Employment Contract (Malaysia)
EMPLOYMENT CONTRACT
Employment Act 1955 (Act 265) | EPF Act 1991 | Industrial Relations Act 1967 (Act 177)
This Employment Contract is entered into on [Contract Date]
BETWEEN:
(1) [Employer Name] (SSM No. [Employer SSM No.]) of [Employer Address] (hereinafter referred to as the "Employer"); AND
(2) [Employee Name] (MyKad/Passport No. [Employee IC/Passport]) of [Employee Address] (hereinafter referred to as the "Employee").
1. POSITION AND DUTIES
1.1 The Employer agrees to employ the Employee as [Job Title] in the [Department] department, and the Employee agrees to serve in that capacity.
1.2 The Employee's employment shall commence on [Commencement Date] and shall be on a [Employment Type] basis.
1.3 The primary place of work shall be [Place of Work]. The Employer may require the Employee to work at other locations as the business requires.
1.4 The Employee shall faithfully and diligently perform all duties assigned by the Employer and shall comply with all lawful directions, company policies, and procedures.
2. PROBATIONARY PERIOD
2.1 The Employee shall be on probation for a period of [Probation Period] from the commencement date. During the probationary period, either party may terminate this Contract by giving not less than 4 weeks written notice or payment in lieu thereof.
2.2 Upon satisfactory completion of the probationary period, the Employer shall confirm the Employee's employment in writing. The Employer reserves the right to extend the probationary period if the Employee's performance is unsatisfactory.
3. SALARY AND BENEFITS
3.1 The Employee shall receive a monthly salary of [Monthly Salary], payable on the [Payment Date], in accordance with Section 19 of the Employment Act 1955.
3.2 The Employee shall be entitled to the following allowances: [Allowances].
3.3 The Employer and Employee shall make mandatory contributions to the Employees Provident Fund (EPF) under the Employees Provident Fund Act 1991, the Social Security Organisation (SOCSO) under the Employees' Social Security Act 1969, and the Employment Insurance System (EIS) under the Employment Insurance System Act 2017 at the applicable statutory rates.
3.4 Income tax shall be deducted from the Employee's salary under the Monthly Tax Deduction (MTD/PCB) scheme pursuant to the Income Tax Act 1967.
4. WORKING HOURS AND REST DAY
4.1 The Employee's normal working hours shall be [Working Hours], totalling not more than 45 hours per week in accordance with Section 60A of the Employment Act 1955.
4.2 The Employee shall be entitled to one rest day per week. Work on a rest day shall be compensated at the rates prescribed in Section 60(3) of the Employment Act 1955.
4.3 Overtime work shall be compensated at the rate of one and a half times (1.5x) the ordinary rate of pay as prescribed in Section 60A(3) of the Employment Act 1955.
5. LEAVE ENTITLEMENTS
5.1 Annual Leave: The Employee shall be entitled to [Annual Leave] per year of continuous service, in accordance with Section 60E of the Employment Act 1955.
5.2 Sick Leave: The Employee shall be entitled to [Sick Leave] per year, plus up to 60 days hospitalisation leave per year, in accordance with Section 60F of the Employment Act 1955.
5.3 Maternity Leave: A female employee shall be entitled to 98 consecutive days of paid maternity leave under Section 37 of the Employment Act 1955 (as amended by the Employment (Amendment) Act 2022).
5.4 Paternity Leave: A male employee who is a Malaysian citizen shall be entitled to 7 consecutive days of paid paternity leave per confinement under the Employment Act 1955 (as amended 2022), up to a maximum of 5 confinements.
5.5 Public Holidays: The Employee shall be entitled to gazetted public holidays under Section 60D of the Employment Act 1955.
6. CONFIDENTIALITY
6.1 The Employee shall not, during or after the employment, disclose any confidential information of the Employer — including trade secrets, client lists, pricing, financial data, or business strategies — to any third party without the Employer's prior written consent.
6.2 All intellectual property created by the Employee in the course of employment shall vest in the Employer under the Copyright Act 1987 (Malaysia) and the Patents Act 1983 (Malaysia).
7. TERMINATION
7.1 Either party may terminate this Contract by giving [Employer Notice Period] written notice (for the Employer) or [Employee Notice Period] written notice (for the Employee), or payment of salary in lieu of such notice, subject to the minimum notice requirements under Section 12 of the Employment Act 1955.
