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Ordinary Rate of Pay and Hourly Rate of Pay

Section 60 I (1A) of the Employment Act 1955 states that:

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

Section 60 I(1)(b) of the Employment Act 1955 states that the hourly rate of pay means the ordinary rate of pay divided by the normal hours of work.

Therefore in calculating the hourly rate of pay, it would be calculated as:

Ordinary Rate of pay

              8*

On the assumption that the normal hours of work per day is 8 hours.*

Section 60 I (1)(a) of the Employment Act 1955 states that the ordinary rate of pay means wages as defined in section 2. Section 2 of the Employment Act 1955 defines wages as follows:

"wages" means basic wages and all other payments in cash payable to an employee for work done in respect of his contract of service but does not include –

(a) the value of any house accommodation or the supply of any food, fuel, light or water or medical attendance, or of any approved amenity or approved service;

(b) any contribution paid by the employer on his own account to any pension fund,

provident fund, superannuation scheme, retrenchment, termination, lay-off or retirement scheme, thrift scheme or any other fund or scheme established for the

benefit or welfare of the employee;

(c) any travelling allowance or the value of any traveling concession;

(d) any sum payable to the employee to defray special expenses entailed on him by the nature of his employment;

(e) any gratuity payable on discharge or retirement; or

(f) any annual bonus or any part of any annual bonus;

Section 60 I (2) of the Employment Act 1955 states that an employer may adopt any method or formula other than the method or formula in subsection (1A), (1B) or (1C) for calculating the ordinary rate of pay of an employee; but the adoption of any other method or formula shall not result in a rate which is less than any of the rates provided in the subsections.

There is nothing improper for an employer to use the formula of wages/26/7.5 to calculate the hourly rate of pay provided it is more advantageous to the worker. The basis for the company to use 7.5 instead of 8 as the denominator in calculating the hourly rate of pay would be the normal number of hours worked per day would be 7.5 hours instead of 8 hours.

Otherwise it is recommended to stick to 8 for 8 hours of work.

I have driver basic salary is RM1000. But he is getting almost RM3000 per month for trip incentive and commission. Do I need to adjust his basic salary to RM1500 OR can I just maintain the current method and making sure he is getting more than RM1500 in total monthly salary?

Paragraph 4(2) of the Minimum Wages Order 2022 states that "in relation to an employee who is not paid basic wages but is paid wages based only on piece rate, tonnage, task, trip or commission, the rate of monthly wages payable to that employee with effect from 1 May 2022 shall not be less than RM1,500."

This above may be confusing because what happens if an employee is paid a basic wage (below RM1,500.00) plus trip and commission as in the above example. A verbal telephone query with one of the Labour Department revealed that they are of the view that basic wage must be RM1,500.00. If this is the view of the Labour Department and if we hold a contrary view, then I believe that this matter can only be decided by a decision from the court.

Given the response from one of the Labour Department, the matter therefore still needs further research and deliberations and at this juncture cannot be positively determined should the Labour Department takes a contrary view.

To terminate a staff in Malaysia can be costly especially if the staff is a long serving staff and the salary is high and the employer losses his case in Industrial Court. Before taking any action including termination, it is important that the employer follows certain basic procedures. If there is a written or verbal complaint against an employee, the company should investigate the matter. If there are sufficient evidence and witness, to issue a show cause letter to the employee.

Depending on the reply by the employee to the show cause letter or the outcome of the domestic inquiry (if it is conducted), the company may consider to take the following action as provided for under Section 14 of the Employment Act 1955 which reads as follows:

Section 14. (1) An employer may, on the grounds of misconduct inconsistent with the fulfilment of the express or implied conditions of his service, after due inquiry-

(a) dismiss without notice the employee.

(b) downgrade the employee; or

(c) impose any other lesser punishment as he deems just and fit, and where a punishment of suspension without wages is imposed, it shall not exceed a period of two weeks.

The misconduct must be sufficient serious enough before we can consider terminating the employee's service. The punishment to be inflicted must be in proportion to the misconduct. Section 14 (1) above talk about due inquiry. This means that some sort of investigation and inquiry must be undertaken. The giving of show cause letter is to ensure that the employee is given an opportunity to reply to the "misconduct". In any event, before terminating or taking any form of disciplinary action, it is advisable to consult a competent Human Resource Practitioner or an advocate & solicitor.

Section 60F. (1) of the Employment Act 1955 states that an employee shall, after examination at the expense of the employer-

(a) by a registered medical practitioner duly appointed by the employer; or

(b) if no such medical practitioner is appointed or, if having regard to the nature or circumstances of the illness, the services of the medical practitioner so appointed are not obtainable within a reasonable time or distance, by any other registered medical practitioner or by a medical officer, be entitled to paid sick leave.

Therefore you can still accept medical chit from non-panel clinic on condition as stated above i.e. emergency basis having regard to the nature and circumstances of the illness. You need to query the employee on why he obtained medical chit from a non-panel clinic and only if the employer is satisfied with the answer should the employer approved the medical chit.

What public holidays are stipulated by the government?

Section 60D (1) of the Employment Act 1955 provides that every employee shall be entitled to a paid holiday at his ordinary rate of pay on the following days in any one calendar year:

(a) on eleven of the gazetted public holidays, five of which shall be-

(i) the National Day;

(ii) the Birthday of the Yang di-Pertuan Agong;

(iii) 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;

(iv) the Workers' Day; and

(v) Malaysia Day; and

(b) on any day appointed as a public holiday for that particular year under section 8 of the Holidays Act 1951 [Act 369].

Section 60D (3) (a) states that any employee may be required by his employer to work on any paid holiday to which he is entitled under the said subsections and in such event he shall, in addition to the holiday pay he is entitled to for that day be paid two days' wages at the ordinary rate of pay if the employee is employed on a monthly rate of pay. This is regardless of the number of hours the employee worked up to the normal hours of work.

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.

Employees may be requested to work on public holidays and provided they are paid according to the Employment Act 1955 there would be no violation of law and regulations.