An e-invoice is a document generated, transmitted, and received electronically, typically generated in a structured digital format, such as XML or JSON.
This format allows for the automatic and seamless exchange of invoice data between the supplier’s and buyer’s systems.
The e-invoice includes mandatory and optional fields that capture all the necessary details of a transaction. The mandatory fields typically include:
the supplier’s name,
buyer’s name,
supplier’s Tax Identification Number (TIN), and
supplier’s registration/identification number, passport number, and so on.
In cases where goods are shipped to a different recipient and/or address, additional mandatory fields are required, such as the shipping recipient’s name and address.
The e-invoice also includes a Unique Identifier Number provided by IRBM, allowing for traceability and reducing tampering with the e-invoice.
Once validated, the e-Invoice is embedded with a QR code provided by IRBM, which can be used to validate the existence and status of the e-Invoice via the MyInvois Portal.
The e-invoice is stored in IRBM’s database, but taxpayers are reminded to retain sufficient records and documentation in relation to the transaction.
Through the MyInvois Portal or API integration, both supplier and buyer can request and retrieve the e-invoice, which provides essential invoice details such as the invoice date, amount, invoice status, and other relevant information submitted to IRBM.
电子发票是以电子方式生成、传输和接收的文件，通常以 XML 或 JSON 等结构化数字格式生成。
这种格式允许在供应商和买方的系统之间自动、无缝地交换发票数据。
电子发票包括必填字段和可选字段，可记录交易的所有必要细节。必填字段通常包括:
供应商名称，
买方名称，
供应商纳税识别号（TIN）；和
供应商注册/识别号或护照号码等等。
如果货物运往不同的收货人和/或地址，则需要填写其他必填字段，如收货人姓名和地址。
电子发票还包括一个由 IRBM 提供的唯一识别码，以便追踪和减少对电子发票的篡改。
电子发票一经验证，即嵌入 IRBM 提供的 QR 码，可用于通过 MyInvois 门户验证电子发票的存在和状态。
Disclaimer: The information in this article should not be construed as legal advice, and we assume no responsibility or liability for any decisions made or actions taken from this article should not be construed as legal advice, and we assume no responsibility or liability for decisions made or actions taken as a result of reading this article.
To calculate overtime, you must know how to ascertain the number of hours worked.
Normal Working Hours
The term “normal working hours” refers to the laws regulating the number of hours an employee can work in a given day, week, month, or year.
As stipulated by the law, employers must pay higher overtime work rates. It varies from country to country, but the Standard working hours around the world are about 40 to 44 hours per week (35 hours per week in France and up to 105 hours per week in North Korean labour camps)
The term “maximum working hours” indicates the maximum number of hours an employee is expected to work per week. The employee is not permitted to work more than the number of hours allowed by law.
Hours of Work, s 60A(9)
In this context, “hours of work” refers to the time during which an employee is at the employer’s disposal and is not free to control his own time and movements.
Limits on Hours of Work, s 60A(1)
Condition 1: more than five continuous hours without a break of at least 30 minutes;
Condition 2: more than 8 hours in one day;
Condition 3: more than 45 hours [Before 1.1.2023: 48 hours (Note 1)] in one week;
Condition 4: over a spread over 10 hours in one day.
Note 1:
This provision was written at a time [before independence] when the majority of employees in our country were forced to work for six days a week and, as a result, were compelled to work for no more than 8 hours a day at most and could not work more than 48 hours in a week.
However, according to the Employment (Amendment) Act 2022, an employee cannot work more than 45 hours in a single week starting September 1, 2022.
Not applicable to the Sabah Labour Ordinance and Sarawak Labour Ordinance; why do I say so?
This is because the Employment (Amendment) Act 2022 is an Act to amend the Employment Act 1955 ONLY.
There are two circumstances in which the conditions outlined above will not be applied
On a written request from an employer, the Director General can grant the employer permission. [s 69A(1A)]
in the case of—
accident, actual or threatened, in or concerning his place of work;
work, the performance of which is essential to the life of the community
work essential for the defence or security of Malaysia;
urgent work to be done to machinery or plant;
an interruption of work which it was impossible to foresee; or
work to be performed by employees in any industrial undertaking essential to the economy of Malaysia or any essential service as defined in the Industrial Relations Act 1967
Act A1026
Employment (Amendment) Act 1998 – 1-8-1998
An amendment took effect on August 1, 1998, as proviso (iii) to section 60A(1) of the EA.
