(Tax Update) Minimum Wage Order 2024: What Employers Need to Know

The Minimum Wages Order 2024 (PUA 376) is here, bringing crucial updates for employers and workers across Malaysia. With new wage requirements effective from 1 February 2025, this order mandates changes that businesses must prepare for to ensure compliance.

Key Highlights of the Minimum Wages Order 2024

Effective Dates:

  • General enforcement starts 1 February 2025.

  • Additional provisions for wages applicable from 1 August 2025.

Revised Minimum Wage:

Monthly minimum wage is set at RM1,700, regardless of how wages are structured (e.g., piece rate, commission, or task-based).

For daily wages, the rates vary based on the number of working days per week:

  • 6 days: RM65.38 per day

  • 5 days: RM78.46 per day

  • 4 days: RM98.08 per day.

Who Does This Apply To?:

  • Employers with five or more employees.

  • Employers engaged in professional activities, irrespective of workforce size, as classified under Malaysia Standard Classification of Occupations (MASCO).

Exceptions:

Domestic workers, as defined in the Employment Act 1955 and related ordinances in Sabah and Sarawak, are excluded from this order.

What is Minimum Wages?

In Malaysia, minimum wages typically include the following components:

1. Basic Salary

  • The primary fixed amount paid to employees for their work, excluding additional allowances or benefits.

  • This is the main component that must meet or exceed the stipulated minimum wage rate.

2. Overtime Pay

  • Not part of minimum wages but calculated separately based on the basic salary.

3. Exclusions

Certain payments and benefits are not considered part of minimum wages, including:

  • Allowances: Such as housing, transport, or shift allowances.

  • Bonuses: Performance-based or discretionary bonuses.

  • Commissions: Earnings based on sales or performance metrics.

  • Reimbursement: Payments for out-of-pocket expenses like travel or equipment costs.

  • Other Benefits: Employer contributions to EPF (Employees Provident Fund), SOCSO (Social Security Organisation), or EIS (Employment Insurance System).

Special Consideration

  • Interns are not entitled to the minimum wage as they are not classified as employees under the National Wages Consultative Council Act 2011

  • Domestic workers (e.g., maids, cooks, guards, gardeners, and personal drivers) are not covered by the minimum wage regulations

  • Apprentices undergoing training for a period of not less than two years are also exempt from minimum wage requirements

Why It Matters

Failure to comply with these regulations can result in penalties and damage to your company’s reputation. As an employer, reviewing payroll structures and ensuring alignment with these updates is crucial.

Next Steps for Employers

  • Review your current wage practices and assess gaps.

  • Educate your HR and payroll teams on these new rates and timelines.

  • Plan and budget for potential payroll adjustments starting February 2025.

This new order supersedes the 2022 Minimum Wages Order, marking a significant update in wage policy. Stay ahead by ensuring compliance today to avoid complications tomorrow! For more information or guidance, feel free to contact us at KTP.

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