Leave · Updated July 2026
Annual Leave & Sick Leave Entitlement in Malaysia
Under the Employment Act 1955, employees in Malaysia are entitled to a minimum of 8 days of paid annual leave per year for less than 2 years of service, 12 days for 2 to 5 years, and 16 days for 5 years or more. Paid sick leave is 14, 18 or 22 days per year on the same service bands, plus up to 60 days of paid hospitalisation leave (capped at 60 days in total where hospitalisation is involved). These are minimums — many Malaysian employers offer 12 to 18 days of annual leave in practice.
Key facts
- Annual leave minimum: 8 days (under 2 years' service), 12 days (2 to 5 years), 16 days (5 years or more)
- Sick leave minimum: 14 days (under 2 years), 18 days (2 to 5 years), 22 days (5 years or more)
- Hospitalisation leave: up to 60 days per year, with a combined cap of 60 days where hospitalisation is involved
- Annual leave for an incomplete year of service is pro-rated to completed months
- The Employment Act is silent on carry-forward and encashment of leave — these follow company policy
- Unused earned annual leave must be paid out when employment ends
Statutory annual leave entitlement
Section 60E of the Employment Act 1955 sets the minimum paid annual leave an employer must provide, scaled by the employee's length of continuous service with that employer. Since the 2022 amendment, the Employment Act covers all employees regardless of wage level, so these minimums apply to virtually every private-sector employee in Peninsular Malaysia and Labuan.
| Length of service | Minimum paid annual leave per year |
|---|---|
| Less than 2 years | 8 days |
| 2 years to less than 5 years | 12 days |
| 5 years or more | 16 days |
The entitlement is earned in respect of each completed 12 months of continuous service. Leave is paid at the employee's ordinary rate of pay, and the employer and employee agree on when it is taken, subject to the employer's operational needs.
Statutory sick leave and hospitalisation leave
Section 60F of the Employment Act provides paid sick leave where the employee is certified unfit by a registered medical practitioner or medical officer. The entitlement scales with service, and a separate, larger allowance applies where hospitalisation is necessary.
| Length of service | Paid sick leave (no hospitalisation) | With hospitalisation |
|---|---|---|
| Less than 2 years | 14 days per year | Up to 60 days per year |
| 2 years to less than 5 years | 18 days per year | Up to 60 days per year |
| 5 years or more | 22 days per year | Up to 60 days per year |
To qualify for paid sick leave, the employee must inform or attempt to inform the employer within 48 hours of the start of the sick leave; failure to do so can be treated as absence without leave.
How leave accrues and pro-rating in the first year
Strictly under the Act, annual leave is earned in respect of each completed 12 months of continuous service — a new hire becomes entitled to the full 8 days only after finishing the first year. If employment ends before a full year is completed, the employee is entitled to leave in direct proportion to the number of completed months of service.
Pro-rated annual leave for a first-year employee
Entitlement band = 8 days per year (under 2 years' service)
Completed months of service at resignation = 9 months
Pro-rated leave = 8 x 9 / 12 = 6.0 days
Fractions of half a day or more are rounded up to a full day
In practice, most employers let staff use annual leave as it accrues month by month (for example 1 day earned per 1.5 months on an 8-day scale) rather than making them wait a full year. That is more generous than the statute and perfectly lawful.
Carry-forward, encashment and payment on termination
The Employment Act is silent on whether unused annual leave may be carried forward to the next year or encashed while employment continues. Both are therefore matters of company policy or contract. Common approaches include allowing a limited carry-forward (for example up to 5 days, to be used by March or June), paying out unused days at year end, or a use-it-or-lose-it rule with reasonable notice.
The position is different when employment ends. Annual leave already earned but not taken as at the termination date must be paid to the employee at the ordinary rate of pay. An employer cannot forfeit earned leave on resignation or dismissal (other than dismissal for misconduct after due inquiry, where the Act removes the entitlement for the broken year).
Unpaid leave
Unpaid leave is not a statutory entitlement — it is granted at the employer's discretion once paid leave is exhausted, or requested by the employee for personal reasons. Any unpaid leave taken reduces that month's wages proportionately, typically calculated as monthly wages divided by 26 for each day of unpaid leave under the Employment Act formula.
Salary deduction for 2 days of unpaid leave
Monthly salary = RM2,600
Daily rate = RM2,600 / 26 = RM100.00
Deduction for 2 days of unpaid leave = 2 x RM100.00 = RM200.00
Salary payable for the month = RM2,600 - RM200 = RM2,400
Note that prolonged unpaid leave can affect statutory contribution amounts for the month, since EPF, SOCSO and EIS are computed on wages actually payable.
Statutory minimum versus market practice
The Employment Act figures are floors, not norms. In the Malaysian market, most established employers offer more than the minimum to stay competitive in hiring, particularly for executive and office roles.
| Item | Statutory minimum | Common market practice |
|---|---|---|
| Annual leave (entry level) | 8 days | 12 to 14 days |
| Annual leave (senior staff) | 16 days | 16 to 18 days or more |
| Carry-forward | Not regulated | Up to 5 days, expiring by mid next year |
| Leave encashment in service | Not regulated | At employer's discretion, often at resignation only |
Whatever an employer adopts above the minimum becomes a contractual term once stated in the offer letter or handbook, so the policy should be written deliberately: state the entitlement scale, accrual method, carry-forward limit and expiry, encashment rules, and the notice required for applications.
Automating this with an HR system
Leave administration errors usually come from manual tracking: miscounted balances, forgotten carry-forward expiries, and pro-rating mistakes for joiners and leavers. An HR system such as staffs.id maintains each staff member's entitlement band by length of service, accrues and pro-rates balances automatically, routes leave applications through an approval workflow, and deducts unpaid leave from payroll at the correct daily rate.
Because the leave module is connected to attendance and payroll in one system, approved leave, sick leave certificates and unpaid leave deductions flow straight into the month's payroll run without re-keying.
Frequently asked questions
How many days of annual leave am I entitled to in Malaysia?
The statutory minimum under the Employment Act 1955 is 8 days per year if you have worked for your employer for less than 2 years, 12 days for 2 to 5 years, and 16 days for 5 years or more. Many employers voluntarily offer 12 to 18 days.
How many days of paid sick leave do employees get in Malaysia?
The minimum is 14 days per year for under 2 years of service, 18 days for 2 to 5 years, and 22 days for 5 years or more, where no hospitalisation is needed. Where hospitalisation is necessary, the entitlement is up to 60 days per year, capped at 60 days combined.
Can unused annual leave be carried forward in Malaysia?
The Employment Act does not regulate carry-forward, so it depends on your company's policy or contract. Many employers allow a limited carry-forward, commonly up to 5 days to be used within the first few months of the following year.
Must my employer pay me for unused annual leave when I resign?
Yes. Annual leave that you have already earned but not taken as at your last day of employment must be paid out at your ordinary rate of pay. Leave for an incomplete year is pro-rated to your completed months of service.
Is unpaid leave allowed under Malaysian law?
Unpaid leave is not a statutory entitlement; it is granted at the employer's discretion. Each day of unpaid leave is typically deducted at the daily rate of monthly wages divided by 26.