Why Are Interns Not Paid Minimum Wage in Malaysia? Is This Illegal?

Blog
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September 14, 2021
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By
Nicholas K

Disclaimer: This article should not be considered to be legal advice, and altHR is not liable for any actions taken based on this article.‍

Most of us, at some point in our careers, have undergone an internship in Malaysia — which means that most of us are also aware of the often meagre allowances that interns are generally paid in Malaysia. According to Jobstreet’s numbers, the average salary for an intern in Malaysia stands at RM1,200, but many interns report monthly allowances of less than RM1,000, or even unpaid internships. 

Of course, an internship is a chance for students or fresh graduates to gain valuable industry experience, and a certain amount of training and supervision is usually required. However, something worth keeping in mind is the cost of living in the capital city of Kuala Lumpur — estimated at nearly three times the minimum wage of RM1,200.

If you’re thinking of hiring a new batch of interns for your business, this one's for you. In today’s article, let’s take a look at the law behind interns, and intern pay. 

Are interns covered by the Employment Act 1955? 

The first thing to consider is whether interns are covered by the Employment Act 1955, which is the law governing a large percentage of employees in West Malaysia. Here, we’ll take a look at the First Schedule of the Act, which defines an employees as: 

  • Employees who have entered into a contract of service with monthly wages of RM2,000 or less.
  • Employees who — regardless of monthly wage — are engaged in manual labour.
  • Domestic servants. 
  • And other categories of employees within the First Schedule of the EA 1955.

According to the Act, apprenticeship contracts are considered to be contracts of service. However, most interns won’t be covered by this provision, as apprenticeships need to be backed up with a written contract for at least 2 years

As such, it appears that interns that undergo attachments of less than 2 years are not covered by the Employment Act 1955, which means that other statutory employee benefits — such as leave entitlements — are not applicable here. 

What about the National Wages Consultative Council Act 2011?

Unfortunately, the National Wages Consultative Council Act 2011 does not offer any respite to interns here, despite its close tie-in with the Minimum Wages Order 2020 (currently the latest version). 

If you aren’t familiar with the legalities, the National Wages Consultative Council Act 2011 is the law that gives legal authority to the Minimum Wages Order — which dictates that minimum monthly wages should be RM1,200 in select areas in Malaysia.

However, when defining an “employee”, the Act refers back to the First Schedule of the Employment Act 1955. As we discussed earlier, this does not cover interns. Consequently, it appears that interns in Malaysia will not be able to rely on the official minimum wage in Malaysia to further their case for a healthier monthly allowance.

So… what are interns entitled to in Malaysia?

The law in Malaysia is still remarkably quiet on this. As such, interns are advised to examine the terms of their internship agreements carefully before beginning internships with companies. 

However, some progress was made back in 2019, where the then-Youth and Sports Minister, Syed Saddiq, announced that the minimum allowance for internships at federal government departments had been increased to RM900 per month.  

This, however, has not been reflected in the private sector. As employers, however, you should always remember that interns are not simply affordable labour. Internships are an opportunity for students to learn and grow, while an internship programme can also be a useful tool for employers to recruit high-potential candidates at the entry level. 

Keep track of payroll — for interns and other employees — with altHR 

Keeping track of everything can be a challenge, particularly for employers and HR departments of SMEs. Consequently, it’s crucial for Malaysian businesses of all sizes to digitalise their HR processes. Calculating payroll can be an arduous, tedious task for even the most experienced of HR professions — but it doesn’t have to be, with Digi’s super app, altHR.

Besides the automation of various other HR processes, altHR comes with a Payroll module that helps employers keep track of all forms of employee remuneration, while automatically calculating monthly salary deductions. This covers EPF contributions, as well as SOCSO, EIS, and monthly income tax (MTD/PCB) deductions also included. 

These deductions are also automatically adjusted when employers make changes to monthly remuneration of employees, including incentives, bonuses, and other allowances. This automation frees up time for HR professionals to focus on other important matters to the business, while ensuring that monthly payroll is calculated accurately for all employees. 

There’s even the option to categorise permanent and fixed-term contract employees, so HR professionals can easily distinguish between them — and process payroll accordingly.   

The best bit? Everything is seamlessly integrated with the other modules within altHR, such as Documents, and Expenses. For example, once payroll has run for the month, admins have the option to send payslips to the Documents module — all within altHR. 

Additionally, the account can also be set to send automated emails, so employees are notified the moment payslips are available. And finally, digital copies of payslips are always available — to employees via the Documents module, and admins via the Payroll admin panel. 

HR professionals are often faced with daunting, often tedious tasks on a daily basis — tasks that have become even more difficult to handle in light of the ongoing COVID-19 situation. 

But help is available, if you know where to look. We can streamline your HR processes by managing and automating all of your day-to-day tasks, so you won’t have to worry about things like paperwork, privacy concerns, time-tracking, or onboarding challenges.

Sign up for altHR, the all-in-one digital solution that covers everything from payroll and onboarding, to staff management and providing employees with information kits. You’ve done it the old way long enough.

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