Malaysia's Minimum Wage: RM1,700 a Month, and What It Actually Covers

The rate, and when it started applying to you

The order was gazetted in late 2024 with a staggered start. General enforcement began on 1 February 2025 for employers with five or more employees, and for employers carrying out professional activities under the MSIC 2008 classification regardless of headcount. Employers with fewer than five employees got a six-month deferral to 1 August 2025.

Both dates have long passed, so the deferral is now irrelevant history: RM1,700 applies to every private-sector employer, including micro-businesses with a single employee. If you are still paying a legacy RM1,500 because you once qualified for the small-employer deferral, you are in breach.

Daily and hourly equivalents

The order sets a monthly figure plus daily rates that vary with the number of days an employee is required to work each week — because a 4-day-week employee must earn the same RM1,700 across fewer days. The formula is monthly wage × 12 ÷ (days per week × 52):

How those rates get applied

• The hourly column is derived, not gazetted: it is the daily rate divided by the employee's normal hours of work, which the Employment Act caps at 8 a day and 45 a week.
• That hourly figure is also the ordinary rate of pay (ORP) used to price overtime, rest-day work and public-holiday work — so raising basic pay to the minimum raises the overtime bill with it.
• Part-timers and daily-rated staff are paid by the daily or hourly equivalent for their own schedule; they are not entitled to a full RM1,700 for part-time hours.
• Piece-rate, commission and productivity-linked workers are the awkward case: however the pay is structured, the employer must top it up so the month's basic wages reach RM1,700 for full normal hours.

RM1,700 means basic wages — not gross pay

This is the single most common compliance failure. The minimum applies to basic wages only. Allowances, overtime, bonuses, commissions, service charges, incentive payments and benefits in kind are all excluded from the comparison, even though they land in the same bank transfer.

So an employee on RM1,500 basic plus a RM250 fixed travel allowance receives RM1,750 a month and is still underpaid — the basic wage is RM1,500. Fixing it means moving the money into basic pay, not renaming the allowance. Employers occasionally try the reverse manoeuvre after a minimum-wage rise: cutting or absorbing existing allowances to keep total cost flat. That reduces the employee's terms and conditions and is the kind of change that lands in front of the Labour Department.

Who is covered, and who is genuinely exempt

Coverage is broad by design. The minimum wage runs on the National Wages Consultative Council Act 2011, not the Employment Act, so it reaches employees who fall outside the Employment Act's First Schedule as well as those inside it. Malaysian and foreign employees are entitled to exactly the same rate — there is no lower foreign-worker minimum.

• Covered: full-time, part-time, probationary, contract and daily-rated employees; local and foreign workers; employees in all states and federal territories.
• Exempt: domestic employees as defined in the Employment Act 1955 — maids, cooks, gardeners, household drivers — who sit outside the order entirely.
• Exempt: apprentices engaged under a written apprenticeship contract for a period of not less than two years.
• Not employees at all: genuine interns and students on industrial training, and true independent contractors. Labelling a full-time worker an 'intern' or handing them a service agreement does not remove the obligation if the working relationship is one of employment in substance.

Penalties for underpaying

Under the National Wages Consultative Council Act 2011, an employer convicted of failing to pay the minimum wage faces a fine of up to RM10,000 for each affected employee — the multiplier matters, because a ten-person shortfall is a six-figure exposure, not a RM10,000 one. The court may separately order the employer to pay the arrears: the difference between the minimum rate and what was actually paid, plus any consequential shortfall in payments calculated off basic wages, such as underpaid overtime.

A continuing offence after conviction attracts a further fine of up to RM1,000 for each day it continues, and a repeat offender faces up to RM20,000 or imprisonment of up to five years. Because underpaid basic wages also mean underpaid EPF, SOCSO and EIS, an enforcement visit typically produces parallel claims from KWSP and PERKESO on the same facts.

What RM1,700 looks like on a payslip

At RM1,700 in monthly wages, the statutory deductions are modest and there is no income tax at all. The employee EPF share is 11% (RM187); because the wage is below RM5,000, the employer contributes 13% (RM221) on top. SOCSO and EIS apply on the standard contribution tables — the RM6,000 insured-wage ceiling is nowhere near binding here.

On tax: RM1,700 a month is RM20,400 a year. After the RM9,000 individual relief and the EPF relief (capped at RM4,000), chargeable income falls well under the RM35,000 mark where the RM400 rebate wipes out the small liability, so a minimum-wage earner has no tax to pay and no PCB deducted. Filing an e-Filing return is still worthwhile if any PCB was withheld in error, since it will be refunded.

For the employer, the true cost of a minimum-wage hire is not RM1,700. Add the 13% EPF, the employer SOCSO and EIS shares, the HRD Corp levy if you are a registered employer, and the higher overtime rate that follows from the higher ORP.

What comes next

The Council is required to review the minimum wage periodically — in practice at least every two years — so RM1,700 should be treated as the current floor rather than a permanent one, and the government has signalled a move toward more regular, inflation-linked reviews. Separately, the Progressive Wage Policy sits alongside the minimum wage as a voluntary, incentive-based scheme that pays participating employers to lift wages above the floor as productivity and skills improve. It does not change the RM1,700 obligation.

Important caveats

This is general information on the position under the Minimum Wages Order 2024, current as at the date below — not legal or payroll advice. Sector-specific exemption applications, Labour Department interpretations and any new order can change the analysis for your business.

Verify the current rate at gajiminimum.mohr.gov.my or with the nearest Jabatan Tenaga Kerja office before you set a pay scale. Use the calculator below to see what RM1,700 — or whatever basic wage you are actually offering — leaves after EPF, SOCSO and EIS.