Authored By: Samantha Koh Zi En
Malaysia’s employment law framework has undergone notable reform in recent years, reflecting a legislative commitment to enhancing worker protections, modernising regulatory standards, and aligning domestic labour practices with evolving international norms. Among the most consequential developments are the 2023 amendments to the Employment Act 1955, the forthcoming requirement for mandatory Employees Provident Fund (EPF) contributions for foreign workers, and the introduction of statutory provisions addressing workplace bullying. Together, these developments reshape the scope of employer responsibilities and employee rights, marking a clear policy direction toward enhanced transparency, fairness, and employer accountability across Malaysian workplaces.
The 2023 Employment Act Amendments: Modernising the Employee Protection Framework
The Employment (Amendment) Act 2022, which took effect on 1 January 2023, represents the most extensive overhaul of the Employment Act 1955 in decades.1 One of the most consequential changes is the broadening of the Act’s scope. Previously, only certain categories of employees— primarily those earning below a prescribed wage threshold—were automatically protected by core provisions of the Act.2 The amendment removes this limitation by extending key employment protections to essentially all employees, regardless of their monthly salary, unless they fall within expressly excluded categories or specific regulations stipulate otherwise.3 This shift has significant implications for employers, many of whom historically structured contracts around the distinction between “EA employees” and non-EA employees. With the boundary now removed, entitlements relating to working hours, leave, termination benefits and employment conditions apply far more broadly.
Another significant development is the reduction of maximum weekly working hours from 48 to 45.4 This amendment not only aligns Malaysian labour standards more closely with international benchmarks but also underscores the government’s commitment to promoting healthier and more sustainable work-life balance. For employers, however, the operational impact can be substantial. Industries with demanding workloads—such as manufacturing, hospitality and logistics—must now adjust rostering practices and overtime budgets to ensure compliance. These recalibrations often require additional manpower or redesigned shift systems, especially for businesses already operating near the statutory hourly limits.
The amendments also strengthen family-related leave. Maternity protection is enhanced with extended entitlements 5 , and for the first time paternity leave is formally recognized.6 These measures emphasise the importance of shared caregiving responsibilities and provide clearer legal frameworks for parental rights in the workplace. Employers must ensure that internal HR policies and employment contracts reflect these updated entitlements and that line managers understand the protections afforded to expectant and new parents, particularly the prohibition against dismissing an employee on the basis of pregnancy.
Additionally, the amended Act introduces mechanisms for employees to request flexible working arrangements, reflecting evolving expectations in a post-pandemic workforce.7 While employers retain discretion to approve or refuse such requests, the law requires decisions to be communicated in writing with valid reasons. This prevents arbitrary refusals and encourages employers to engage meaningfully with genuine employee needs. Taken together, the 2023 reforms push Malaysian employers toward a more structured, transparent and fair management style, supported by documentation and well-defined processes.
Mandatory EPF Contributions for Foreign Workers: A New Social Protection Landscape
Another major development is the decision to extend mandatory EPF contributions to foreign workers with effect from October 2025.8 Historically, non-Malaysian employees were not required to contribute to the EPF unless they opted in voluntarily. The new framework, however, makes EPF membership compulsory for most foreign workers, excluding domestic helpers, with both employer and employee contributing at two percent respectively. Although the contribution rate is lower than that imposed on Malaysian citizens, the introduction of compulsory contributions represents a significant policy shift.9
From a labour policy perspective, the move is consistent with Malaysia’s effort to enhance the social protection floor and provide retirement security to non-Malaysian workers who contribute significantly to the national economy. The policy also aligns with international labour standards that call for equitable treatment and social protection for migrant workers.
For employers, however, the implications are largely financial and administrative. Companies employing large numbers of foreign workers—particularly in sectors such as manufacturing, construction and plantations—will bear additional monthly payroll costs. While the percentage appears small, cumulative contributions across a sizeable workforce may significantly affect operating budgets. Employers must also update payroll systems to accommodate EPF deductions, register all eligible foreign workers with the EPF, and ensure timely contribution submissions to avoid penalties.
Beyond direct costs, the change may also influence workforce planning. Employers may reconsider the ratio of local to foreign hires, renegotiate compensation packages to maintain competitiveness, or adjust manpower projections to accommodate the long-term effects of increased statutory contributions. Transparent communication with affected employees is likewise critical to ensure that foreign workers understand the mandatory nature of the deductions and the benefits accruing to them through the EPF system.
Legal Recognition of Workplace Bullying: Strengthening Accountability and Psychological Safety
A third significant development is the formalisation of legal provisions related to workplace bullying. Although bullying has long existed as a workplace issue, Malaysian law previously lacked a clear statutory definition or explicit framework addressing it. Recent reforms, however, have introduced more structured criminal and employment-related measures aimed at tackling bullying behaviour, signalling heightened governmental and societal emphasis on psychological safety in the workplace. These changes not only provide employees with clearer avenues for redress but also place employers under a stronger obligation to establish preventive mechanisms, investigate complaints promptly, and cultivate a safe and respectful working environment.
The new provisions capture a broad range of behaviours, including verbal abuse, threats, intimidation, repeated unreasonable conduct and even digital or online harassment.10 Importantly, the rise of cyberbullying—whether through messaging platforms, social media or digital communications—has prompted legal reforms that impose liability for harmful conduct occurring both within and outside physical office premises, so long as it affects the employment relationship.11
Employers now shoulder greater responsibility in preventing and responding to workplace bullying. Failure to act may lead not only to civil claims—such as constructive dismissal or negligence— but also potential exposure to criminal investigations if the conduct meets statutory thresholds. This raises the stakes for employers, who must adopt proactive measures to mitigate risk.
Comprehensive anti-bullying policies are now essential, and these policies must clearly define unacceptable conduct, outline reporting channels, and set out investigation procedures that uphold confidentiality and non-retaliation principles. Equally important is the need for adequate training. Both employees and supervisors must understand what constitutes bullying, how incidents should be reported, and the appropriate steps to take when responding to complaints. Effective implementation of these measures not only supports compliance but also fosters a safer, more respectful workplace culture.
The growing legal focus on bullying underscores the transition from viewing misconduct as an internal HR issue to recognising it as a legal compliance matter that may attract regulatory or criminal consequences. Employers who fail to intervene effectively risk reputational harm, loss of workforce morale, increased turnover and possible litigation. By contrast, organisations that invest in preventive measures and create respectful, psychologically safe work environments position themselves as employers of choice in a competitive labour market.
Conclusion: A New Compliance Landscape for Malaysian Employers The recent developments in Malaysian employment law, taken collectively, mark a clear shift towards protecting employee welfare, strengthening social security and ensuring accountability for workplace conduct. The 2023 amendments to the Employment Act expand employee entitlements and impose more structured management processes. The inclusion of foreign workers in the EPF system enhances social protection while introducing new cost and administrative considerations for employers. The recognition of workplace bullying as a legal issue reflects the growing importance of psychological safety and modernises Malaysia’s approach to labour relations.
Employers must therefore adapt their policies, systems and workplace culture to meet these evolving standards. This includes revising employment contracts and handbooks, updating payroll systems, training managers on statutory changes and enforcing robust anti-bullying frameworks. Ultimately, compliance is not merely a legal obligation; it is a strategic investment in a stable, equitable and productive workforce.
Reference(S):
1 Employment Act 1955 (Act 265, Malaysia) (as amended by Employment (Amendment) Act 2022) https://jtksm.mohr.gov.my/sites/default/files/2023-11/Akta%20Kerja%201955%20%28Akta%20265%29_0.pdf accessed 30 November 2025.
2 Dexter Tilo, ‘Malaysia’s employment act changes now in effect’ (HCMag, 4 January 2023) https://www.hcamag.com/asia/specialisation/employment-law/malaysias-employment-act-changes-now-in effect/431693 accessed 30 November 2025.
3Jack Yow, ‘All employees irrespective of wages to be covered under amended Employment Act 1955 from 1 January 2023’ (Allen & Gledhill) https://www.allenandgledhill.com/publication/articles/22319/all-employees-irrespective-of wages-to-be-covered-under-amended-employment-act-1955-from-1-january-2023?agreed=cookiepolicy accessed 30 November 2025.
4 Section 60A, Employment Act 1955.
5 Section 37, Employment Act 1955.
6 Section 60FA, Employment Act 1955.
7 Section 60P, Employment Act 1955.
8 Ragananthini Vethasalam, Tarrence Tan and Benjamin Lee, ‘Mandatory EPF contributions for foreign workers start Q4 2025’ (The Star, 6 March 2025) https://www.thestar.com.my/news/nation/2025/03/06/mandatory-epf contributions-for-foreign-workers-start-q4-2025 accessed 30 November 2025.
9 KWSP Corporate Affairs Department, ‘EPF Begins Mandatory Contributions For Non-Malaysian Citizen Employees Effective October 2025’ https://www.kwsp.gov.my/en/w/news/epf-begins-mandatory-contributions-for-non malaysian-citizen-employees-effective-october-2025 accessed 30 November 2025.
10 Ng Wing Yan, ‘Legal Update: Hidden Cost of Silence – Bullies in Suit Met Malaysia’s New Penal Code’ (Y Kwong, Wong & Partners, 18 August 2025) https://www.ykwong.com.my/legal-update-hidden-cost-of-silence-bullies-in-suit met-malaysias-new-penal-code/ accessed 30 November 2025.
11 RSA Chambers, ‘Amendments to the Malaysian Penal Code – Implications Upon Workplace Conduct & the Employer’s Duty of Care’ (Lexology, 2025) https://www.lexology.com/library/detail.aspx?g=ccfb2010-42e7-461d 9f8b-603196f4dcaa accessed 30 November 2025.
