How to calculate overtime salary?

how is the minimum payment calculated

You are covered under the Malaysia’s Employment Act 1955 if your monthly salary is RM1500 or below.

The act governs many provisions of the employment including probationary period, breach of contract, termination, salary or wages, leave, retrenchment and so on. According to the law, employees who work beyond the ‘normal hours of work’ is considered working overtime and is entitled for overtime salary payment. So if you’re an Admin Assistant with salary RM1400 often finding yourself staying beyond 6pm in the office by your boss’ request, know that your employer has broken the law if they do not pay you overtime for your extra hard work.

For ease of explanation and simplification, calculations and rate shown in the following assumes the employee works 8 hours per day and is paid monthly (not on daily rate, weekly or others). The normal hours of work is defined as:

  • Maximum or no longer than 5 consecutive hours with a period of rest not less than 30 minutes
  • Not more than 8 hours of working in one day.

    And for a continuous 8 hours of work, there should be a minimum of 45 minutes of (paid) rest – the fact that you have lunch hour is part of the law, and not just letting you responding to nature’s call

  • Not more than 48 hours in a week

First, to calculate the overtime salary and payment, you must know your daily rate and hourly rate first. The daily rate payment is defined as (monthly paid/no of working days) and your hourly rate is (daily rate/normal hours of work). For example, if your salary is RM1200 and you work for 26 days – 8 hours per day, your daily rate = RM1200/26 = RM46.15 and your hourly rate = RM46.15/8 = RM5.80.

Now, the following table illustrates the rate of the salary payment for overtime work. Again here, please note that you need to be covered under the Employment Act to be entitled to this overtime, and the assumption that you are an employee receiving monthly rate payment is still applicable.

Normal working days


Category: Bank

Similar articles: