Employment Act 1955 (Act 265) specifies the way in which one can calculate one’s ordinary rate of pay, and also that rate of pay for work done outside of normal hours of work.
Normal hours of work can be said to be the total number of working hours per day agreed upon by employer and employee in the contract of service, and it shall not exceed eight (8) per day or forty-five (45) per week.
Ordinary Rate of Pay
Act 265, under Section 60I(a), defines “ordinary rate of pay” as the rate of pay that an employee receives for work done during normal hours of work divided by the number of working days in a month.
Ordinary rate of pay = monthly rate of pay / 26 days = RM per working day
Weekly rate of pay = monthly rate of pay / 6 days = RM per week
Hourly rate of pay = ordinary rate of pay / normal hours of work
Overtime Rate of Pay (Working Day)
Act 265 does not include pay received for work done during rest days and public holidays.
Overtime is specifically work done on working days but outside of normal hours of work.
Under Section 60A (3a), an overtime rate of pay on a working day shall be no less than one and a half (1.5) times the hourly rate of pay.
Overtime Rate of Pay Per Hour on a Working Day = Hourly Rate of Pay x 1.5
We have said before that the total number of working hours in a day shall not exceed eight (8) hours. This does include any breaks in between.
Under Section 60A (3b), overtime begins once the hour spread exceeds ten (10) hours (8 working hours+2 hours of breaks).
Thus, for example, if a employee’s normal hours of work is from 9am until 6pm, then his or her over will only begin after 7pm.
Rate of Pay for Rest Days
Rest days are instituted by law to enable labourers to rest after almost one week of working. Thus, the hourly rate of pay for work done on rest days differ from the rates on working days.
Measured in terms of the normal hours of work in a working day (8 hours), the pay rate for rest days depends on whether work was done for only half day or less, or more.
Rest Day Rate of Pay for half a day or less = ordinary rate of pay
Rest Day Rate of Pay for more than half a day = ordinary rate of pay x 2
Rate of Pay on Public Holidays
Unlike rest days, the minimum hourly charge for work done on public holidays are at a premium. The ordinary rate of pay on public holidays must be at least twice (2 times) the ordinary rate of pay on working days. The overtime rate of pay on public holidays shall be no less than thrice (3 times) the ordinary rate of pay on working days.
Under Section 60D (3aa) and (3aaa), the rate of pay for work done on public holidays shall be no less than thrice (3 times) the hourly rate of pay during normal hours of work.
Rate of Pay on Public Holidays = Ordinary Hourly Rate of Pay x 2
Overtime Rate of Pay Per Hour on Public Holidayx = Ordinary Hourly Rate of Pay x 3
Recap
Employers may decide the figures they wish to grant to their employees, however whatever they propose must not contradict the figures derived from the ordinary rate of pay calculation specified in Act 265, nor should they contradict the rates specify for overtime, rest days, and public holidays for works done on those days.
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