Knowing if you're eligible for overtime and learning how to calculate the amount you're due can help ensure your payment is correct. Read on to discover some aspects of overtime compensation. Here's what we'll cover:
Overtime pay is the extra money you receive when you do overtime work past your regular hours. Companies usually pay overtime at a fixed hourly rate, which they calculate based on your salary. You may qualify for overtime depending on your contract and regular weekly hours.
Its purpose is to offer fair compensation for your extra time and effort in completing your duties and your meaningful contribution to the company's operations. The overtime system protects the interests of employees and employers. Fair overtime compensation creates a beneficial and impartial work environment.
In Malaysia, employees can receive overtime when they work more than the legislated number of working hours. Overtime rates usually apply after working eight hours per day or 45 hours per week. There are limitations to the amount of overtime work an employee can legally do. According to Malaysia's Employment Regulations 1980, employees can work up to 104 hours every month. This means you can work overtime for a maximum of four hours per day.
Malaysia's employment regulations state that working more than eight hours per day or 45 hours per week constitutes overtime for salaried employees. The working period excludes breaks and mealtimes. Non-shift personnel who work five days a week, eight hours a day, can work overtime for a maximum of four hours daily. If you work shifts, you may need to do more than eight hours per day or 45 hours per week. In this case, the average number of hours you work over any three-week period should not exceed 45 hours per week.
Employers should pay employees overtime in the following circumstances:
Employees receive standard overtime at a minimum of 1.5 times their hourly rate. This applies to workers with daily or monthly salaries. To calculate your ordinary rate, divide your monthly salary by 26 days. Then, divide by your total daily ordinary hours – eight hours. Multiply your standard hourly rate by 1.5 to calculate your hourly overtime rate. Multiply this rate by the number of hours you worked. The result equates to your total paid overtime entitlement. This calculation method applies to all employees eligible for overtime compensation.
Employers should pay overtime at twice an employee's hourly rate when working on a public holiday if they don't exceed the normal eight working hours. This is regardless of whether your pay period is hourly, weekly, or monthly. This rule also applies if you do overtime work on a public holiday that falls on a normal workday or rest day. If you work more than eight hours on a public holiday, your pay is three times your standard rate. This calculation method applies to all employees eligible for overtime compensation.
If you work overtime on a rest day, not exceeding half your normal working hours (up to four hours), you should receive half a standard day's wage. If you work on your rest day and exceed half your normal hours (between four and eight hours) that day, you should receive a standard day's wage. However, for more than your standard (eight) daily work hours, you should earn twice your ordinary rate. This calculation method applies to all employees eligible for overtime compensation.
The Employment Act, which covers overtime regulations, applies to employees who fit the following overtime criteria:
These criteria apply regardless of your employment status or whether your payment period is hourly, daily, or monthly. You should receive your overtime compensation in addition to your salary.
Several factors affect how employers pay for overtime in Malaysia. Payment depends on whether overtime falls on a normal workday, rest day, or public holiday. The regulations also limit how many hours of overtime work an employee can do. Here are some examples of an employee's overtime pay in different scenarios:
Here's an example of Siti's overtime compensation if they work beyond their work period on a normal workday:
Their overtime hourly rate is:
RM12.50 x 1.5 = RM18.75
Their total overtime wage for that day is:
RM18.75 x 2 = RM37.50
Siti typically has rest days on weekends (Saturday and Sunday). Here's how they can calculate their overtime compensation for rest days in three different situations:
Their total payment for that rest day is:
RM100 / 2 = RM50
Their total payment for the two rest days is:
RM100 x 2 = RM200
The total payment for this rest day is:
[RM12.50 x 8 hours] + [RM12.50 x 2 x 3 hours] = RM100 + RM75 = RM175
Malaysia's public holidays include festivities such as Hari Raya Puasa or national days like Independence Day. The following examples show how Siti can calculate their overtime for public holidays in three different situations:
The total payment for that day is:
RM12.50 x 2 x 3 hours = RM75
Total payment for this public holiday is:
[RM12.50 x 2 x 8] + [RM12.50 x 3 x 5] = RM200 + RM187.50 = RM387.50
Malaysia's Employment Act protects employee pay. This law sets the standard employment hours and calculation methods for overtime rates. Here's a summary of the overtime regulations:
By following the employment guidelines and calculation methods for overtime pay, workers can safeguard themselves against employers who miscalculate their pay or undercharge overtime rates. Employees who work overtime should be compensated fairly, but also try to work within the standard working hours to prevent overstretching their limits. Ultimately, this motivates employees to work hard for the company.