This amendment allowed the law to permit that, by agreement between employers and employees, where the number of hours of work on one or more days of the week is less than 8 hours (for example, some employees are required to work a half day on Saturday or some are not even required to work on Saturday), on the remaining days of the week, the restriction of eight hours may be exceeded; nevertheless, no employee may be required to work for more than nine hours in a single day or for more than forty-eight [Effective January 1, 2023: 45] hours in a single week.
Why?
We speculated that this provision accommodates employees who prefer to work a 5-day work week rather than a 6-day work week.
For instance, if employees are not required to clock in on a Saturday, then for the remaining days of the week, the employees will be required to work for more than 8 hours but not more than 9 hours in 1 day.
Flexi Work Arrangement: the government remembers some but not all
The government enacted this law to encourage employers to provide more flexible working arrangements.
To put it another way, after an agreement has been reached between an employee and their employer, the employee has the option of working flexible hours.
Regrettably, the introduced amending law does not consider work hours for this flexible work arrangement.
Illustration
Scenario 1: A 5-day workweek
Depending on the operational requirements of the Firm, your working days and hours will be as follows:
Please note that you may be required to work beyond these working hours because of the demands of your work and position. The working hours and rest days may be changed from time to time as determined by the Firm.
The current employment law allows for Scenario 1 due to the following conditions are met:
A one-hour lunch break (even though the law requires a lunch break of 30 minutes or more) when working no more than five consecutive hours.
Najib doesn’t have to work more than 8 hours a day (He is required to work for 8 hours exactly)
Also, Najib is not required to work more than 45 hours per week (He is only needed to work for a total of 40 hours)
Najib is entitled to 1 rest day.
Scenario 2: A 6-day workweek
Same facts as in Scenario 1 except that [in brown colour]:
Within five consecutive hours, any break that is less than thirty minutes long will be considered part of the work hours—for example, a 20-minute tea break or two tea breaks of 15 minutes each.
Kesatuan Sekerja Pembuatan Barang Galian Bukan Logam v Malex Industries Bhd
“Overtime Work” is defined as the number of hours carried out over the regular work hours per day as stated in section 60A(1) of the EA.
This definition of “overtime work” can be found in the EA’s section 60A(3).
If any work is carried out after the spread over a period of ten hours, the whole period beginning from the time that the said spread over period ends up to the time that the employee ceases work for the day shall be deemed to be overtime.
A simple definition of overtime would be the number of hours worked outside of normal working hours.
Limitation Of Overtime Work
Similarly, there is a cap on the overtime that can be worked.
According to the Employment (Limitation of Overtime Work) Regulations of 1980, the maximum overtime an employee can be required to work in a single calendar month is 104 hours.
This equates to almost four hours every day, on average.
Even though the pay rate should be one and a half times the hourly rate of pay of employees, some companies decided that it was more cost-effective to ask employees to work overtime rather than acquire a new employee.
On the other hand, employers are responsible for remembering that they cannot, under any circumstances, mandate that employees work more than 12 hours in a single day.
Amendments to the Employment Act 1955
A series of explanations of the Amendments to the Employment Act 1955 was previously posted:-
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In the context of the Malaysian Employment Act, an employment contract is a legally binding agreement between an employer and an employee that outlines the terms and conditions of the employment relationship.
Section 2(a) of the Employment Act 1955 states that “contract of service” means any agreement, whether oral or in writing and whether express or implied, whereby one person agrees to employ another as an employee, and that other agrees to serve his employer as an employee and includes an apprenticeship contract.
In general, this contract can be in writing or verbal. Still, Section 10(1) of the Employment Act 1955 states that “A contract of service for a specified period of time exceeding one month or for the performance of a specified piece of work, where the time reasonably required for the completion of the work exceeds or may exceed one month, shall be in writing.”
