Notice Periods & Resignation in Malaysia (Employment Act)

Your contract first, the statute only as a floor

Section 12 does not override your employment contract. If the contract states a notice period, that period governs — the Act only steps in where the contract is silent, and it insists on one thing: the notice must be the same length for both sides. An employer cannot write “two months if you resign, one week if we terminate you.” Where the contract is silent, these minimums apply:

The details that decide the leaving date

• Notice must be in writing. A verbal resignation accepted in a meeting is arguable; a dated letter or email is not.
• The period starts on the day the notice is given, not the next day and not the first of the following month. A one-month notice served on the 14th ends on the 13th, unless your contract says otherwise.
• Weekends, rest days and public holidays fall inside the period — the count is calendar weeks or months, not working days.
• Probationers are employees. The same contractual or statutory notice applies to them, and dismissing a probationer still needs just cause and excuse.
• Untaken annual leave must be paid out when you leave. Your employer may agree to let you clear it during notice, but cannot unilaterally force the offset unless the contract provides for it.

Buying out the notice (Section 13)

Either party may terminate immediately by paying the other an indemnity equal to the wages the employee would have earned over the unexpired notice. This runs both ways and needs no one's permission: an employer can pay you out and walk you to the door the same afternoon, and you can pay your way out of an eight-week notice to start a new job on Monday.

The amount is based on wages, which under the Act means basic pay plus cash payments for work done. It excludes the annual bonus, gratuity, travelling allowance, employer retirement contributions and the value of housing, utilities or medical benefits. So the buy-out on an RM6,000 package that is RM5,000 basic plus a RM1,000 car allowance is usually computed on the RM5,000, not the RM6,000 — check which of your allowances the contract treats as wages, because the difference over eight weeks is real money.

Can your employer just deduct it from the final salary?

This is the most common flashpoint, and the practice is on weaker ground than employers assume. Section 24 restricts what may be lawfully deducted from wages, and a short-notice indemnity is not one of the automatically permitted deductions — it generally needs the employee's written consent, and in some categories the Director General's approval as well. Many employers set it off anyway.

In practice, agree the number in writing before your last day and let it be deducted from the final pay. If you dispute it, the sum does not disappear — the employer can sue for it as a debt — but the employer also cannot simply withhold your entire final salary as leverage. Unpaid wages and unlawful deduction complaints go to the Labour Department (JTK); a claim that your resignation was really a forced one goes to Industrial Relations within 60 days.

EPF, SOCSO and tax on notice pay

• EPF: payment in lieu of notice is excluded from the definition of wages for contribution purposes, so no employee or employer EPF is deducted from it.
• SOCSO and EIS: likewise not contributable — PERKESO lists payment in lieu of notice among payments not subject to contribution.
• Income tax: where the EMPLOYER pays you in lieu, LHDN treats it as compensation for loss of employment rather than ordinary salary, which means the RM10,000-per-completed-year-of-service exemption can apply. That is far better treatment than your normal monthly pay receives.
• If YOU pay the employer to shorten your notice, it is simply an outflow — not a deduction against your income, and not recoverable at filing.
• Your last salary may be held pending tax clearance. The employer must notify LHDN using Form CP22A and may withhold monies for up to 90 days or until clearance is issued.

Leaving without notice, and being dismissed without notice

Section 13(2) lets either side terminate immediately for a wilful breach of a condition of the contract by the other. The clearest example on the employee's side is Section 15(1): if your employer fails to pay your wages within seven days of the end of the wage period, the employer is deemed to have broken the contract and you may treat yourself as discharged — with the unexpired notice payable to you.

The mirror image is Section 15(2). An employee absent for more than two consecutive working days without leave, without reasonable excuse, and without informing or attempting to inform the employer is deemed to have broken the contract. This is how absconding is handled, and it is why “just stop showing up” is a poor plan — the employer can treat you as having terminated and claim the indemnity.

Separately, Section 14 lets an employer dismiss for misconduct without notice, but only after a due inquiry. Skipping the inquiry is what turns a defensible dismissal into an unfair one at the Industrial Court.

What notice is not

• Notice is not termination benefits. Retrenchment benefits are a separate entitlement under the Termination and Lay-Off Benefits Regulations and are calculated on years of service, not on notice.
• Notice is not a barrier to resigning. No employer can refuse to accept a resignation; the only live question is the indemnity.
• A resignation given under pressure may be a constructive dismissal. If you resign because of a fundamental breach by the employer — a unilateral pay cut, a demotion in substance — act promptly rather than continuing to work under the new terms, and file the representation within 60 days of leaving.
• Foreign employees: the employer must additionally notify the Director General within 30 days of the termination.

Caveat

The Employment Act 1955 covers Peninsular Malaysia and Labuan; Sabah and Sarawak are governed by their own Labour Ordinances, which set out notice periods in similar but not identical terms. A minority of provisions — overtime, shift allowance and termination benefits among them — still apply only to employees earning RM4,000 a month or less, but Sections 12, 13, 14 and 15 are not among them. Read your own contract before relying on the statutory minimums, and take advice on any live dispute. General information, not legal advice.