Malaysia Termination & Lay-off Benefits Calculator for Employees

About the Malaysia Termination & Lay-off Benefits Calculator for Employees

Work out what an employee in Malaysia is owed when the employment ends: the termination benefit of the Employment (Termination and Lay-Off Benefits) Regulations — at least 10, 15 or 20 days’ wages for every year of service — the pay in lieu of notice of the Employment Act, and the pay for unused annual leave. For RM3,000 a month and 6 years 3 months of service ended by redundancy that is RM12,328.77, plus RM5,600.00 for 8 weeks’ notice not worked.

The calculator first checks who qualifies — 12 months of service, the way the employment ends, and the RM4,000 a month line above which only manual workers keep these rights — then counts the service to the nearest month, works out a day’s wages the way JTKSM does, and applies the contract’s notice or the Act’s minimum. Nothing you type leaves your browser. Without a pass the page gives a free preview of your own result: who qualifies, the notice period and the rules, with every amount hidden until you unlock it with a Pro pass.

Who gets termination benefits

An employer must pay termination benefits to an employee with a continuous contract of service of at least 12 months whose contract is terminated, or who is laid off (regulations, regulation 3). Two or more periods with the same employer count together when the gaps add up to no more than 30 days. They are payable whatever the reason for the termination except when:

• the employer retires the employee at the retirement age in the contract;
• the employer dismisses the employee for misconduct after a due inquiry;
• the employee resigns — unless it is because the employer broke the contract (Employment Act section 13(2)) or because of a threat of danger (section 14(3));
• the contract is renewed, or the employee is re-employed, on terms no less favourable from the next day; or the employee unreasonably refuses such an offer made at least 7 days before;
• the business changes owner and the new owner offers, within 7 days, to keep the employee on no less favourable terms, and the employee unreasonably refuses (regulation 8).

An employee who leaves before the end of the employer’s notice, without the employer’s consent or without paying for the rest of the notice, loses them too. Since the amendments by Act A1651, employees earning more than RM4,000 a month are outside these regulations unless they are manual workers (JTKSM’s questions and answers2022.pdf), question 7).

How much: 10, 15 or 20 days’ wages a year

At least 10 days’ wages for every year of service if the employee has been employed for less than 2 years, 15 days’ from 2 to under 5 years and 20 days’ from 5 years, and pro rata for an incomplete year, to the nearest month (regulation 6). The calculator counts a part month of 15 days or more as a month.

A day’s wages is the employee’s average true day’s wages over the 12 completed months before the termination, with “wages” as the Employment Act defines them: basic pay and other cash payments for work — overtime, commission and allowances included — but not the employer’s contributions, travelling allowances, gratuities or annual bonuses. JTKSM’s calculator takes the wages received in the last 12 months divided by 365; so does this one. JTKSM’s calculator counts the service in days divided by 365 rather than to the nearest month; when that differs, the calculator shows its figure too (JTKSM).

The benefit is due within 7 days of the last day of service, with a written statement of the amount and how it was worked out (regulations 11 and 12) — and in addition to any pay in lieu of notice.

Notice and pay in lieu of notice

Either side ends a contract of service by written notice. Its length is what the written contract says; if it says nothing, at least 4 weeks for less than 2 years of service, 6 weeks from 2 to under 5 years and 8 weeks from 5 years. When the job ends because the business closes or moves, the work has ceased or diminished, the employee refuses a transfer the contract does not require, or the business changes owner, the employer must give at least these weeks whatever the contract says (Employment Act section 12, Act 265).

Instead of notice, either side may pay the wages the employee would have earned during it, or during the rest of it (section 13(1)). JTKSM works that out as the monthly salary divided by the days of the month the employment ends, times the days of notice (JTKSM); a month’s notice is a month’s salary. An employee who resigns owes the same notice, or the wages for it.

Lay-offs

An employee whose pay depends on being given work — paid by the hour, the day, the task or the piece — is laid off when the employer gives no work on at least 12 normal working days within 4 consecutive weeks and pays nothing for them; rest days, public holidays and leave do not count (regulation 5). Lay-off benefits are worked out like termination benefits. JTKSM explains that this does not apply to monthly-paid employees, whose salary does not depend on the work given (JTKSM).

Unused annual leave and the rest of the final pay

An employee gets 8 days of paid annual leave a year under 2 years of service, 12 days from 2 to under 5 years and 16 days from 5 years, in proportion to the completed months in the last year. Leave not taken when the contract ends is paid at the ordinary rate of pay — the monthly salary divided by 26 — for every day, unless the employee was dismissed for misconduct (section 60E). JTKSM lists the statutory items of a final settlement as notice pay, termination benefits, the balance of annual leave and any wages still due.

An employer retrenching employees must report it to JTKSM with Form PK. An insured employee who loses the job may claim Employment Insurance System allowances from PERKESO (PERKESO) — after a retrenchment, a voluntary separation scheme, a closure or a constructive dismissal, but not after an ordinary resignation, the end of a fixed-term contract or of the work it was for, a termination by mutual consent without terms, retirement or dismissal for misconduct (Act 800, section 30).

Limitations

• Follows the Employment Act 1955 and its regulations for Peninsular Malaysia and Labuan; Sabah and Sarawak have their own Labour Ordinances.
• The statutory minimum only: a contract, company policy or collective agreement may give more, and a voluntary separation scheme is whatever is offered.
• The notice length depends on the service on the day notice is given; the calculator uses the last day of service, which is the same when notice is paid in lieu.
• Whether a resignation was forced by the employer’s breach, an offer was “no less favourable” or a refusal “unreasonable” is decided by the Labour Department or the courts, not by a calculator.
• Wages still due for the last month, EIS benefits and any tax on the payment are not worked out.

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