Working overtime is common across many industries in Malaysia, from retail and manufacturing to hospitality and office-based roles. However, many employees are unsure whether they are receiving the correct overtime (OT) pay, while employers and HR teams need to ensure payroll calculations comply with the Employment Act 1955.
This guide explains how to calculate overtime pay in Malaysia, including the Ordinary Rate of Pay (ORP), Hourly Rate of Pay (HRP), overtime rates for normal working days, rest days, and public holidays, as well as the latest legal requirements.
Instead of calculating everything manually, you can also use our Free Overtime Pay Calculator to estimate your overtime pay instantly.
Who Is Eligible for Overtime Pay in Malaysia?
Not every employee is automatically entitled to statutory overtime pay under the Employment Act 1955.
Generally, the Employment Act applies to:
- Employees whose monthly wages do not exceed RM4,000.
- Employees engaged in manual labour, regardless of their monthly wages.
- Other categories of employees specifically listed under the First Schedule of the Employment Act 1955.
If an employee earns more than RM4,000 per month and does not fall within one of the protected categories, overtime entitlement depends on the terms and conditions stated in their employment contract.
If you are unsure whether you qualify, check your employment contract or speak with your HR department.
What Is the Ordinary Rate of Pay (ORP)?
Before calculating overtime, you first need to determine your Ordinary Rate of Pay (ORP).
For monthly-rated employees, the Employment Act uses a statutory divisor of 26 days to calculate the daily rate of pay.
ORP Formula
Ordinary Rate of Pay (ORP) = Monthly Wages ÷ 26
Example
Monthly basic salary: RM2,600
ORP = RM2,600 ÷ 26
ORP = RM100.00 per day
What Is the Hourly Rate of Pay (HRP)?
Once you know your ORP, you can calculate your hourly rate.
HRP Formula
Hourly Rate of Pay (HRP) = ORP ÷ Normal Daily Working Hours
Most employees work 8 hours per day.
Example
ORP = RM100
Normal working hours = 8 hours
HRP = RM100 ÷ 8
HRP = RM12.50 per hour
What Counts as Wages When Calculating Overtime?
The Employment Act generally uses wages when calculating the Ordinary Rate of Pay.
Depending on the employee's remuneration structure, wages generally include:
- Basic salary
- Fixed cash allowances that form part of wages
Items that are generally not included include:
- Bonuses
- Travel allowance
- Mileage claims
- Employer EPF contributions
- Discretionary incentives
- Reimbursements
If your salary package includes multiple allowances, check whether they form part of your contractual wages before calculating overtime.
Overtime Pay Rates in Malaysia
The overtime rate depends on when the overtime is worked.
*Employees who work on a public holiday are generally also entitled to the statutory public holiday payment provided under the Employment Act, subject to the applicable provisions.
How to Calculate Overtime Pay on a Normal Working Day
Employees who work beyond their normal working hours on a regular working day must be paid at not less than 1.5 times their hourly rate of pay.
Formula
OT Pay = 1.5 × HRP × Overtime Hours
Example
Aina earns RM2,600 per month.
ORP = RM100
HRP = RM12.50
She works 2 extra hours on Wednesday.
Calculation:
2 × (1.5 × RM12.50)
Overtime Pay = RM37.50
How to Calculate Overtime Pay on a Rest Day
Rest day calculations are slightly different because payment depends on the number of hours worked.
Scenario 1: Work up to Half of Normal Working Hours
The employee is entitled to:
0.5 × ORP
Scenario 2: Work More Than Half but Not Exceeding Normal Working Hours
The employee is entitled to:
1.0 × ORP
Scenario 3: Work Beyond Normal Working Hours
Any additional hours worked beyond the normal daily working hours must be paid at:
2 × HRP for each extra hour
Example
Aina works 10 hours on her weekly rest day.
First 8 hours:
1.0 × RM100 = RM100
Additional 2 hours:
2 × (2.0 × RM12.50) = RM50
Total Rest Day Pay: RM150
How to Calculate Overtime Pay on a Public Holiday
Employees who work on a gazetted public holiday receive higher overtime rates.
For work during normal working hours, employees are generally entitled to payment for the holiday under the Employment Act together with additional payment for hours worked. Any work beyond the normal working hours is paid at 3 times the hourly rate of pay.
Example
Aina works 10 hours on Malaysia Day.
First 8 hours:
8 × (2.0 × RM12.50) = RM200
Additional 2 hours:
2 × (3.0 × RM12.50) = RM75
Total Payment for Hours Worked: RM275
Overtime Calculation Summary
Using Aina's salary of RM2,600 as an example:
Legal Limits on Overtime in Malaysia
Employers should also be aware of the legal limits under the Employment Act and subsidiary regulations.
Normal Working Hours
Employees generally should not work more than:
- 45 hours per week
Maximum Overtime
Employees may work a maximum of:
- 104 hours of overtime per month
Daily Working Hours
In general, an employee's total working hours, including overtime, should not exceed 12 hours in one day, except in circumstances permitted by law.
Employers should ensure overtime is properly recorded and compensated according to the applicable legal requirements.
Does Overtime Affect Your Salary?
Yes.
Overtime pay increases an employee's gross earnings, which may also affect statutory deductions and taxable income.
Depending on your salary and overtime amount, it may influence:
- Monthly Tax Deduction (PCB)
- SOCSO contributions
- Employment Insurance System (EIS) contributions
If you also want to understand how these deductions affect your take-home salary, read our guide on Salary Deductions in Malaysia: How They Affect Your Take-Home Salary.
Calculate Your Overtime Pay Instantly
Calculating overtime manually requires multiple formulas, including the Ordinary Rate of Pay, Hourly Rate of Pay, and the correct overtime multiplier for each type of working day.
Instead of calculating everything yourself, use our Free Overtime Pay Calculator to estimate your overtime pay in just a few seconds.
Simply enter your monthly salary, working hours, overtime hours, and the applicable day type to get an instant estimate.
FAQs
How do I calculate overtime pay in Malaysia?
For overtime worked on a normal working day:
Overtime Pay = 1.5 × Hourly Rate of Pay × Overtime Hours
The Hourly Rate of Pay is calculated by dividing the Ordinary Rate of Pay by the employee's normal daily working hours.
Who is eligible for overtime pay in Malaysia?
Generally, employees earning RM4,000 or below and employees performing manual labour are covered by the overtime provisions of the Employment Act 1955. Employees earning above RM4,000 may still receive overtime pay if it is provided for in their employment contract.
What is the maximum overtime allowed in Malaysia?
Employees may work up to 104 hours of overtime per month, subject to the Employment Act 1955 and the Employment (Limitation of Overtime Work) Regulations.
Does overtime pay count towards EPF and SOCSO contributions?
SOCSO and EIS generally treat overtime payments as part of wages for contribution purposes.
For EPF, overtime payments are generally not subject to mandatory EPF contributions, unless the employer chooses to contribute or the employment agreement provides otherwise.