Section 10(2) of the Employment Act 1955 also states, “in every written contract of service a clause shall be included setting out the manner in which such contract may be terminated by either party in accordance with this Part.”
An employment contract typically includes the following key elements:
Job Position and Duties: A clear description of the employee’s job title and responsibilities.
Working Hours: The normal working hours and days of the week.
Salary and Benefits: Details about the employee’s compensation, including the basic salary, allowances, and any benefits such as medical coverage, bonuses, or other perks.
Terms of Employment: The contract should specify whether the employment is permanent, temporary, or for a fixed term.
Probation Period: The contract should state its duration and terms if there is a probationary period.
Termination: The conditions under which either party can terminate the employment, notice period, and any severance or termination benefits.
Leave and Holidays: Information about annual leave, public holidays, and other types of leave, including sick leave and maternity leave.
Confidentiality and Non-Compete Clauses: Provisions protecting the company’s confidential information and any restrictions on the employee’s activities after leaving the company.
Disciplinary and Grievance Procedures: Details on how disciplinary matters and grievances will be handled within the organisation.
Employers and employees need to understand and agree to the employment contract terms.
The Employment Act in Malaysia provides certain minimum employment standards and protections for employees, which must be met in any employment contract.
However, employers can provide more favourable terms and conditions in the contract as long as they meet or exceed the statutory requirements.
Both parties should consult with legal experts or labour advisors when drafting or entering into employment contracts to ensure compliance with the Employment Act and to address any specific needs or concerns.
In the context of Malaysian employment law, an Employee Handbook, often referred to as an Employee Manual or Company Handbook, is a written document that outlines the policies, procedures, rules, and guidelines governing the employment relationship between an employer and its employees.
The employee handbook is not legally required in Malaysia. It serves as a reference guide for employees, providing information about their rights, responsibilities, and the company’s expectations.
An Employee Handbook typically covers a wide range of topics, including:
Employment Terms and Conditions: Information about terms of employment, working hours, overtime, and leave policies.
Code of Conduct: Expectations for employee behaviour, including standards of professionalism, ethics, and workplace behaviour.
Non-Discrimination and Harassment Policies: Ensuring that the workplace is free from discrimination and harassment based on factors like gender, race, religion, and others.
Health and Safety: Guidelines for workplace safety and procedures for reporting accidents or hazards.
Leave Policies: Details on various types of leave, including annual leave, sick leave, maternity or paternity leave, public holidays, and the application procedures.
Compensation and Benefits: Information about salary, benefits, bonuses, and other forms of compensation.
Rules on dress code while working in the office: This section defines the company’s expectations regarding employee attire, ensuring a professional and appropriate workplace appearance.
Privacy policy for employees handling personal data, sensitive, or confidential information: This is especially crucial for employees handling sensitive information, outlining their responsibilities in safeguarding privacy and data security.
Alcohol and drug policy details the company’s stance on alcohol and drug use, typically emphasising a drug-free workplace and rules for alcohol consumption during work-related events.
Rules on company email usage, breaks, and attendance: This section outlines guidelines for using company email for professional purposes, taking breaks during work hours, and maintaining good attendance. It provides employees with a clear understanding of what’s expected regarding punctuality and email communication.
Guidelines for phone use (e.g., no private calls during work hours): This provides instructions on the appropriate use of personal phones in the workplace, emphasising that private calls should be limited during working hours to maintain productivity.
Termination and Resignation Procedures: Procedures for ending the employment relationship, including notice periods and exit interviews.
Grievance Procedures: Steps for addressing workplace conflicts or concerns.
Confidentiality and Data Protection: Policies for handling company information and employee data.
Employee Rights and Responsibilities: Outlining employees’ rights and obligations in the workplace.
The Employee Handbook is a valuable resource for both employers and employees, as it helps promote transparency, consistency, and fair treatment within the organisation.
It can also serve as a reference in disputes or legal matters related to employment.
Both employers and employees need to be aware of the contents of the Employee Handbook, as it forms part of the employment contract and may have legal implications. Additionally, the handbook should be periodically reviewed and updated to reflect changes in labour laws or company policies.