7.2 The Employer may terminate this Contract summarily for gross misconduct — such as theft, fraud, or serious breach of duty — following a fair domestic inquiry in accordance with the Industrial Relations Act 1967 (Act 177).
7.3 An employee who considers their dismissal to be without just cause or excuse may file a representation to the Director General of Industrial Relations within 60 days of dismissal under Section 20 of the Industrial Relations Act 1967.
7.4 Upon termination, the Employee shall return all property belonging to the Employer, including equipment, documents, access cards, and confidential materials.
8. GOVERNING LAW
8.1 This Contract is governed by and shall be construed in accordance with the laws of [Governing Law], including the Employment Act 1955, the Industrial Relations Act 1967, and the Contracts Act 1950.
8.2 Any dispute arising under this Contract shall first be referred to the Department of Labour (Jabatan Tenaga Kerja) or the Department of Industrial Relations (Jabatan Perhubungan Perusahaan) as applicable.
Employer (Authorised Signatory)
________________
Signature
Employee
________________
Signature
What Is a Employment Contract (Malaysia)?
A Malaysia Employment Contract is a legally binding agreement between an employer and an employee that sets out the terms and conditions of employment, including the position, salary, working hours, leave entitlements, benefits, and termination provisions, within the framework established by the Employment Act 1955 (EA 1955) as amended by the Employment (Amendment) Act 2022. The Employment Contract is the foundational document governing the employer-employee relationship in Malaysia and supplements the statutory minimum standards that the EA 1955 mandates.
The Employment Act 1955 applies to all employees in Malaysia, having been significantly expanded by the Employment (Amendment) Act 2022 which removed the previous salary threshold of RM2,000 per month for most protections. Key statutory entitlements under the EA 1955 that cannot be contracted out include: maximum 45 hours of normal work per week under Section 60A; annual leave of 8 to 16 days depending on length of service under Section 60E; paid sick leave of 14 to 22 days plus up to 60 days hospitalisation leave under Section 60F; maternity leave of 98 consecutive days under Section 37 (as amended); paternity leave of 7 consecutive days under the EA 2022 amendment; and minimum termination notice periods under Section 12.
The Employees Provident Fund Act 1991 (EPF Act 1991) imposes mandatory EPF contribution obligations on both employers and employees for all employees under 75 years of age, with employer contributions of 12-13% and employee contributions of 11% (for Malaysian citizens). The Employees' Social Security Act 1969 (SOCSO) and the Employment Insurance System Act 2017 (EIS) similarly impose mandatory contributions for workplace injury protection and retrenchment insurance.
The Industrial Relations Act 1967 (IRA 1967) governs the termination of employment in Malaysia. Under Section 20 of the IRA 1967, an employee who considers their dismissal to be without just cause or excuse may file a representation to the Director General of Industrial Relations within 60 days of dismissal. Malaysian Industrial Court decisions consistently require employers to demonstrate both a valid reason for dismissal and compliance with a fair procedural process — the twin pillars of just cause and excuse.
A Malaysia Employment Contract differs from an Independent Contractor Agreement in that it creates an employer-employee relationship attracting all statutory protections under the EA 1955, EPF Act 1991, and SOCSO Act 1969. Courts and the Department of Labour apply a multi-factor test — including control, integration, economic dependence, and mutuality of obligation — to determine the true nature of the relationship regardless of how the parties label it.
The legal framework governing the Employment Contract (Malaysia) in Malaysia draws on several key statutes and regulatory bodies. Under Malaysian law, the Contracts Act 1950 (Act 136) governs contractual obligations. The Companies Act 2016 (Act 777) regulates corporate entities through the Companies Commission of Malaysia (SSM). The Employment Act 1955 (Act 265) and the Department of Labour govern employment matters. The Personal Data Protection Act 2010 (Act 709) and the Personal Data Protection Department protect personal data. The Inland Revenue Board of Malaysia (LHDN) administers tax obligations. The Industrial Court adjudicates employment disputes under the Industrial Relations Act 1967 (Act 177). Parties executing a Employment Contract (Malaysia) in Malaysia should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Employment Act 1955 (Act 265) sets the foundational requirements.
