With the announcement from the Minister of Human Resources, Datuk Seri Saravanan Murugan, the Employment (Amendment) Act 2022 came into force on 1 January 2023. This section provides you with the key highlight which may affect your business.
| BEFORE | AFTER |
The EA covered employees receiving monthly wages up to 2,000 MYR. | The EA now covered all employees, except for certain provisions as mentioned below, which apply to wages up to 4,000 MYR (increased from 2,000 MYR): |
| ⮚ Sec 60A Overtime rates on rest days & normal workday; | |
| ⮚ Sec 60C Allowance for shift-based work; | |
| ⮚ Sec 60D Overtime rates on public holiday & half working days on holidays; | |
| ⮚ Sec 60J Termination, lay-off & retirement benefits. |
Leave Entitlements
| BEFORE | AFTER |
i.Maternity leave entitlement of 60 consecutive days; | i. Maternity leave entitlement increased to 98 consecutive days; |
ii. No paternity leaves; | ii. Married male employee (at least 12-months of employment) is entitled to 7 consecutive days of paternity leave; |
iii.Maximum hospitalization and medical leaves are 60 days. | iii. Hospitalization leave of 60 days is in addition to the medical leave entitlement. |
MALAYSIA | EMPLOYMENT (AMENDMENT) ACT 2022
Number of Working Hours
| BEFORE | AFTER |
| Weekly working hours limited to 48 hours. | Weekly working hours limited to 45 hours. |
The ordinary rate of pay calculation based on 26 days is applied specifically to the computation of overtime and leave. | Wages for incomplete month’s work based on:[ Monthly wages / Number of days of the particular wage period x Number of days eligible in the wage period ]> Number of days refers to calendar days. |
No provision for flexible working arrangement. | Sec 60P & 60Q, employee may apply in writing to their employer for flexible working arrangements.And employer must reply in writing of their approval or refusal of the employee’s application by giving the grounds of refusal, within 60 days. |
Other Provisions
| BEFORE | AFTER |
Restriction on terminating pregnant employee’s service, except on the ground of employer’s business closure. | It is an offence to terminate a female employee who is pregnant or ill arising out of her pregnancy, except on the grounds of breach of contract, misconduct or closure of the employer’s business.. |
| No specific provision on sexual harassment | Sec 81H, employer requires to display a notice to raise awareness on sexual harassment in the workplace. |
sMALAYSIA | EMPLOYMENT (AMENDMENT) ACT 2022
Other Provisions (cont’d)
| BEFORE | AFTER |
No presumption as to who qualifies as an employee under the EA in the absence of a contract of service. | Presumption until proven otherwise that a person is an employee if a particular condition is satisfied. Example, this include but not limited to: manner or hours of work controlled by another perspn, equipments provided by another person to execute work, payments in return for work done executed at regular intervals etc. > Gig workers are now covered. |
On Foreign Employees
| BEFORE | AFTER |
Particular of foreign employees must be submitted to DG within 14 days. | On top of the existing condition, employer must obtain prior approval from the DG in hiring of foreign employee. |
General penalty at 10,000 MYR. | General penalty increased from 10,000 MYR to 50,000 MYR. |
The salary capping was made at 4,000 MYR for SOCSO (er:69.15 MYR; ee:19.75 MYR) & EIS (er:7.90 MYR; ee:7.90 MYR). | Monthly salary ceiling limit increased from 4,000 MYR to 5,000 MYR for SOCSO (er:86.65 MYR; ee:24.75 MYR) & EIS (er:9.90 MYR;ee:9.90 MYR) contributions. |
CHANGES TO PERSONAL INCOME TAX RATE – WEF YA2023
The individual progressive tax rates YA2023 changed as below:
| Chargeable Income ( MYR )0 – 5,000 | New Tax Rate ( % ) | Previous Tax Rate ( % ) |
| 0 | 0 | |
| 5,001 – 20,000 | 1 | 1 |
| 20,001 – 35,000 | 3 | 3 |
| 35,001 – 50,000 | 6 | 8 |
| 50,001 – 70,000 | 11 | 13 |
| 70,001 – 100,000 | 19 | 21 |
| 100,001 – 250,000 | 25 | 24 |
| 250,001 – 400,000 | 25 | 24.5 |
| 400,001 – 600,000 | 26 | 25 |
| 600,001 – 1,000,000 | 28 | 26 |
| 1,000,001 – 2,000,000 | 28 | 28 |
| > 2,000,001 | 30 | 30 |
The above changes shall be reflected and impacted to the monthly tax deduction (PCB) computation of employees from 1 May 2023.
MALAYSIA | CHANGES TO CORPORATE INCOME TAX RATE
Wef. YA2023, income tax rate for the first 150,000 MYR chargeable income of a Micro, Small Medium Enterprise is to be reduced from 17% to 15%.
| Chargeable Income ( MYR )First 150,000 | New Tax Rate ( % ) | Previous Tax Rate ( % ) |
| 15 | 17 | |
| 150,001 – 600,000 | 17 | 17 |
| 600,001 & above | 24 | 24 |
Along with the rate reduction, as part of the change made in the Finance Bill 2023 approved in this April, the additional shareholding condition required to be observed by MSME to be qualified for the reduced tax rates has been added (refer to (d)).
| Before | After |
| a) Not more than 50% of the paid-up capital of the company is directly or indirectly owned by a related company which has a paid-up capital > 2.5 M MYR; | |
| b) Not more than 50% of the paid-up capital of the related company which has a paid-up capital > 2.5 M MYR is directly or indirectly owned by the company mentioned in (a); | |
| c) Not more than 50% of the paid-up capital of the company as mentioned in (a) and the related company which has a paid-up capital > 2.5 M MYR is directly or indirectly owned by another company; or | |
| n.a. | Not more than 20% of the paid-up capital of the company is directly or indirectly owned by one or more companies/ individuals outside Malaysia |
The above amendment with effective from YA 2024.
MALAYSIA | PROPOSITION OF MANDATORY E-FILING
The e-filing of tax returns and amended tax returns are to be made mandatory for the following taxpayers:
| BEFORE | AFTER | |
Amended Income Tax Return (Sec 77B) | – | Companies, LLPs, Trust Bodies & Co-ops Spcieties |
Income Tax Return (Sec 77A) | Companies & LLPs | Companies, LLPs, Trust Bodies & Co-ops Spcieties |
| Return of Employer (Form E) (Sec 83) | Companies | LLPs, Trust Bodies & Co -ops Societies |
The above amendment with effective from YA 2024.
IMPLEMENTATION OF NEW E-INVOICE SYSTEM
In May 2023, the Malaysian Inland Revenue Board (LHDN) has announced the implementation of e-invoicing to targeted taxpayers and a set of guidelines (“Garis Panduan E-Invois Versi 1.0”) is issued in July 2023, mainly to provide direction on the new initiative of e-invoicing. The first stage of implementation tentatively to be begun in June 2024 and it is to be made mandatory for business with a sales threshold of 100M MYR per year.
e-Invoice Guidelines 2023 lhdnm-garis-panduan-e-invois-versi-10.pdf (hasil.gov.my)
1 JUN 2024
Taxpayers with sales > 100M MYR per year
1 JAN 2025
Taxpayers with sales > 50M MYR per year
1 JAN 2026
Tax with sales > 25M MYR per year
1 JAN 2027
ALL taxpayers
