HR Guide to Annual Leave in Malaysia 2026

Updated on 16 March 2026 in Business | Suki Bajaj

Feeling overwhelmed by Malaysia's annual leave regulations? With a diverse workforce and unique cultural nuances, keeping up with the labour laws can be a bit tricky to navigate.

But don't worry, HR leaders! In this blog post, we'll dive deep into the key regulations of annual leave in Malaysia, from entitlements and calculations to other relevant considerations.

We’ll help you ensure your team is getting the time off they deserve. So, let's get started.

Key Takeaways:

Malaysian labour law establishes minimum annual leave based on employment tenure, ranging from 8 days for new staff to 16 days for those with over 5 years of service.
Employees are entitled to at least 1 rest day per week and paid leave for all gazetted public holidays.
Unused leave can typically be carried forward or converted into cash (encashment), though specific terms are governed by individual company policy.
Resigning employees may use their remaining leave to shorten their notice period or receive a cash payout for the balance.

Stay up-to-date and compliant with the latest changes on
annual leave policies in Malaysia!

Get Started Today

Annual Leave Entitlement in Malaysia

The Employment Act 1955 (as amended in 2022) dictates minimum annual leave entitlements based on tenure for all employees:

Less than 2 years: 8 days per year
2-5 years: 12 days per year
Over 5 years: 16 days per year

Employees must utilize their annual leave within 12 months of earning it. Unused leave may be forfeited.

For an incomplete year of service, entitlement is pro-rated based on completed months of service.

Public Holidays in Malaysia

In accordance with the Employment Act, employees are entitled to 11 paid public holidays each year.

Real-time annual leave tracking synced directly to your calendar

Learn More

Mandatory Public Holidays

Under the Employment Act, employees are entitled to 11 public holidays annually, including 5 designated as:

National Day
Birthday of the Yang di-Pertuan Agong
Birthday of the Ruler or Yang di-Pertua Negeri (or Federal Territory Day if the employee works in a Federal Territory)
Workers' Day
Malaysia Day

Before the start of each calendar year, employers are required to prominently display a notice informing employees about the 6 remaining public holidays that they are entitled to.

Note: The government may declare additional public holidays throughout the year. Employees are entitled to a paid public holiday on any day declared a public holiday.

Rest Days

Besides public holidays, the EA also mandates that employees are entitled to at least one rest day each week. This ensures that employees have a regular break from their work duties.

What Happens When a Public Holiday Falls on a Rest Day

If a public holiday coincides with a rest day, the following working day will be treated as the public holiday. A replacement leave can also be substituted. This ensures employees still receive the benefit of a paid day off even if the actual public holiday falls on a day they wouldn't normally work.

For employees with multiple weekly rest days, only the last one is considered for public holiday carryover purposes.

Calculating Annual Leave Entitlement

To calculate prorated annual leave, you'll need to consider the employee's start date, end date (if applicable), and the company's annual leave policy.

The basic formula for calculating prorated annual leave is:

(Annual Leave Entitlement / 12) * Number of Completed Month

For new hires, calculate the number of days from the employee's start date to the end of the year.

For example, if an employee joins on July 1st and the annual leave entitlement is 14 days:

Number of Completed Months Worked = 6 months (July 1st to December 31st)
Prorated Leave Entitlement = (14 / 12) x 6 ≈ 7 days

For departing employees, calculate the number of days from the start of the year to the employee's last day.

For instance, if an employee resigns on September 30th and has an annual leave entitlement of 14 days.

Number of Completed Months Worked: 9 months (from January 1st to September 30th)
Prorated Leave Entitlement: (14 / 12) x 9= 10.5 days (rounded up to 11 days)

What Employees Can Do with Unused Leave

Employees in Malaysia often find themselves with unused annual leave at the end of the year. Fortunately, there are two main options to manage this accumulated time off:

Carry Forward Annual Leave

Many Malaysian companies allow employees to carry forward their unused annual leave into the following year. This provides flexibility in managing personal and professional commitments.

However, the specific rules and limitations vary from company to company. For instance, a company might permit employees to carry forward up to a certain number of days, or they may impose a deadline for using the carried-over leave.

Annual Leave Encashment

In some cases, employees may be able to convert their unused annual leave into cash, known as leave encashment.

Leave encashment is usually calculated based on the employee's ordinary rate of pay. This option is typically subject to the company's policies and may not be available in all circumstances.

Annual Leave for Resigned Employees

When an employee resigns with unused annual leave, there are typically two options to consider:

Offset Notice Period

The employee can use their remaining annual leave days to shorten their required notice period.

For instance, if an employee has a 30-day notice period and 10 days of unused annual leave, they could potentially end their employment 10 days earlier by using their annual leave.

Encash Remaining Leave

The company may choose to pay out the employee's remaining annual leave balance in cash.

For employees on a monthly salary, they usually receive their full monthly wages without any reduction during the month in which they take annual leave.

