Definition of minimum wages

Basic wages to be or as determined under section 23.

- S 2 of National Wages Consultative Council Act 2011
Minimum wages is basic wages, excluding any allowances or other
payments.
- from official min. wages portal
(http://minimumwages.mohr.gov.my/?lang=en)
- from official website of National HR Resource Centre
(http://www.nhrc.com.my/minimum-wages#.Vu9cAeJ97EY)
- S 2 of Employment Act
Wages means basic wages and all other payments in cash
payable to an employee for work done in respect of his
contract of service but does not include
(a) the value of any house accommodation or the supply of
any food, fuel, light or water or medical attendance, or of any
approved amenity or approved service;
(b) any contribution paid by the employer on his own account
to any pension fund, provident fund, superannuation scheme,
retrenchment, termination, lay-off or retirement scheme, thrift
scheme or any other fund or scheme established for the
benefit or welfare of the employee;
(c) any travelling allowance or the value of any traveling
concession;
(d) any sum payable to the employee to defray special
expenses entailed on him by the nature of his employment;
(e) any gratuity payable on discharge or retirement; or
(f) any annual bonus or any part of any annual bonus;

Principles
1. Basic wages of all employees to a minimum of RM900 in Peninsular
Malaysia and RM800 in Sabah, Sarawak and Labuan respectively
- S 4 of Minimum Wages Order 2012

2. Employer is required by law to pay minimum wages even if employee

agrees to a lower wage than minimum wage.
- S 24(2) of National Wages Consultative Council Act 2011
3. If agreed a higher pay than minimum wages, employer cannot use the
Order as an excuse to pay employee less than the wages agreed upon
in the contract of service.
- S 24(3) of National Wages Consultative Council Act 2011
4. Offence liable to fine X > 10k (max 10k) for each employee.
- S 43 of National Wages Consultative Council Act 2011
Who is entitled to minimum wages?
1. The Minimum Wages Policy also applies to employees who are paid on
piece-rates, tonnage, trip- or commission-based.
2. All local and foreign employees who have entered into a contract of
service with an employer shall be entitled to receive minimum wages.
- from official website of National HR Resource Centre
(http://www.nhrc.com.my/minimum-wages#.Vu9cAeJ97EY)
3. The Minimum Wages Order 2012 does not apply to apprentices (who
undergo training for a period not less than two years) nor to
domestic servants (e.g., maids, gardeners and personal drivers) as
defined under Section 2 of the Employment Act 1955 [Act 265],
Section 2 of the Sabah Labour Ordinance [Cap. 67]and Section 2 of
the Sarawak Labour Ordinance [Cap. 76].
- S 3 of Minimum Wages Order 2012
When to enforce?
1. The Minimum Wages Order 2012 commenced on 1 January 2013 for
employers with more than five employees, and on 1 July 2013 for
employers with five or fewer employees.
2. Meanwhile, SMEs will pay their foreign employees minimum wages
beginning 1 January 2014.

Restructuring of Wages
1. Definition of restructuring of wages includes converting allowances (if
applicable) into employees basic wages.
2. Employers have been given the opportunity to restructure employees
wages before the date of implementation of the Minimum Wages Order
2012 which was 1 January 2013 (for employers with more than 5
employees) and 1 July 2013 (for employers with 5 employees or less).
- from official min. wages portal
(http://minimumwages.mohr.gov.my/employers/key-information-foremployers/ )
3. For example: The travelling allowance cannot be converted into his
basic wages since travelling allowance or the value of any travelling
concession is defined as non-wages under Section 2 of the
Employment Act 1955. Food allowance is included in the definition of
wages under Section 2, thus it can be restructured.
- from official min. wages portal
(http://minimumwages.mohr.gov.my/employees/scenarios/)
- S 2 of the Employment Act 1955
4. non-wages payments that are excluded in the definition of "wages"
under section 2 of the Employment Act 1955, the Sabah Labour
Ordinance [Chapter 67] or Sarawak Labour Ordinance [Chapter 76]
shall not be restructured as minimum wages.
- Point 3(iii): Method Of Restructuring Of Wages from
Guidelines On The Implementation Of The Minimum Wages
Order 2012
5. Wages restructuring can only be done after negotiation with the
employees/ trade union.
- Point 3: Method Of Restructuring Of Wages from Guidelines
On The Implementation Of The Minimum Wages Order 2012