Key amendments

Expansion of scope to all employees

The key changes to the Ordinances include an expansion of the Ordinances' coverage, which now applies to all workers regardless of their wages or job type. Previously, the Ordinances had only applied to employees earning monthly wages of MYR 2,500 or less per month, and to certain categories of blue-collar employees regardless of their wage amount.

Additional protections for employees and duties on employers

Some of the enhanced protections or new entitlements under the Ordinances are summarised below.

1. Extension of maternity leave

Maternity leave is increased from 60 days to 98 days.

2. Expansion of definition of confinement

The definition of "confinement" (to determine the eligibility of parental entitlements) has been updated to refer to childbirth occurring after at least 22 weeks of pregnancy, instead of the previous threshold of 28 weeks.

3. Restriction on termination of pregnant employees

Employers are restricted from terminating a pregnant employee or an employee suffering from an illness arising out of pregnancy except on grounds of misconduct, wilful breach of a condition of the employment contract or closure of the employer's business.

4. Introduction of paternity leave

Married male employees are entitled to seven consecutive days of paternity leave.

5. Reduction in limit on regular working hours

The weekly limit on regular working hours has been reduced from 48 hours to 45 hours.

6. Notice on sexual harassment

Employers are required to conspicuously exhibit a notice to raise awareness of sexual harassment at the workplace.

7. Duty to inquire into sexual harassment complaints

Employers are required to inquire into a complaint of sexual harassment. If the employer refuses to inquire into a complaint, the employer must provide written reasons for the refusal within 30 days after receipt of the complaint.

8. Discrimination

The Director General has the power to inquire and decide on any dispute relating to discrimination in employment and make an order where necessary. The extent of the orders which the Director General may make is not prescribed.

9. Wider powers for Director General to handle wage disputes

The Director General of Labour can now investigate and decide on contractual wage-related disputes for all employees, removing the previous limit of claims from employees within the wage range of between MYR 2,500 to MYR 5,000.

10. Flexible working arrangements

Employees may apply to their employer in writing for a flexible working arrangement to vary their hours of work, days of work or place of work. Employers are required to respond to the application within 60 days, either approving or refusing the request. If the application is refused, the employer must provide the reasons for the refusal.

11. Termination of non-resident employees

The amendments also provide that if the service of a non-resident employee¹ is terminated, the employer shall inform the Director General of Labour.

12. Presumption of employment

Unless proven otherwise, an individual will be presumed to be an employee if among others, his manner or hours of work are subject to control by another person and he is provided with tools, materials or equipment by another person to execute his work.

Revocation of Employment (Exemption) Order 2005

In addition, the Employment (Exemption) Order 2005 ("2005 Order") which applied to Sabah and Sarawak has been revoked under the Employment (Exemption) (Revocation) Order 2025.

Previously, the 2005 Order exempted non-manual, executive, and managerial employees earning between MYR 2,001 and MYR 2,500 from certain protections under the Ordinances, including paid holidays, hours of work, shift work and rest days. Following the revocation, the exemptions under the 2005 Order will no longer apply.

Now, only employees earning wages above MYR 4,000 per month are excluded from the following protections below (unless they fall within specified categories of blue-collar employees such as manual labourers, supervisors of the manual labourer and drivers). The exempted sections relate to:

1. Public holiday rate of pay
2. Overtime pay
3. Additional pay for working on rest days
4. Entitlement to allowances during shift work
5. Termination, lay-off, and retirement benefits

Limitation on permitted work by children or young persons

In line with the Children and Young Persons (Employment) Act which applies in Peninsular Malaysia, the Ordinances have been amended to include a provision which states that children or young persons shall not be engaged in, among others, production or trade of alcoholic beverages, gambling activities and massage services. By explicitly prohibiting children and young persons from engaging in harmful and exploitative employment, the amendments provide stronger legal protection for these vulnerable groups.

Increased Penalties

The maximum fines for breach of the obligations and duties under the Ordinances have been significantly increased, with the general penalty being increased from MYR 10,000 to MYR 50,000 per offence. Certain non-compliances such as the commission of forced labour, and the commission of a second offence relating to the employment of children and young persons, attract higher penalties of MYR 100,000 and/or imprisonment for a term not exceeding five years per offence, depending on the breach.

Looking ahead

These changes, which largely address the disparity between the employment laws of Peninsular Malaysia and the states of Sabah and Sarawak, are welcomed. With an effective date of 1 May 2025, they aim to immediately improve the protections for employees in Sabah and Sarawak.

Considering the additional duties and heavier penalties for non-compliance, employers and all relevant parties with a workforce in Sabah and Sarawak should take the necessary action to ensure compliance, including by reviewing their employment contracts, employment policies, conducting audits of their current practices and implementing training for all relevant personnel. 

1 "Non-resident employee" means any person who does not belong to Sabah or Sarawak as provided for in section 71 of the Immigration Act 1959/63

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Han Yang Quek, Associate, and Naomi Teh, Legal Assistant, contributed to this legal update.

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