When Do You Need a Employment Contract (Malaysia)?
A Malaysia Employment Contract is required whenever an employer engages an individual in a relationship of employment — as distinct from an independent contractor or consultant engagement.
An Employment Contract is needed when an employer hires a new employee for a permanent full-time position and needs to document the agreed salary in Malaysian Ringgit (MYR/RM), working hours in compliance with Section 60A of the Employment Act 1955, leave entitlements under Sections 60E and 60F, and the notice period for termination under Section 12 of the EA 1955.
An Employment Contract is required when a foreign company with Malaysian operations under the Companies Act 2016 employs Malaysian nationals or permanent residents, to document the terms of employment in compliance with Malaysian law and to specify whether additional group employment policies apply.
An Employment Contract is needed when the employer requires the employee to maintain confidentiality of trade secrets, client information, or proprietary business processes. Post-employment restraint of trade clauses must comply with Section 28 of the Contracts Act 1950, which renders void any agreement preventing a person from exercising a lawful profession after employment ends, subject to very limited exceptions.
An Employment Contract is necessary for employers in regulated industries — such as financial services institutions regulated by Bank Negara Malaysia under the Financial Services Act 2013, or healthcare providers under the Private Healthcare Facilities and Services Act 1998 — to document the specific qualifications, licensing conditions, and regulatory obligations relevant to the employee's role.
An Employment Contract is required when an employee will have access to the employer's confidential information, customer data, or intellectual property, to establish the employee's obligations regarding confidentiality and to assign ownership of work product created during the employment under the Copyright Act 1987 (Malaysia).
What to Include in Your Employment Contract (Malaysia)
A valid Malaysia Employment Contract must contain the following essential elements to comply with the Employment Act 1955 and protect both employer and employee.
Parties: Full legal name and identity of the employer (with SSM registration number under the Companies Act 2016), and the employee's full legal name, MyKad or passport number, and address. The date of commencement of employment must be stated.
Position and Duties: The employee's job title, department, primary place of work, and a description of key responsibilities. The employer should reserve the right to assign additional duties consistent with the employee's role to maintain operational flexibility.
Salary and Benefits: The agreed monthly salary in Malaysian Ringgit (MYR/RM), the payment date (typically the last working day of each month or the first working day of the following month), and any allowances, bonuses, or commissions. The salary must meet the applicable National Minimum Wage under the Minimum Wages Order 2022 (RM1,500 per month as of 1 May 2023 for employers with more than 5 employees).
Working Hours: Normal working hours in compliance with Section 60A of the Employment Act 1955 — maximum 45 hours per week — specifying the daily hours, lunch break, and rest day.
Leave Entitlements: Annual leave per Section 60E of the EA 1955, sick leave per Section 60F, maternity leave (98 days), paternity leave (7 days), and public holidays per Section 60D.
EPF and SOCSO: Confirmation of the employer's obligation to make EPF contributions under the EPF Act 1991 and SOCSO/EIS contributions under the Employees' Social Security Act 1969 and Employment Insurance System Act 2017.
Confidentiality: The employee's obligation to protect the employer's trade secrets, client information, and business data during and after employment, enforceable as a contractual duty under the Contracts Act 1950.
Termination: Notice periods in compliance with Section 12 of the Employment Act 1955, the employer's right to terminate for cause following a fair disciplinary process under the Industrial Relations Act 1967, and payment in lieu of notice provisions.
Governing Law: Malaysian law and the courts of Malaysia, with acknowledgement that the EA 1955 and other Malaysian employment statutes apply.
Additional compliance elements for a Employment Contract (Malaysia) used in Malaysia include: Under Malaysian law, the Contracts Act 1950 (Act 136) governs contractual obligations. The Companies Act 2016 (Act 777) regulates corporate entities through the Companies Commission of Malaysia (SSM). The Employment Act 1955 (Act 265) and the Department of Labour govern employment matters. The Personal Data Protection Act 2010 (Act 709) and the Personal Data Protection Department protect personal data. The Inland Revenue Board of Malaysia (LHDN) administers tax obligations. The Industrial Court adjudicates employment disputes under the Industrial Relations Act 1967 (Act 177). Forms-legal.com provides this template as a starting point for Malaysia-compliant documentation.
