Malaysia

9 Chapter Q&A

    • Q&A1

       Q1Upon the commencement of the maternity leave and the employee passed away  unexpectedly, will the company still pay maternity benefits?

      A: If the employee who commences her  maternity leave died during the eligible period, the benefits being paid during the period must be paid continuously. At that time, since the employee cannot anymore received the benefits by herself, her legal personal representative shall receive. Article 39 of the Labor Law stipulates the order as follows:

      1) Payee

      2) Legal representative (when there is no recipient)

      No other person except to the stated above shall receive the payment of the benefits.

    • Q&A2

       Q2: Are there any restrictions on salary deductions in Malaysia?

       

      A: Under the Labor Law of Malaysia, the maximum allowable deduction is up to 50% of monthly salary.

      . No further deduction is allowed. However, if the employee will leave the company for retirement or any other reasons except the above, deductions will be made from the final payment of the wages of the employee for any amount due to the employer.

      In that case, there will be no problem even if the deduction exceeds 50% or more or deducting the full amount will also be possible.. 

    • Q&A3

       Q3: Is it possible to apply interest on the amount borrowed by the employee from the company?

       

      A: In general, Malaysia's labor law prohibits the application of interest. However, interest may be applied if the following two documents are present: 1. Agreement with employees

      2. License of the Labor Office

      However, in reality, it is very difficult and almost impossible to secure these documents. 

    • Q&A4

       Q4: Does Malaysia, have any rules regarding the payment of salaries to employees? For example, payment by cash is possible.

       

      A: In Malaysia, due to the revision of the Labor Law in 2012, the general rule is that the payment of salary should be paid by bank transfer.

      However, based also in the Labor law, upon the request of an employee, the employer may pay in legal tender or by a cheque made payable to or to the order of the employee.

       The purpose of the general requirement on payment of wages through bank transfer is to prevent problems such as employee claims of non-payment of salary because the bank statement serves as evidence of payment or transfer of funds. Also, even if there is an agreement with employees on check payment, it is encouraged that a payment record be made by the company.

      Also, please be aware that Labor Law stipulates that payment of salary must be paid within 7 days from the closing date of any wage period. Since this 7 day is not referring to business day, it should be noted that holidays are included.

    • Q&A5

       Q5: If a mistake in calculating the overtime payment of employees occurred and the employee was overpaid, can the overpaid amount be deducted from the salary for the next month?

       

      A: Under Article 24 of the Malaysian Labor Law, it is accepted that deduction is possible. However, please be careful because there is time limit. Deduction is not permitted unless it is done within 3 months from the month when overpayment was made. For example, if the month you overpaid overtime was April, the month that you can deduct the overpayment is June. If deduction will be made in July, this April portion cannot be deducted anymore. Also, it is necessary for the employer to calculate mistakes in overpayment that can be allowed as deduction.. In principle, deductions other than that are not allowed.

       

    • Q&A6

       Q6: I would like to acquire medical insurance for employees as employer, but to be able to do that, do you think that the company pays to individuals or whether it is better to join as group insurance, is there any difference? .

       

      A. The big difference is probably whether or not the expenses reimbursed by insurance fall under the taxable income of the employee. In the case of group insurance, it is not included in taxable income, but if it is individual, it is added to individual taxable income.

      The company assumes the cost and the beneficiary is the employee, but in that case the amount paid by the Malaysia domestic revenue agency is recognized as the actual salary of the employee andt is subject to taxable income. Family insurance is subject to taxation in the same case.

      However, if the case falls under the following, it is not considered to be taxable income for employees.

      a) Insurance that is obliged not to enter foreign workers other than SOCSO

      b) Joining group insurance

      c) Amount of air insurance paid for public use

      d) In public and private medical institutions, the amount the employee has taken medical care actions by the company

    • Q&A7

       Q7: In Malaysia, do you oblige legislation to make a vacation leave?

       

      A: Under the Employment Law of Malaysia, there is no provision for an invitation vacation. Therefore, specifying it is not necessary. As a company, if you are planning for it, I think that you must decide on employment rules etc. because it is free. As for the number of days, there is no such thing as more than one in particular, so I think whether to look at about 2 to 3 days can be considered as a guide.

       

    • Q&A8

       

      Q8: Is Malaysia is it mandatory to buy annual paid vacation just like in Thailand? Or can the company create their own rules? 

      A: In Malaysia, as stipulated by the Employment Law, buying annual paid holidays for employees who pay salary on a monthly basis is not mandatory. However, if employees resign or the contract was ended, the company obliged to purchase the remaining leave.

       

       

    • Q&A1

       Q1: In this contract, I joined the business of the construction supervision with the Japanese side and a company in Malaysia. At that time, PE taxation is a concern, but in the case of Malaysia Is there anything that has been decided on tax supervision over this supervisory work?

       

      A: According to the Japan Battle Treaty, it is stated that PE's judgment on construction supervision work lasts more than six (6) months. If the contract period lasts longer than six (6) months, PE certification must be secured.