Minimum Wage 2023: What’s the Deadline for Employers in Malaysia?

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

The new (current) monthly minimum wage of RM1,500 has been in effect since the 1st of May 2022 — but to help with the adjustment period, the effective date for employers with less than 5 employees was initially delayed till the 1st of January 2023. 

However, the Human Resources Minister, V. Sivakumar has now announced that this date has been pushed back after taking into account the “readiness” of micro enterprises across the nation. 

What does this mean for HR professionals and employers in Malaysia? Here are a few key points to take note of. 

When does the minimum wage take effect in Malaysia (<5 employees)?

According to the official statement put out by the Human Resources Ministry, companies or businesses with less than 5 employers are exempted from the new RM1,500 monthly requirement until the 1st of July 2023. 

This decision was made after taking into consideration feedback given by multiple stakeholders involved, as well as critical economic challenges faced by micro enterprises in Malaysia through 2022 and beyond. 

As a result, the deferment is expected to affect/benefit around 560,000 organisations across Malaysia, who will be given an added buffer to focus on “building their business and cashflow”. According to Datuk Dr Syed Hussain Syed Husman, President at the Malaysian Employers Federation (MEF): 

“Employers value their employees, who are their assets. This is an issue of sustainability and keeping their businesses alive while retaining staff and building their financial position.”

When does the minimum wage take effect in Malaysia (>5 employees)?

For organisations who have 5 or more employees, it’s important to note that the Minimum Wages Order 2022 is already in effect. This means that employers must pay employees a minimum monthly salary of RM1,500, with the order coming into effect on the 1st of May 2022. 

Employers who fail to adhere to the minimum wage above are liable to be fined up to RM10,000 per employee, according to the Section 43 of the National Wages Consultative Council Act 2011 (if you’re interested in the legalese, read the full Act here).

How much to pay for employers with less than 5 employees (for now)?

As the deadline for the new minimum wage has been deferred, employers with less than 5 employees are still bound by the previous minimum wage — originally amended back in 2020. This amounts to RM1,200 per month for employees in City Council or Municipal Council areas, or RM1,100 for other areas. 

This will only be temporary, as stated above. Once the new deadline has passed, companies of all sizes are required to pay monthly wages of RM1,500 to employees.