Must-Know Types of Employee Allowances Available in Malaysia

In the competitive landscape of today’s job market, companies in Malaysia are increasingly recognizing the importance of providing a comprehensive benefits package to attract and retain top talent. Employee allowances play a significant role in this package, offering financial incentives that go beyond the basic salary.

These allowances are designed to cover various expenses that employees may incur as part of their job or to enhance their quality of life. Let’s delve into the types of employee allowances available in Malaysia and understand how they benefit both the employer and the employee.

Whether you're an employee or employer, understanding the various types of employee allowances in Malaysia is crucial for both employers and employees. Allowances are a big part an employee’s total remuneration package and can influence job satisfaction and performance.

Here's a quick breakdown of the types of allowances that both employees and employers in Malaysia should know about.

What are Employee Allowances?

Employee allowances are additional payments made to employees on top of their regular salary. These are typically provided to cover specific costs related to their jobs, such as travel, housing, or meals. In Malaysia, these allowances can be categorised into several types, each serving a unique purpose.

1. Travel and Transportation Allowances

One of the most common allowances is for travel and transportation. With the rising cost of fuel and public transportation, companies often provide a petrol or transportation allowance to ease the financial burden on their employees. This not only helps employees manage their commuting costs but also ensures that they arrive at work on time and are less stressed about travel expenses.

2. Housing Allowance

A housing allowance is another significant benefit, particularly in areas such as Kuala Lumpur or the Klang Valley, where the ever-rising cost of living is a huge factor in employee satisfaction. This allowance helps employees afford comfortable accommodation closer to their workplace, reducing commute times and improving work-life balance.

3. Meal and Food Allowances

For employees who spend long hours at the office, meal allowances are a welcome relief. These allowances cover the cost of meals during work hours, ensuring that employees have access to nutritious food without worrying about the expense.

4. Health and Wellness Allowances

Health and wellness are paramount, and companies in Malaysia are increasingly offering allowances to this end. These initiatives not only support the physical health of employees but also demonstrate the company’s commitment to their overall well-being. Here are some examples: 

• Medical insurance
• Gym memberships
• Wellness programs

5. Professional Development Allowances

Investing in employee growth is beneficial for both the individual and the organisation. Professional development allowances provide employees with the opportunity to attend training, workshops, or courses that enhance their skills and career prospects. The best part? It's a win-win for the organisation as well, with improved talent helping to better achieve business objectives and goals.

Here are some resources to get you started: 

• ‍https://upskillmalaysia.gov.my/
• ‍https://elatih.hrdcorp.gov.my/‍
• HRDF grant

6. Childcare Allowance

For working parents, childcare is certainly a big factor. A childcare allowance helps alleviate the financial pressure of finding reliable and safe childcare services, enabling parents to focus on their work with peace of mind.

7. Special Allowances

In addition to the standard allowances, companies may offer special allowances for unique circumstances, such as relocation, overtime work, or hazardous duty. These are tailored to the specific needs of the job and the employee.

Are allowances taxable?

It’s important to note that some allowances in Malaysia are tax-exempt, providing further financial benefits to employees — while others are not. Click this article to find out about benefits that are tax-exempt in Malaysia.