Get to know : Overtime Rates for employees
Rules explained in this article apply to employees covered under the Employment Act (e.g. wages not exceeding RM2,000, manual labourers), but can also be used as guidelines for other staff.
Different rates apply whether the work is performed during or outside normal working hours and during normal work days, rest days or public holidays.
Overtime on normal working days
For any overtime work carried out in excess of the normal hours of work, the employee shall be paid at a rate not less than one and half times his hourly rate of pay.
Overtime on rest days
Every employee is allowed a rest day of one whole day per week. Where an employee is allowed more than one rest day in a week (employees working a 5-day week), the last of the rest days shall be the rest day for overtime purposes. So, for employees working Monday to Friday the rest day will be Sunday.
A daily-rated worker who works on a rest day during normal working hours shall be paid as follows:
(i) 1 day's wages if the work does not exceed half his normal hours of work; or
(ii) 2 days' wages if the work is more than half but does not exceed his normal hours of work.
A monthly-rated worker who works on a rest day during normal work hours shall be paid as follows:
(i) 1/2 day's wages if the work does not exceed half his normal hours of work, or
(ii) 1 day's wages if the work is more than half but does not exceed his normal hours of work.
For overtime work on a rest day outside normal working hours, an employee shall be paid at a rate which is not less than two times his hourly rate of pay.
Overtime on public holidays
Ordinary rate of pay
The Employment Act provides that the minimum daily rate of pay for overtime calculations should be: monthly wages*/26. However employers are also allowed to choose any other calculation basis which is more favourable to the employee, eg monthly wages/22 if the employee works 5 days a week.
If your employees work 6 days a week, please be aware that some months have 27 workdays and therefore it would be preferable to choose Fixed Days - 26 as calculation basis rather than Working Days in Current Calendar Month to avoid paying overtime below the minimum rate.
*Wages for this purpose are defined as:
Basic wages and all other payments in cash payable to an employee for work done in respect of his contract of service but not including:
(a) the value of any house accommodation or the supply of any food, fuel, light or water or medical attendance, or of any approved amenity or approved service;
(b) any contribution paid by the employer on his own account to any pension fund, provident fund, superannuation scheme, retrenchment, termination, lay-off or retirement scheme, thrift scheme or any other fund or scheme established for the benefit or welfare of the employee;
(c) any travelling allowance or the value of any travelling concession;
(d) any sum payable to the employee to defray special expenses entailed on him by the nature of his employment;
(e) any gratuity payable on discharge or retirement; or
(f) any annual bonus or any part of any annual bonus.
Source: PayrollPanda
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