It’s official: Malaysia to start RM1,500 minimum wage from May 1; firms with fewer than five staff to follow in Jan 2023

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The new RM1,500 minimum wage rate will apply to an employer who has five or more employees from May 1. — Picture by Miera Zulyana
The new RM1,500 minimum wage rate will apply to an employer who has five or more employees from May 1. — Picture by Miera Zulyana

KUALA LUMPUR, April 28 — Malaysia’s new minimum wage rate of RM1,500 has been officially gazetted and will take effect nationwide this Sunday, which is also Labour Day.

The exception is for employers with fewer than five staff members which will only be legally required to start paying at least RM1,500 from January next year.

The Minimum Wages Order 2022 made by Human Resources Minister Datuk Seri M. Saravanan was published in a federal government gazette yesterday.

This means that the minimum wage that employers must pay workers would amount to RM7.21 an hour.

In daily wages, this translates to RM57.69 for a six-day work week; RM69.23 (five-day work week); and RM86.54 (four-day work week).

For employees who are not paid basic wages but are paid wages based only on “piece rate, tonnage, task, trip or commission”, the rate of monthly wages that has to be paid to such employees from May 1 is at least RM1,500.

The new RM1,500 minimum wage rate will apply to an employer who has five or more employees from May 1.

If an employer carries out a professional activity classified under the Malaysia Standard Classification of Occupations (Masco) as published officially by the Human Resources Ministry, the new RM1,500 rate will apply from May 1, regardless of how many employees are employed by such an employer.

In other words, even if an employer who carries out such professional activities has less than five employees, such employees would have to be paid at least RM1,500 from May 1.

New rate to take effect later

But if you are an employer who has fewer than five employees, your employee will only be entitled to the new RM1,500 minimum wage rate from January 1, 2023. This would be eight months from the May 1 rate for other employers.

This deferred introduction of the new minimum wage rate also applies to employees who take in commission-based wages from such employers with less than five employees.

Before the new RM1,500 minimum wage rate kicks in for these employers with a workforce of below five, these employers will continue to be required to pay at least RM1,200 or RM1,100 depending on where their place of employment is located.

From May 1 to December 31, the minimum monthly wage for employees (whose employers have less than five employees) in areas under city councils or municipal councils will continue to be RM1,200, which translates to RM5.77 per hour.

In terms of daily wages, this would translate to RM46.15 for a six-day work week, RM55.38 for a five-day work week, or RM69.23 for a four-day work week.

From May 1 to December 31, the minimum monthly wage for employees (whose employers have less than five employees) in areas that are not city councils or municipal councils will continue to be RM1,100, which translates to RM5.29 per hour.

In terms of daily wages, this would be RM42.31 for a six-day work week, RM50.77 for a five-day work week, or RM63.47 for a four-day work week.

A bit of history

Malaysia had in January 2013 introduced minimum wage rates of RM900 per month (or RM4.33 per hour) for Peninsular Malaysia and RM800 per month (or RM3.85 per hour) for Sabah, Sarawak and the federal territory Labuan for those working with employers with more than five employees or employers who carried out professional activity according to the Masco classification, but also with a deferred implementation date of July 2013 for employers with less than five employees.

The minimum wage rates were revised and increased from July 2016 onwards to RM1,000 monthly in Peninsular Malaysia and RM920 monthly in Sabah, Sarawak and the federal territory Labuan.

That translated to a minimum rate of RM4.81 per hour or daily rates of RM38.46 for a six-day work week, RM46.15 (five-day), RM57.69 (four-day) in Peninsular Malaysia, and a minimum rate of RM4.42 per hour or daily rates of RM35.38 (six-day), RM42.46 (five-day), RM53.08 (four-day) for Sabah, Sarawak and the federal territory Labuan.

While the minimum wage rate was initially raised to RM1,100 nationwide from January 2019, the additional category of RM1,200 minimum wage rate had kicked in from February 1, 2020.

The RM1,200 rate was initially applicable to places of employment under a gazetted list of 16 city council areas and 40 municipal areas, from February 1, 2020 onwards.

From February 1, 2022 onwards, a January 2022 order by the human resources minister removed the gazetted list of city council areas and municipal areas where the RM1,200 rate applied, with such areas defined according to local government laws instead (Local Government Act 1976, Local Government Ordinance 1961 [Sabah No. 11 of 1961], Local Authorities Ordinance 1996 [Sarawak Cap. 20], including Putrajaya and Labuan.

These definitions for city council areas and municipal areas continue to apply in the human resources minister’s order gazetted yesterday.

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