The decision of which option to pursue often depends on the company's specific policies and the terms outlined in the employee's contract or handbook.

It's important to be familiar with these options and to ensure that the process is handled fairly and consistently for all employees.

FAQ on Annual Leave in Malaysia

Are employees on probation entitled to annual leave?
The entitlement to annual leave for probationary employees depends on the terms of their employment contract and the applicable labour laws. Generally, employees on probation are not entitled to paid annual leave. If they need to take leave during their probationary period, it will typically be considered unpaid leave.

However, the Employment Act 1955 mandates that certain categories of employees, regardless of their probationary status, are entitled to leave benefits. These categories include:
- Employees earning a monthly salary of RM4,000 or less.
- Employees engaged in manual labour, regardless of their salary.
- Domestic servants.
- Other categories of employees specified in the First Schedule of the Employment Act.
Can employers reject an employee’s annual leave application?

Yes, employers may deny annual leave requests under certain circumstances. These include insufficient notice, non-compliance with company policies, scheduling conflicts, or urgent work demands.
Can the company force employees to take annual leave?

No, employers cannot compel employees to take annual leave for their convenience. Leave should be granted based on employee preferences and the company's operational requirements.

The Industrial Court and the Ministry of Human Resources guidelines generally discourage forced annual leave, even during extraordinary situations like the Movement Control Order.

During festive seasons, employers may consider temporary closures for additional days instead of requiring employees to use their annual leave. This approach can benefit both employees and the company.
Can employees that are working from home take annual leave?

Yes, they are entitled to the same annual leave benefits as their in-office counterparts. In fact, the flexibility of remote work can sometimes lead to blurred lines between work and personal life, increasing the risk of burnout. That's why it's important for them to take their annual leave to disconnect, recharge, and maintain a healthy work-life balance.

Mandatory Types of Leave

Sick Leave

In accordance with the Employment Act 1955, employees are entitled to sick leave based on their tenure:

14 days for employees with less than 2 years of service
18 days for employees with 2-5 years of service
22 days for employees with 5+ years of service

Hospitalisation requires an additional 60 days of leave. Sick leave is not prorated for partial-year employment.

Hospitalisation Leave

Separate from sick leave, employees may take up to 60 days of hospitalization leave per year. This covers situations like:

Hospitalisation or outpatient surgery
Bed rest due to medical conditions, including pregnancy complications
Continued treatment or recovery after discharge

Hospitalisation requires an additional 60 days of leave. Sick leave is not prorated for partial-year employment.

Maternity Leave

Female employees are entitled to 98 consecutive days of maternity leave under EA Section 37. They receive maternity allowance if they:

Have been employed for at least 90 days in the 9 months before confinement
Have been employed in the 4 months before confinement

Maternity leave starts within 30 days before or after confinement. Allowance is not payable for 5th or more surviving children.

Paternity Leave:

Married male employees can take 7 consecutive days of paternity leave (limited to 5 confinements) if they:

Have been employed for at least 12 months
Notify the employer at least 30 days before the expected confinement or as soon as possible after the birth

Optional Types of Leave in Malaysia

While not mandatory, offering these additional leave types can significantly enhance employee satisfaction and loyalty.

Compassionate Leave: This provides employees time to grieve the loss of a close family member. It's a common practice for employers to offer 2-5 days of paid compassionate leave.
Marriage Leave: This allows employees to celebrate their wedding or the wedding of a close relative with a paid time off. The duration can vary based on company policy.
Hajj Leave: For Muslim employees, this leave enables them to undertake the pilgrimage to Mecca. Given Malaysia's predominantly Muslim population, it's a valuable benefit.
Emergency Leave: This is for unforeseen circumstances requiring immediate absence from work. It's often deducted from the employee's annual leave allotment.
Replacement Leave: This is granted to employees who work on rest days or public holidays. It's a way to compensate for working outside of regular hours, ensuring fair treatment for employees.
Unpaid Leave: This is a flexible option for employees who need time off but have exhausted their paid leave. The terms and conditions vary between employers.

While these are optional, offering a variety of leave types demonstrates an employer's commitment to employee well-being and can attract and retain top talent.

Streamline Your Annual Leave Management in Malaysia

QuickHR Leave Management System helps you stay in sync with real-time updates and on-the-go access on leave requests, approvals, and balances, anytime, anywhere - directly from your mobile device!

Our HRMS platform keeps you up-to-date on all public holidays and regulation changes in Malaysia. Additionally, you can easily manage substitute holidays and company-specific observances based on your organisation's unique policies, ensuring a smooth workflow throughout the year.

Plus, a seamless HR Experience! QuickHR integrates with other HR systems like payroll, attendance, and performance appraisals. This creates a unified platform that saves you time and keeps things organised for your entire organisation.

Empower your employees with efficient leave process and watch your business thrive!

Get Started Today!