In Malaysia, employers are mandated to grant employees a comprehensive array of leave entitlements totalling six distinct categories.
This post delves into these vital employee entitlements, shedding light on the legal provisions, conditions, and considerations surrounding:
annual leave,
sick leave,
hospitalisation,
maternity leave,
paternity leave, and
public holidays.
Understanding these leave types is crucial for both employers and employees to ensure a harmonious and well-regulated work environment.
1. Sick Leave:
Employees in Malaysia are entitled to paid sick leave when they are medically unfit to work.
Employees must provide a medical certificate from a registered medical practitioner to be eligible for paid sick leave.
The statutory sick leave entitlements outlined in the Employment Act are as follows [s 60F]:-
2. Hospitalisation Leave:
Hospitalisation leave is provided for employees who require hospitalisation due to illness or injury.
Medical certificates or proof of hospitalisation are usually required to claim hospitalisation leave.
Under the Employment (Amendment) Act 2022, hospitalisation leave of 60 days would be regarded separately from any paid sick leave now.
With this amendment, employees will be entitled to an additional 60 days of paid hospital leave in addition to the number of paid sick leave days they are entitled to in a calendar year (depending on the length of employment)
3. Annual Leave:
Annual leave is provided to employees for rest, relaxation, and personal time off.
Employers usually define the criteria for taking annual leave, such as notice periods and blackout dates.
The amount of annual leave is dependent on tenure of service; an employee shall be entitled to paid annual leave of [s 60E]:
To qualify for annual leave, the employee must have served at least twelve months with the employer.
If the employees have not completed twelve months of continuous service with the same employer during the year in which their contract of service terminates, their entitlement to paid annual leave shall be in direct proportion to the number of completed months of service.
The employee’s annual leave will be forfeited unless otherwise specified in the employment agreement:
in the case of dismissal for misconduct [s 14(1)(a)],
absenteeism from work without permission for more than 10% of the working days during the twelve months of continuous service, or
if the leave is not used up within 12 months after the end of every twelve months of continuous service (unless with prior consent from the employer).
4. Maternity Leave:
Female employees in Malaysia are entitled to 98 days of maternity leave if they meet specific eligibility requirements.
Employers are required to pay maternity leave based on the Employment Act 1955.
5. Paternity Leave:
Malaysia introduced paternity leave under the Employment (Amendment) Act 2022
A married male employee is now entitled to paid paternity leave at his ordinary pay rate for 7 consecutive days for each child if:-
The employee has been employed by the same employer for at least 12 months immediately before the commencement of such paternity leave.
The employee has notified his employer of his spouse’s pregnancy at least 30 days from the expected birth or as early as possible.
6. Public Holidays
Every employee shall be entitled to [s 60D(1)]:
11 paid gazetted public holidays at his ordinary rate of pay on the following days in any one calendar year, five of which shall be:
the National Day;
the Birthday of the Yang di-Pertuan Agong;
the Birthday of the Ruler or the Yang di-Pertua Negeri, as the case may be, of the State in which the employee wholly or mainly works under his contract of service, or the Federal Territory Day if the employee wholly or mainly works in the Federal Territory;
the Workers’ Day, and
Malaysia Day; and
on any day appointed as a public holiday for that particular year under section 8 of the Holidays Act 1951
By agreement between the employer and employee, any other day or days may be substituted for one or more of the remaining gazetted public holidays not stated in above.
If a public holiday falls on a rest day or any other public holiday, the following day shall be considered the paid holiday.
If an employee is on sick or annual leave during a public holiday, they are owed a replacement day.
However, if an employee is absent from work on the day immediately before or after a public holiday with no just cause, they forfeit the right to the paid holiday.
Please keep in mind that employment laws and regulations can change over time. It’s essential to check the latest labour laws and your company’s employment policies to ensure you have the most up-to-date and accurate information regarding leave entitlements in Malaysia.
In the context of Malaysian employment law, overtime refers to the hours worked by an employee beyond their regular working hours.
According to employment regulations, employers are required to compensate employees for the extra hours worked during overtime.
The compensation rate for overtime work is typically higher than the employee’s regular hourly wage.
