Understanding OT Rates Under Malaysia’s Employment Act 1955

Overtime (OT) is regulated under the Employment Act 1955 to ensure employees are fairly compensated for extra working hours. Here’s a simple breakdown:

🔹 Who is covered?

• Employees earning RM4,000 per month and below.
• Employees involved in manual work, including skilled workers or trainees.
• Employees who operate or maintain vehicles used to transport passengers or goods.
• Employees who supervise or manage workers doing manual labour

🔹 What counts as overtime?
Any work beyond:

• Normal working hours
• During a non-working day
• During a public holiday

🔹 OT on a normal working day
Employees must be paid at 1.5 times their hourly rate for extra hours worked.

Example: John’s monthly salary is RM3,500 and his normal working hours is 8 hours per day. He worked another extra 2 hours on Friday.

Hourly Rate: RM3,500/26/8 = RM16.83 per hour

OT pay: RM16.83*1.5*2 hours = RM50.49

🔹 OT on a rest day
Payment depends on hours worked:

• Less than half-day: 0.5 day wages
• More than half-day (up to normal hours): 1 full day wages
• Beyond normal hours: 2 times hourly rate

Example: Sally’s monthly salary is RM3,000 and she worked for 10 hours on Sunday, which is her rest day.

Hourly Rate: RM3,000/26/8 = RM14.42 per hour

OT Pay for the first 8 hours (normal working hours): RM3,000/26 = RM115.38

OT Pay for another 2 hours (beyond normal working hours): RM14.42*2*2 hours = RM57.68

Total is RM115.38 + RM57.68 = RM173.06

🔹 OT on public holidays
Employees are entitled to:

• 2 times hourly rate for normal working hours
• 3 times hourly rate for any extra hours worked

Example: Ahmad’s monthly salary is RM2,800 and he worked for 9 hours on a Public Holiday.

Hourly Rate: RM2,800/26/8 = RM13.46 per hour

OT Pay for the first 8 hours (normal working hours): RM13.46*2*8 hours = RM215.36

OT Pay for another 1 hour (beyond normal working hours): RM13.46*3*1 hour = RM40.38

Total OT Pay is RM215.36 + RM40.38 = RM255.74

🔹 Why it matters
Understanding OT ensures:

• Employees are paid fairly
• Employers stay compliant with the law
• A transparent and positive work culture is maintained

Clear OT practices aren’t just about compliance—they reflect how much an organization values its people.