Annual Leave Malaysia 2026: Complete Guide to Entitlements, Sick Leave, Maternity & Public Holidays

Annual Leave Malaysia Overview — All Leave Types for 2026

Annual leave Malaysia law is governed primarily by the Employment Act 1955 (Act 265), as amended by the Employment (Amendment) Act 2022 — which took effect on 1 January 2023 and extended coverage to all employees regardless of salary. The 2022 amendment was the most significant overhaul of Malaysian employment law in decades, but it did not change the core annual leave entitlement days — those remain at 8, 12, and 16 days based on tenure.

What did change were the surrounding benefits: maternity leave jumped from 60 to 98 days, paternity leave was introduced for the first time at 7 days, and coverage expanded so that annual leave rights now apply to every employee under a contract of service — not just those earning below RM4,000 per month.

Statutory Annual Leave Malaysia Entitlements by Tenure — Section 60E

The minimum annual leave entitlement under Section 60E of the Employment Act 1955 is based purely on the employee's length of continuous service with the same employer. It does not matter which sector you work in, how much you earn, or what position you hold — the statutory annual leave minimum applies to all employees under a contract of service.

Key Rules for Annual Leave Under Section 60E

• Service anniversary, not calendar year: Annual leave entitlement is based on the employee's anniversary date of joining — not the calendar year. An employee who joined on 1 April is assessed on their 1-year, 2-year, and 5-year service anniversaries.
• Same employer rule: The tenure for annual leave purposes resets if an employee joins a different employer — even if under the same group of companies, unless the transfer is on terms that preserve continuous service.
• Unpaid leave over 30 days excluded: Any period of unpaid leave exceeding 30 days in a year is not counted when determining length of service for annual leave entitlement purposes (Section 60E(4A)).
• Probationary employees: Employees on probation are generally not entitled to annual leave during the probationary period unless they earn RM4,000 or less per month, are engaged in manual labour, or are domestic servants — in which case the Employment Act 1955 mandates entitlement regardless of probationary status.
• Employer controls timing: Under Section 60E(1), annual leave shall be taken at a time convenient to the employer. Employers can legally direct when leave is taken, deny requests due to operational needs, and require employees to take leave during specific periods — as long as this is communicated fairly and in advance.

Sick Leave & Hospitalisation Leave Malaysia 2026

Sick leave — or medical leave — under the Employment Act 1955 is entirely separate from annual leave. Taking sick leave does not reduce the employee's annual leave Malaysia balance. The minimum sick leave entitlement is governed by Section 60F and similarly scales with tenure:

Sick leave requires a medical certificate from a registered medical practitioner, government medical officer, or the company's panel doctor. Employees who take sick leave without a valid MC can have the absence treated as unauthorised leave — which may be unpaid and recorded as absence from duty.

Maternity Leave Malaysia 2026 — 98 Consecutive Days

Since 1 January 2023, maternity leave Malaysia has been set at 98 consecutive days — a 63% increase from the previous 60-day entitlement. This is paid leave that the employer must grant to all eligible female employees, separate from annual leave and sick leave.

• Duration: 98 consecutive calendar days, commencing from the day of confinement (birth) or earlier at the employee's discretion
• Eligibility: All female employees under a contract of service — applies regardless of salary level after the 2022 Amendment
• Child limit: The 98-day paid maternity leave applies for the employee's first 5 surviving children. From the 6th child onward, the employer is not obligated to provide paid maternity leave under the Employment Act (though many companies offer it as part of their HR policy)
• Miscarriage & stillbirth: Employees who suffer a miscarriage or stillbirth are entitled to maternity leave under the Employment Act
• Payment: Paid at the employee's ordinary rate of pay — the same rate used for annual leave calculations
• Cannot be offset against annual leave: Maternity leave is a distinct statutory entitlement and must not be counted against the employee's annual leave balance

Paternity Leave Malaysia 2026 — 7 Consecutive Days

Paternity leave was introduced in Malaysia for the first time under the Employment (Amendment) Act 2022, effective 1 January 2023. Prior to this, there was no statutory entitlement to paternity leave in Malaysia. Like maternity leave, paternity leave is entirely separate from annual leave.

• Duration: 7 consecutive days
• Eligibility: All married male employees under a contract of service
• Timing: Must be taken within the confinement period of the spouse (i.e., around the time of birth)
• Child limit: Applies for the employee's first 5 surviving children — same limit as maternity leave Malaysia
• Payment: Paid at ordinary rate of pay

Public Holidays Malaysia 2026 — 11 Gazetted Paid Days

In addition to annual leave, all employees are entitled to 11 paid gazetted public holidays per year under Section 60D of the Employment Act 1955. These are distinct from annual leave — public holiday entitlement does not count against, or reduce, the employee's annual leave balance.

Of the 11 public holidays, 5 are compulsory national holidays that every employer in Malaysia must observe. The remaining 6 are chosen by the employer from the official gazetted public holiday list — which varies by state. Employers must display a notice specifying the chosen 6 public holidays before the start of each calendar year.

How to Calculate Pro-Rata Annual Leave Malaysia

When an employee does not work a complete year — either because they joined mid-year or resigned before the year-end — their annual leave entitlement must be pro-rated. This is the most frequent calculation dispute in Malaysian workplaces.