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Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Employment Contract (Malaysia) (Malaysia) [Legal document template]. Forms Legal. https://forms-legal.com/malaysia/employment/contracts/employment-contract-malaysia
"Employment Contract (Malaysia) (Malaysia)." Forms Legal, 2026, https://forms-legal.com/malaysia/employment/contracts/employment-contract-malaysia.
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author = {{Forms Legal}},
title = {Employment Contract (Malaysia) (Malaysia)},
year = {2026},
howpublished = {\url{https://forms-legal.com/malaysia/employment/contracts/employment-contract-malaysia}},
note = {Free legal document template. Based on Employment Act 1955 (Act 265)}
}
Frequently Asked Questions
Malaysian law does not require all employment relationships to be documented in a written contract, as employment contracts can be formed orally or through conduct. However, Section 10 of the Employment Act 1955 requires that contracts of service for a period of one month or more, or for the completion of a specified task, be in writing. A written Employment Contract is strongly recommended for all employees because: (1) it provides clear evidence of agreed terms in the event of a dispute; (2) it enables the employer to enforce legitimate contractual provisions such as confidentiality obligations; and (3) it demonstrates compliance with the Employment Act 1955 requirements during audits by the Department of Labour (JTKSM). Malaysian Industrial Court decisions frequently decide disputes based on the absence or presence of written employment terms.
The National Minimum Wage in Malaysia is RM1,500 per month (or RM7.21 per hour for monthly-rated employees and RM7.21 per hour for hourly-rated employees) under the Minimum Wages Order 2022, effective 1 May 2023 for employers with more than 5 employees, and 1 July 2023 for employers with 5 or fewer employees. The Minimum Wages Order is issued under the National Wages Consultative Council Act 2011. Employers who pay below the national minimum wage commit an offence under the Employment Act 1955 and may be prosecuted by the Department of Labour (Jabatan Tenaga Kerja Semenanjung Malaysia / JTKSM). The minimum wage applies to all employees regardless of nationality (including foreign workers) and regardless of employment type. The Malaysian government has signalled intent to further increase the minimum wage.
Post-employment restraint of trade clauses — commonly called non-compete clauses — are generally unenforceable in Malaysia under Section 28 of the Contracts Act 1950, which renders void any agreement that prevents a person from exercising a lawful profession, trade, or business after the employment relationship ends. Malaysian courts have consistently held that post-employment non-compete restrictions constitute an unlawful restraint of trade, as confirmed in cases before the High Court of Malaya. Limited exceptions exist for the protection of genuine trade secrets — an employer may enforce a non-disclosure agreement (NDA) preventing the use of specific confidential information, even post-employment. Clauses restricting solicitation of specific clients or key employees during the employment period are generally enforceable as they operate during the employment relationship when the employee owes a duty of fidelity.
Section 12 of the Employment Act 1955 sets out the minimum notice periods for termination of employment contracts in Malaysia: 4 weeks for employees with less than 2 years of service; 6 weeks for employees with 2 or more years but less than 5 years; and 8 weeks for employees with 5 or more years of continuous service with the same employer. Either the employer or the employee may terminate with payment in lieu of notice (equivalent to the notice period wages) instead of working out the notice period. Dismissal for gross misconduct — following a fair domestic inquiry — can take effect without notice or payment in lieu, but the employer must establish just cause. Employees who consider their dismissal to be without just cause may file a representation to the Director General of Industrial Relations under Section 20 of the Industrial Relations Act 1967 within 60 days.
All employees under 75 years of age who are Malaysian citizens, permanent residents, or non-citizens who elect to contribute are entitled to Employees Provident Fund (EPF) contributions under the Employees Provident Fund Act 1991. The mandatory contribution rates are: employer contribution of 13% of the employee's monthly wages for employees earning RM5,000 or below, and 12% for employees earning above RM5,000; employee contribution of 11% (reduced to 9% voluntarily since 2020 COVID-19 relief, restored to 11% in 2023 for most employees). Non-citizen employees and non-permanent residents contribute at 5.5% employee and a flat RM5 employer contribution unless they elect to contribute voluntarily at the standard rates. Self-employed individuals may contribute voluntarily to the EPF's i-Saraan scheme. Employers who fail to register employees with the EPF or remit contributions commit an offence under Section 43 of the EPF Act 1991.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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