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  • Writer's picturephteh

Budget 2020 Employment issue

Employment highlights featured in Malaysia’s 2020 budget include:

1. Increase of Minimum Wage for Major Cities

the monthly wages payable to such employee is at least RM1,200 for “major cities” effective from 1 February 2020.

2. The eligibility to pay overtime from those earning less RM2,000 to those earning less than RM4,000 per month

As employer, you should start to review the employee who are earning between RM 2,000.00 and RM 4,000.00 a month because this group of employees are entitled to overtime according Budget 2020.

The 16 city councils and 40 municipal councils areas referred in the Gazette are as follow (see the chart below).

3. Maternity leave will increase from 60 to 90 days from 1 Jan 2021.

Previously, the maternity leave entitlement is not less than 60 consecutive days of paid leave. Employers can also extend the leave beyond this initial period, but without pay.

Beginning January 1, 2021, the Budget 2020 extended the maternity leave period for employees in the private sector to 90 consecutive days of paid leave and only applies to a female employee’s first five surviving children.

4. Revised procedures will apply for handling sexual harassment complaints, and individuals will have enhanced protection against sexual harassment.

Sexual Harassment is a serious misconduct in the workplace and it become mandatory duty for employers to have a written sexual harassment code / policy to create a safe environment for employees

5. New provisions will prohibit discrimination based on religion, ethnicity and gender.

Job-seekers NOT Applicable, however, as employers shall ensure only relevant information is requested and DONOT have discriminatory hiring practices at their job application details and employee information forms.

6. The Employees Provident Fund (EPF) will expand to include contract workers.

The Employees Provident Fund (EPF) will have extended coverage to contract workers “contract for services” (i.e. independent contractors) and professionals NOT only for Contract of Services.

7. Wage Incentives & Hiring Incentives

The initiative of Malaysians@Work is aims to benefit employees and employers by providing wage incentives to workers and hiring incentives for employers for following certain groups of individuals:


Hiring a graduates who have been unemployed for more than 12 months, the Employers shall receive a hiring incentive of RM 300 per month for each for duration of 2 years.

The graduate who secures work will receive a wage incentive of RM 500 per month for a duration of 2 years.


Hiring returning women worker (between 30-50 years old) to the work force after a minimum of 1 year, the employers shall receive a hiring incentive up to RM 300 per month for duration of 2 years.

The returning women worker will receive a wage incentive of RM 500 per month for duration of 2 years, and will receive an income tax exemption for another 4 years until 2023.


Malaysian who are hired to replace foreign workers will receive either RM 350 or RM 500 wage incentive a month (depending on sector) for a duration of 2 years.

There is a corresponding hiring incentive for employers up to RM 250 per month for duration of 2 years.


Trainees on apprenticeships will receive an additional RM 100 per month on their existing allowance. The government will also extend double tax deduction on expenses incurred by companies participating in certain schemes such as the Structured Internship Programme approved by TalentCorp and the Skim Latihan Dual Nasional (SLDN).

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