Pro-Rata Formula for Annual Leave Malaysia

Pro-rata annual leave Malaysia = (Number of completed months of service ÷ 12) × Full-year entitlement

Carry Forward & Forfeiture Rules for Annual Leave Malaysia

One of the most misunderstood aspects of annual leave Malaysia is the carry-forward rule. Many employees assume they have an automatic right to carry unused annual leave Malaysia into the following year — but the law does not mandate this.

What the Law Says

Under Section 60E(2) of the Employment Act 1955, employees must take their annual leave Malaysia entitlement not later than 12 months after the end of the 12-month qualifying period in which it was earned. If the employee fails to take the leave within this window, it may be forfeited — but only if the employer had offered the employee a reasonable opportunity to take the leave and the employee declined or failed to apply.

Employers cannot simply forfeit annual leave Malaysia without having genuinely allowed the employee the opportunity to take it. An employer who refuses all leave requests throughout the year and then declares unused annual leave Malaysia forfeited is not compliant with the Employment Act 1955.

Company Policy on Carry Forward

The Employment Act does not require employers to allow annual leave Malaysia carry-forward — it is entirely at the employer's discretion. In practice, most Malaysian employers choose one of three approaches:

• Full forfeiture at year-end: Unused annual leave Malaysia lapses on 31 December. Employees who do not take their leave lose it. Simple to administer but can damage morale.
• Partial carry-forward: A capped number of unused days (commonly 3–5 days) may be carried forward to the following year, with a utilisation deadline (often 31 March). The most common policy for annual leave Malaysia in Malaysian private sector companies.
• Full carry-forward with expiry: All unused annual leave Malaysia can be carried forward but must be used within a specified period (e.g., 6 months). Common in professional services and MNC environments.

Annual Leave Malaysia Encashment — Legal Formula & When It Applies

When an employee leaves a company — whether by resignation, dismissal, retrenchment, or retirement — they are legally entitled to be paid for any unused annual leave Malaysia days. This is a statutory right under Section 60E(2A) of the Employment Act 1955 and cannot be waived or withheld by the employer.

Annual Leave Malaysia Encashment Formula

Encashment amount = Unused annual leave Malaysia days × Daily ordinary rate of pay
where: Daily ordinary rate = Monthly salary ÷ 26 working days

The 26-working-day divisor is the standard used under the Employment Act 1955 for annual leave Malaysia daily rate calculations — it excludes rest days and public holidays. Using a different divisor (e.g., 30) would under-compensate the employee and potentially expose the employer to a Labour Office complaint.

Employer Obligations for Annual Leave Malaysia — Compliance Checklist

Under the Labour Department (Jabatan Tenaga Kerja) and Ministry of Human Resources (MOHR) guidelines, every Malaysian employer has the following obligations regarding annual leave Malaysia management:

• Grant statutory entitlement: Every employee under a contract of service must receive the statutory minimum annual leave Malaysia (8/12/16 days). Providing fewer days than the statutory minimum — even in the employment contract — is invalid and unenforceable.
• Record leave accurately: Employers must maintain accurate leave records showing each employee's annual leave Malaysia entitlement, leave taken, and balance. These records must be available for inspection by the Labour Department.
• Allow reasonable leave access: While the employer controls timing, they cannot unreasonably deny all annual leave Malaysia requests throughout the year. Doing so — and then declaring unused leave forfeited — is a breach of the Employment Act.
• Pay on termination: All unused annual leave Malaysia must be encashed and included in the final payslip within 7 working days of the employee's last day of service.
• Clearly communicate policy: The company's annual leave Malaysia carry-forward, forfeiture, encashment, and application process must be documented in the employee handbook or employment contract.
• Track separately from sick leave and public holidays: Payroll systems must maintain separate tracking for annual leave Malaysia, sick leave, maternity/paternity leave, and public holidays — which must never be conflated or offset against each other.

Frequently Asked Questions — Annual Leave Malaysia 2026

Final Word: Know Your Annual Leave Malaysia Rights — Employers and Employees

Annual leave Malaysia under the Employment Act 1955 is one of the most fundamental employment rights in the country — and understanding it correctly protects both sides of the employment relationship. For employees, knowing the 8/12/16-day entitlement by tenure, the pro-rata formula, and the statutory right to encashment upon resignation means you are never shortchanged on what you have legally earned. For employers, accurate annual leave Malaysia management — separate tracking from sick leave, maternity leave, and public holidays, clear carry-forward policies in writing, and correct encashment calculation — protects the company from Labour Department complaints and ensures every payroll run is compliant.

The most practical step any Malaysian employer can take is to move annual leave Malaysia tracking off spreadsheets and into a dedicated payroll system — one that automatically calculates pro-rata entitlement, tracks leave balances in real time, generates compliant payslips, and flags encashment amounts at termination. When leave is managed correctly from the start, workplace disputes almost never arise.

👉 Let KC Group's payroll team manage your annual leave Malaysia tracking, calculations, and compliance — alongside EPF, SOCSO, PCB, and every other statutory obligation →