Payroll · Updated July 2026
How Overtime Is Calculated in Malaysia (Employment Act 1955)
Under the Employment Act 1955, overtime on a normal working day is paid at 1.5 times the employee's hourly rate of ordinary pay, 2 times on a rest day, and 3 times on a public holiday. The ordinary rate of pay (ORP) is the monthly wage divided by 26 days, and the hourly rate is the daily ORP divided by normal working hours (typically 8). Overtime is capped at 104 hours per month, and normal working hours may not exceed 45 hours per week.
Key facts
- Overtime rates: 1.5x hourly ORP on a normal working day, 2x on a rest day, 3x on a public holiday
- Ordinary rate of pay (ORP) per day = monthly wages / 26; hourly ORP = daily ORP / normal hours (usually 8)
- Overtime monetary provisions apply to employees earning RM4,000/month or less, plus manual workers regardless of wage
- Maximum normal working hours: 45 hours per week; maximum overtime: 104 hours per month
- Employers must keep wage and overtime records for 6 years under section 61
Who the overtime provisions apply to
Since the 2022 amendment, the Employment Act 1955 covers all employees in Peninsular Malaysia and Labuan regardless of how much they earn. However, the monetary provisions on overtime, rest-day pay and shift allowances (section 60A and related sections) only apply to employees earning RM4,000 per month or less, and to manual workers regardless of their wage.
Employees earning above RM4,000 per month who are not manual workers have no statutory right to overtime pay. Their overtime terms, if any, are governed purely by their employment contract, so many employers voluntarily extend the same 1.5x/2x/3x rates for consistency.
The ordinary rate of pay (ORP) formula
All statutory overtime calculations start from the ordinary rate of pay. For a monthly-rated employee, the daily ORP is the monthly wage divided by 26, regardless of how many days the employee actually works in that month. The hourly ORP is the daily ORP divided by the employee's normal working hours, which is typically 8 hours.
ORP for an employee earning RM2,600 per month
Daily ORP = RM2,600 / 26 = RM100.00 per day
Hourly ORP = RM100.00 / 8 = RM12.50 per hour
Wages for ORP purposes means basic salary plus fixed cash payments the employee is contractually entitled to, but excludes items such as travel allowances, annual bonuses and overtime pay itself.
Statutory overtime rates: 1.5x, 2x and 3x
The multiplier applied to the hourly ORP depends on when the overtime hours are worked.
| When overtime is worked | Rate | Legal basis |
|---|---|---|
| Normal working day (beyond normal hours) | 1.5x hourly ORP | Section 60A(3) |
| Rest day (beyond normal hours) | 2.0x hourly ORP | Section 60(3) |
| Public holiday (beyond normal hours) | 3.0x hourly ORP | Section 60D(3) |
These are statutory minimums. An employer may pay more, but any contract clause paying less than these rates to a covered employee is void.
Rest-day pay rules
Work on a rest day has two components for a monthly-rated employee. For the hours within normal working hours, the employee is paid a flat amount: half a day's wages if they work up to half of their normal hours, or one full day's wages if they work more than half of their normal hours. Only the hours beyond normal working hours count as rest-day overtime, paid at 2 times the hourly ORP.
| Hours worked on rest day (monthly-rated) | Pay |
|---|---|
| Up to half of normal hours (e.g. up to 4 of 8) | Half a day's wages at ORP |
| More than half, up to normal hours (e.g. 4 to 8) | One full day's wages at ORP |
| Beyond normal hours (e.g. beyond 8) | 2.0x hourly ORP per overtime hour |
Public holiday pay rules
A monthly-rated employee who works on a paid public holiday receives two extra days' wages at the ordinary rate of pay, on top of the holiday pay already included in the monthly salary. Any hours worked beyond normal working hours on that public holiday are paid at 3 times the hourly ORP.
In practice this means a full normal shift on a public holiday costs the employer an additional 2 days' ORP, and every overtime hour on that day costs 3x the hourly ORP on top of that.
