Malaysia is a Southeast Asian country with a rapidly growing economy, making it an attractive destination for many people to work. The average basic salary in Malaysia is an important factor for individuals considering working here, and for companies who want to recruit employees in Malaysia.
This article will provide an overview of the average basic salary in Malaysia, the basic salary regulations, penalties for failing to meet these regulations, and other payments employees may be entitled to. Let’s find out!
The Average Basic Salary in Malaysia
As of 2023, the average basic salary in Malaysia is around RM 6,590 per month. However, this is just an estimated number and the actual numbers can be higher or lower and vary greatly depending on the individual’s industry, experience, and location. For instance, the average basic salary in Kuala Lumpur is significantly higher than in other cities in Malaysia. It is important to note that the basic salary is just the starting point of an employee’s income, and they may be eligible for additional bonuses, allowances, and other forms of compensation.
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Basic Salary Regulations in Malaysia
In Malaysia, there are strict regulations in place to ensure that employees receive a fair basic salary. The main regulation governing basic salaries in Malaysia is the Minimum Wages Order 2022, which sets the minimum basic salary that employers must pay their employees. This order is reviewed periodically to ensure that employees are paid a fair wage and is updated accordingly.
The Minimum Wages Order 2022
Starting 1 May 2022, the Malaysian Minimum Wages Order 2022 will take effect and raise the minimum monthly salary of workers to RM 1,500. The Order applies to all workers except domestic helpers, but there is a temporary exception for employers who have less than 5 employees until 31 December, 2022. This exemption, however, does not apply to employers engaged in professional activities.
Malaysia’s minimum wage policy itself is determined under the National Wages Consultative Council Act 2011 (Act 732). The National Wages Consultative Council, which is a tripartite body, is established to suggest the minimum wage rate to the government. After the government gives its approval, the Minister of Human Resources issues a Minimum Wages Order.
The Minimum Wages Order was first introduced in 2012 and became effective on 1 January 2013. Then, it established the minimum wage rates for workers in West Malaysia at RM 900 per month and RM 4.33 per hour, and for those in East Malaysia at RM 800 per month and RM 3.85 per hour.
Prior to the Minimum Wages Order, Malaysia had the Wages Council Act 1947, which aimed to establish a standard for low-wage workers’ salaries. However, the act suffered from several drawbacks, such as infrequent revisions to the wage rate and lengthy and complicated processes.
Through the implementation of the Minimum Wages Order and the National Wages Consultative Act, the government now regularly evaluates the minimum wage every two years to ensure that workers receive appropriate compensation relative to the state of the economy.
Penalties for Failing to Meet Basic Salary Regulations in Malaysia
It is crucial for employers to abide by the Minimum Wages Order 2022 as failing to pay the minimum wage as outlined in the order constitutes a violation under Section 23 of the National Wages Consultative Council Act 2011. If found guilty, the employer could face a fine of up to RM 10,000 for each employee they have failed to pay the minimum wage to.
Components of Basic Salary in Malaysia
The basic salary that employees receive in Malaysia is composed of several different components, each of which is important in determining their overall compensation. The three main components of basic salary in Malaysia are:
1. Base Salary
Base salary is the core component of an employee’s compensation and is used to determine their eligibility for other forms of compensation, such as benefits and allowances. The minimum wage for the base salary in Malaysia is determined by the Minimum Wage Order 2022, which is RM 1,500 per month.
2. Benefits
Benefits are additional compensation that employees may be eligible for, over and above their basic salary. These can include medical insurance, paid time off, retirement benefits, and other forms of compensation. Benefits are often provided by employers as part of a comprehensive compensation package, and are designed to help employees meet their personal and financial needs.
3. Allowances
Allowances are additional payments that employees may be eligible for, in addition to their basic salary and benefits. These can include housing allowances, transportation allowances, and other forms of compensation. Allowances are typically provided to help employees cover additional expenses associated with their job, such as commuting to work or providing for their housing needs.
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