🇲🇾 Employment Act 1955 • Termination & Lay-Off Regulations 1980

Malaysia Severance & Termination Calculator

Calculate statutory redundancy compensation: 10 days wages per year (< 2 yrs), 15 days per year (2 to 5 yrs), and 20 days per year (5+ yrs) in Malaysian Ringgit (MYR).

⚡ Typical Tenure Presets

Employment Termination Parameters

RM
ORP = Basic Salary ÷ 26 working days
Total Statutory Termination Benefits
RM 11,538.46
60 Days Entitlement (15 days/yr tier) • Tax Exempt: RM 40,000

Severance Schedule Matrix

Tenure Bracket Statutory Formula Amount (MYR)
MS

Engr. Muhammad Shahzad

Verified Systems Specialist & Engineer

Principal systems architect and statutory compliance engineer. Specialist in Malaysian statutory frameworks, LHDN income tax schedules, EPF/KWSP regulations, and Bank Negara Malaysia financing guidelines.

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Frequently Asked Questions (Statutory FAQs)

What is the statutory severance pay formula under Malaysian labor law?

Under Regulation 6 of the Employment (Termination and Lay-Off Benefits) Regulations 1980: Less than 2 years service: 10 days wages for each year; 2 to less than 5 years service: 15 days wages for each year; 5 years service or more: 20 days wages for each completed year of service (with pro-rata for incomplete years).

How is daily wage calculated for severance benefits in Malaysia?

Daily wage for severance pay is based on the statutory Ordinary Rate of Pay (ORP): Monthly Basic Salary divided by 26 days (or divided by the actual days worked in the preceding 12 months).

Under what circumstances is statutory severance NOT payable in Malaysia?

Severance pay is not statutory in cases of voluntary employee resignation, retirement under contractual retirement age, dismissal for proven employee misconduct after due inquiry, or unreasonable refusal of immediate suitable re-employment.

Is severance pay separate from notice pay and annual leave encashment?

Yes. Severance retrenchment pay is a distinct entitlement earned by tenure, and must be paid in addition to statutory notice indemnity (Section 12) and untaken annual leave encashment (Section 60E).

Is severance pay taxable in Malaysia?

Under the Income Tax Act 1967, compensation for loss of employment enjoys a tax exemption of RM 10,000 for each completed year of service with the same employer (or RM 20,000 per year under certified medical incapacity).