Malaysia, known for its multicultural and multi-ethnic society, has attracted many overseas employers seeking investment and business expansion. However, understanding the leave and benefits system for Malaysian employees is crucial when hiring locally. This blog aims to provide a guide for foreign employers on annual leave and benefits in Malaysia, helping them better comprehend and manage employee welfare.

2.Statutory Leave

According to Malaysian labor law, employees are entitled to statutory leave under certain conditions. The following outlines Malaysia's statutory leave system:

2.1. Annual Leave: Employees have the right to a minimum of 10 days of annual leave after working continuously for one year. The number of annual leave days increases correspondingly with the employee's tenure in the same company. For instance, after 3 years of service, annual leave may increase to 15 days.

2.2. Public Holidays: Malaysia observes various public holidays, and employees are entitled to enjoy these holidays. These include Malaysia's National Day, Chinese New Year, Christmas, and more. If employees are required to work on public holidays, employers must provide additional compensation or offer replacement leave.

2.3. Sick Leave: After working continuously for three months, employees are entitled to sick leave. According to labor law, employees have 14 days of sick leave per year, provided they submit a medical certificate.

3.Additional Benefits

In addition to statutory leave, many companies offer extra benefits to attract and retain employees. Here are some common additional benefits:

3.1. Flexible Working Hours: Many companies allow employees to adjust their working hours based on individual needs. This flexibility helps employees achieve a better work-life balance.

3.2. Overtime Pay: If employees need to work during non-standard hours, employers are required to pay overtime. According to labor law, overtime pay is at least 1.5 times the basic salary.

3.3. Medical Insurance: Some companies provide medical insurance plans, offering healthcare coverage for employees and their families. This helps alleviate the financial burden of medical expenses.

3.4. Training and Development: Many companies offer training and development opportunities to help employees enhance their skills and knowledge. This not only improves employee performance but also increases loyalty to the company.

3.5. Retirement Plans: Some companies provide retirement plans to help employees plan for their future post-retirement life. This can increase long-term commitment and loyalty to the company.

4.Welfare Management

To effectively manage employee welfare, overseas employers should take the following measures:

4.1. Understand Legal Regulations: Overseas employers should familiarize themselves with Malaysian labor laws to ensure that company benefits comply with legal requirements.

4.2. Establish Clear Policies: Companies should establish clear leave and benefit policies and communicate them transparently to employees. This helps prevent misunderstandings and disputes.

4.3. Provide Appropriate Training: To better manage employee welfare, companies can provide relevant training to managerial staff. This helps them understand and implement welfare policies effectively.

4.4. Continuous Monitoring and Evaluation: Companies should regularly monitor and evaluate the implementation of welfare benefits and make adjustments and improvements as needed.


Understanding and managing the leave and benefits system for Malaysian employees is crucial for overseas employers. By adhering to legal regulations, establishing clear policies, providing appropriate training, and continuously monitoring and evaluating, overseas employers can better meet the needs of their employees and build a positive employer image. Additionally, offering extra benefits helps attract and retain top talent, enhancing the competitiveness of the company. Therefore, overseas employers should prioritize and allocate sufficient resources to manage employee leave and welfare effectively.

Overcome Every Global Hiring Challenge With ChaadHR

As part of our Global Employer of Record (EoR) solution, we help companies compliantly hire and pay teams in 160+ countries. Provide accurate, on-time payments to your team through our integrated Global Payroll solution, which consolidates payroll streams into one centralized platform and offers international employees local, ongoing support whenever they need it. By partnering with ChaadHR, you can quickly enter new markets and hire globally without setting up an entity. We handle everything from on boarding and payroll to benefits administration and compliance so you can focus on daily tasks and big-picture goals.