Limits: 45-hour week and 104-hour overtime cap
Since 1 January 2023, normal working hours under the Employment Act are capped at 45 hours per week (down from 48). Overtime is capped at 104 hours per employee per month under the Employment (Limitation of Overtime Work) Regulations, and employers need approval from the Director General of Labour to exceed this.
- Maximum normal working hours: 45 hours per week
- Maximum spread of hours: work should not normally exceed 8 hours a day or be spread over more than 10 hours
- Maximum overtime: 104 hours per month without approval
Worked examples: RM2,600 per month employee
The examples below use an employee earning RM2,600 per month with normal working hours of 8 per day. Daily ORP is RM100.00 and hourly ORP is RM12.50.
Example 1: 2 hours of overtime on a normal working day
Hourly ORP = RM2,600 / 26 / 8 = RM12.50
Overtime rate = RM12.50 x 1.5 = RM18.75 per hour
Overtime pay = RM18.75 x 2 hours = RM37.50
Example 2: full 8-hour shift plus 2 hours on a rest day
Hours within normal hours = 8 (more than half of normal hours)
Rest-day pay = 1 full day's wages = RM100.00
Overtime beyond 8 hours = 2 hours x RM12.50 x 2.0 = RM50.00
Total rest-day pay = RM100.00 + RM50.00 = RM150.00
Example 3: full 8-hour shift plus 2 hours on a public holiday
Extra pay for working the holiday = 2 days' wages = 2 x RM100.00 = RM200.00
Holiday pay itself is already included in the monthly salary
Overtime beyond 8 hours = 2 hours x RM12.50 x 3.0 = RM75.00
Total additional pay = RM200.00 + RM75.00 = RM275.00
Record-keeping duty
Section 61 of the Employment Act requires employers to keep a register of employees containing particulars of wages and overtime, and to retain those records for 6 years. Labour Department officers can inspect these records, and missing or inaccurate overtime records are a common finding in labour audits.
Accurate clock-in and clock-out records are the foundation of defensible overtime pay: without reliable attendance data, an employer cannot prove overtime was calculated correctly.
Automating this with an HR system
Overtime errors usually start with attendance, not arithmetic. An HR system like staffs.id records clock in and clock out with WiFi verification and a photo, then computes overtime automatically at the correct 1.5x, 2x or 3x multiplier depending on whether the hours fall on a normal day, a rest day or a public holiday marked in the company calendar.
staffs.id also supports an overtime approval workflow with a per-branch minimum overtime threshold, so unapproved or accidental extra minutes do not inflate payroll, and the resulting figures flow straight into monthly payroll alongside EPF, SOCSO, EIS and PCB deductions.
Frequently asked questions
How do I calculate overtime pay in Malaysia?
Divide the monthly wage by 26 to get the daily rate, divide by normal working hours (usually 8) to get the hourly rate, then multiply by 1.5 for a normal working day, 2 for a rest day, or 3 for a public holiday. For example, at RM2,600 per month the hourly rate is RM12.50, so one hour of normal-day overtime pays RM18.75.
Who is entitled to overtime pay under the Employment Act 1955?
Employees earning RM4,000 per month or less, and manual workers regardless of salary. Employees above RM4,000 who are not manual workers rely on their employment contract for overtime terms.
What is the maximum overtime allowed per month in Malaysia?
104 hours per month. Employers who need more must apply for approval from the Director General of Labour. Normal working hours are also capped at 45 hours per week.
How much do I get paid for working on a public holiday in Malaysia?
A monthly-rated employee working on a paid public holiday gets 2 extra days' wages at the ordinary rate of pay on top of their salary, and any hours beyond normal working hours that day are paid at 3 times the hourly rate.
Is overtime calculated on basic salary or gross salary?
On the ordinary rate of pay, which is basic salary plus fixed contractual cash payments, divided by 26 days. It excludes items like overtime pay itself, annual bonuses and travel allowances.