Malaysian labour laws set minimum wage limits per hour, so overtime must be paid at or above these minimum wage standards.
Under the Employment (Limitation of Overtime Work) Regulations 1980 [Sabah and Sarawak Labour Limitation of Overtime Work Regulations], an employee can only be expected to perform 104 hours of overtime a month.
Any work carried out on a Rest Day, any of the Gazetted Public Holidays, or any paid holiday substituted shall not be construed as overtime work.
However, the Director-General may, on the application made to him in writing by an employer or by an employee or a group of employees, permit any particular employee, or any group, class, category, or description of employees in any particular industry, undertaking or establishment to work overtime in excess of the limit of hours so prescribed.
Overtime is usually calculated on an hourly basis, and employers are required to ensure that employees receive appropriate rest periods and compensation for their overtime work.
The statutory limit for regular working hours in Malaysia is 45 hours per week and 8 hours per day (* by agreement under the contract of service between the employee and the employer, the number of hours of work on one or more days of the week is less than 8, the limit of 8 hours may be exceeded on the remaining days of the week, but so that no employee shall be required to work for more than 9 hours in one day or 45 hours in one week).
For any additional work performed beyond the normal working hours, the employee is typically compensated at a rate not less than 1.5 times their Hourly Rate of Pay (HRP).
To determine the Hourly Rate of Pay (HRP), it’s essential first to understand what the Ordinary Rate of Pay (ORP) is.
According to Section 60I(1A) of the Employment Act 1955, where an employee is employed on a monthly rate of pay, the ordinary rate of pay shall be calculated according to the following formula:
= monthly rate of pay/26
Whereas 60I(b) defines the hourly rate of pay means the ordinary rate of pay divided by the normal hours of work.
For any overtime work carried out in excess of the normal hours of work, the employee shall generally be paid at a rate not less than 1.5 times his Hourly Rate of Pay (HRP).
Example:
Ali’s monthly salary is RM 2,600.
He works 8 hours a day, from Monday to Friday.
To calculate Ali’s ORP, divide his monthly salary by 26. This will give you RM 100.
To calculate Ali’s HRP, divide his ORP by 8. This will give you RM 12.50.
So, if Ali works for an extra hour of overtime, he is compensated at a rate of 1.5 times his Hourly Rate of Pay (HRP), which is RM 12.50.
Ali is entitled to RM 18.75 (RM 12.50 * 1.5) for work performed beyond his normal working hours.
However, his employer can pay at a rate higher than 1.5 times but not less than 1.5 times.
The overtime payment for an employee on a monthly pay basis differs for rest days and holidays:
Rest Day Overtime Payment: If an employee on a monthly pay basis is required to work on their rest day, they are entitled to additional compensation.
which does not exceed half his normal hours of work, wages equivalent to half the ordinary rate of pay for work done on that day, or
which is more than half but which does not exceed his normal hours of work, one day’s wages at the ordinary rate of pay for work done on that day
For any work carried out in excess of the normal hours of work on a rest day by an employee mentioned in paragraph (a) or (b), he shall be paid at a rate which is not less than two times his hourly rate of pay.
Holiday Overtime Payment: If an employee on a monthly pay basis is required to work on a paid holiday, they are also entitled to additional compensation:-
two days’ wages at the ordinary rate of pay, regardless that the period of work done on that day is less than the normal hours of work
For this, they should receive their holiday pay for the day and, in addition, receive two days’ wages at the ordinary rate of pay for the work done on the holiday.
This means they are paid twice their usual daily wage for hours worked on the holiday.
For any overtime work carried out by an employee in excess of the normal hours of work on a paid public holiday, the employee shall be paid at a rate which is not less than three times his hourly rate of pay.
Example 1: Rest Day
Ali’s designated rest day is Sunday.
His normal working hours are from 9:00 AM to 6:00 PM, including a 1-hour lunch break.
Ali’s monthly salary is RM 2,600.
1) Ordinary Rate of Pay (ORP) Calculation:
Ali’s monthly salary is RM 2,600.
