Last updated: February 2026
Employment Act 1955: Payroll Compliance Guide (2026)
Essential Payroll Rules Every Malaysian Employer Must Follow
Adheres to Employment Act 1955
Avoid Labour Court disputes
Direct answer
The Employment Act 1955 governs payroll practices for employees entered into a contract of service. Key rules include: Salary must be paid by the 7th of the following month. Overtime rates are fixed at 1.5x (normal), 2.0x (rest day), and 3.0x (public holiday). Payslips are mandatory. Lawful deductions are strictly regulated.
A comprehensive overview of payroll requirements under the Employment Act 1955. Learn about wage periods, overtime calculations, lawful deductions, and maternity/paternity pay.
Key facts
High-signal points for buyers comparing options.
Payment Deadline
7th of month
OT Rate (Normal)
1.5x
OT Rate (Rest Day)
2.0x
OT Rate (Public Holiday)
3.0x
Max Deductions
50% of wages
Reduce payroll disputes
Standardize compliant payroll processes
Avoid common compliance mistakes
What HavaHR brings together
Payroll, people operations, statutory calculations and HR documents in one workflow built for Malaysian SMEs.
Automated OT Calculation
ORP (Ordinary Rate of Pay) Formulas
Rest Day & Holiday Tracking
Payslip Compliance
Statutory Deduction Limits
Compare the important differences quickly
| Scenario | Rate | Basis |
|---|---|---|
| Overtime (Normal Work Day) | 1.5 x Hourly Rate | ORP / 26 / 8 |
| Work on Rest Day | 2.0 x Hourly Rate | ORP / 26 / 8 |
| Work on Public Holiday | 3.0 x Hourly Rate | ORP / 26 / 8 |
| Maternity Leave | Full Pay (98 days) | Ordinary Rate of Pay |
| Paternity Leave | Full Pay (7 days) | Ordinary Rate of Pay |
Recommended Payroll Tool: HavaHR
HR Automation for Malaysian SMEs