Labor Law / Labor Column Part 1: Overall picture of Labor Law in Malaysia

Labor Law / Labor Column Part 1: Overall picture of Labor Law in Malaysia


1. Introduction

 Not only in Malaysia, as long as employees are employed by company, so labor problems cannot be avoided. It is difficult to grasp the overall picture of labor law because this is an individual specific problem that is required to deal with incident every day in the company. Therefore, we got the opportunity to write a column (6 times in total) with the basic concepts regarding laws on labor laws and labor in Malaysia. Throughout the whole picture, we would appreciate if you could use it as a clue to solving individual problems.

2. About Malaysia legal system and recent labor law

2-1 Common Law and Eastern Regional Autonomy

In Malaysia, it is important to understand the precedent because Malaysia is following the common law system (customary law, precedent) where under the influence of the UK which is the former religious country. However, since Malaysia is a federal state, especially in the Sabah and Sarawak states in the eastern part, since many autonomy rights are recognized from the historical background, it is necessary to have knowledge about Federal Constitution, statutory laws by the Congress and its subordinate rules, the constitutional laws by state, laws and regulations and other written laws.

2-2 About Workers Protection

Malaysia is regarded as a country that is more protective of workers compared to Singapore, which is easier to dismiss. "Workers" under the Employment Law are primarily targeted for low-income and physical workers, and from the start of employment, during employment, until the end of employment. Attention is required at each stage, not only the provisions of the law but also appropriate procedures such as collecting evidence etc.

2-3 Regarding Labor policy in recent years

  According to the Economic Transformation Program announced in 2010, announced that 3.3million employment will be created by 2020. On the other hand, it aims to reduce reliance on foreign workers, and regarding expatriate, from September 1, 2017, categories of employment paths to foreigners are reclassified. It should be paid attention to the changes in legislation and practical operations in each field including labor laws in future. In addition, the Minimum Wages Order 2016 has been enforced in July 2016, currently RM1,000 in the Malaysia Peninsula and RM920 ringgit in eastern Malaysia, but in 2018 the Ministry of Human Resources has announced a policy to raise the minimum wage, therefore, we should pay attention on this as well.

3. About Labor Law

3-1 General Topic

As mentioned above, in the field of labor law, besides statutory law, precedents are also important. As an important point in practice, it is necessary to pay attention to the fact that it is difficult to recognize the validity of the description and agreement which is different out of the contract and from the contract, and the faith law as general principle is difficult to follow.

3-2 About the Acts Governing Individual Incorporated Administrative Agencies

 Please refer to the main labor laws and regulations below:

  • Employment Act 1955:Law for protecting part of the workers.
  • Trade Unions Act1959:Law regulate the activities & organize of Labor union
  • Industrial Relations Act196:Law regulate means to solve labor disputes between companies and workers, labor union, labor and management.
  • Employees Provident Fund Act1991:Law regulate for employee fund, which is a government managed pension system.
  • Employeeʼs Social Security Act1969:Law regulate the social security system.
  • Workmenʼs Compensation Act1952:Law concerning the system for granting compensation and financial support for accidents and diseases etc. of workers during work.
  • Factories and Machinery Act1967:Law regulate the safety, health, welfare, etc. of factory workers.
  • Occupational Safety and Health Act1994:Law regulate the safety and health of workers, legal protection to protect welfare.
  • Immigration Act1959/1963:Law regulate for immigration and foreign workers such as permission to enter Malaysia, approval of visa and procedures thereof.
  • Employment (Restriction) Act1968:Law regulate in matters specifically applied to foreign workers.
  • Human Resource Development Act 2001:Law regulate in facility training of workers, establishment & management of human resources development agency and its funds, company funds provision.
  • Minimum Retirement Act 2012:Law regulate the retirement age.
  • Children and Young Persons (Employment) Act:Law regulate the prevention of exploitation by child labor.
  • In additional, there are guidelines such as Minimum Wages Order 2016, The Code of Conduct for Industrial Harmony 1975, The Code of Practice for the Eradication and Prevention of Sexual Harassment in the Workplace1999.
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All data and commentary included in this material was edited and written by Legal firm "One Asia" based on published information at the time of this material creation, but it does not guarantee its accuracy and completeness. In addition, we are not responsible for any damage caused by using the information in this material.
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"One Asia Lawyers" is the first ASEAN legal specialization in Japan, which was established in order to offer advice on legislation in Japan and ASEAN countries, including Malaysia. For inquiries regarding this article, please send in email to

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