To calculate the ORP, divide his monthly salary by 26:
ORP = Monthly Salary / 26
ORP = RM 2,600 / 26
ORP = RM 100
Now that we have Ali’s ORP (RM 100), we can calculate his HRP.
2) Hourly Rate of Pay (HRP) Calculation:
Ali’s HRP can be calculated by dividing his ORP by 8 (the typical number of working hours in a day):
HRP = ORP / 8
HRP = RM 100 / 8
HRP = RM 12.50
Now, we’ll calculate the overtime payment for Ali based on your provided scenarios:
Scenario 1 – Ali Works on Rest Day for 4 Hours (Within Normal Working Hours):
Ali works on his rest day (Sunday) for 4 hours.
The ORP is RM 100.00.
The overtime payment for the 4 hours of work on a rest day within normal working hours:
= 0.5 ORP * RM 100.00
= RM 50
Scenario 2 – Ali Works on Rest Day for 8 Hours (Within Normal Working Hours):
Ali works on his rest day (Sunday) for 8 hours, all within normal working hours.
The ORP is RM 100.00.
The overtime payment for the 8 hours of work on a rest day within normal working hours:
= 1 ORP * RM 100.00
= RM 100
Scenario 3 – Ali Works on Rest Day for 9 Hours (Including 1 Hour in Excess of Normal Working Hours):
Ali works on his rest day (Sunday) for 9 hours, including 1 hour in excess of normal working hours.
For the first 8 hours, he is paid at 2 ORP, which is RM 100 as calculated above.
For the additional 1 hour in excess of normal working hours, he is paid at a rate not less than two times his HRP.
Calculation:
For the first 8 hours: 1 ORP * RM 100.00 = RM 100
For the additional 1 hour (overtime): 1 hour * 2 * RM 12.50 = RM 25
Total Overtime Payment
= RM 100 + RM 25
= RM 125
In these examples, we’ve calculated Ali’s ORP and HRP and provided the overtime payment for scenarios where he works on his rest day, both within normal working hours and in excess of normal working hours.
Example 2: Public Holiday
Same fact as above. Consider a public holiday, such as Malaysia Day on September 16.
Ali is scheduled to work on Malaysia Day.
Scenario 1 – Working on a Public Holiday for 4 hours:
Compensation for 4 hours on a public holiday:
= 2 ORP
= 2 x RM 100.00
= RM 200
Scenario 2 – Working on a Public Holiday for 8 hours (normal working hours):
Compensation for 8 hours on a public holiday:
= 2 ORP
= 2 x RM 100.00
= RM 200
Scenario 3 – Working on a Public Holiday for 9 hours (1 hour in excess of normal working hours):
Compensation for the first 8 hours on a public holiday = RM 200
Compensation for the additional 1 hour (in excess):
= 1 hour * (HRP * 3)
= 1 hour * (RM 12.50 x 3)
= RM 37.50
Total Compensation for 9 hours = RM 200.00 + RM 37.50
= RM 237.50
These examples illustrate how Ali would be compensated for overtime work on rest days and public holidays, both within his normal working hours and beyond them.
So, in addition to his holiday pay, Ali’s compensation for working on a public holiday (Malaysia Day) includes overtime pay equivalent to at least 2 days’ wages at the ordinary rate of pay.
This applies regardless of the duration of work on that day, even if it’s less than the normal working hours. Any hours worked in excess of the normal working hours are compensated at a higher rate (three times).
Conclusion
If your employees are required to work overtime on a public holiday as per S.60D of the Act, in addition to their holiday pay, they are entitled to overtime pay of at least 2 days’ wages at the ordinary rate of pay.
This applies to all employees as per the act, including monthly, daily, and hourly-paid workers; the employees in question will also receive their ordinary pay on top of the overtime pay.
Meanwhile, if the employee in question works hours that are in excess of their normal hours of work on a public holiday, this work shall be paid at 3 times the ordinary hourly rate per hour for that employee.
For employees employed on various bases, such as monthly, weekly, daily, hourly, or other similar pay rates, it's important to note that the calculation of overtime compensation may vary. Detailed information can be found in the Employment Act 1955.
Illustration Calculating Overtime Pay for an Employee with an 8-Hour Workday
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