some pointers that you can rely on but if you need a clear understanding on this, please contact me.