Malaysia Termination & Severance Benefits Calculator
Calculate your full retrenchment package: statutory severance compensation (Regulation 6), payment in lieu of notice (Section 12), and annual leave encashment in Malaysian Ringgit (MYR).
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Engr. Muhammad Shahzad
Verified Systems Specialist & EngineerPrincipal systems architect and statutory compliance engineer. Specialist in Malaysian statutory frameworks, LHDN income tax schedules, EPF/KWSP regulations, and Bank Negara Malaysia financing guidelines.
Frequently Asked Questions (Statutory FAQs)
What are statutory notice periods under Section 12 of the Employment Act?
If employment is terminated without cause, statutory notice periods are: Less than 2 years service: 4 weeks notice; 2 to less than 5 years service: 6 weeks notice; 5 years service or more: 8 weeks notice.
Can an employer terminate immediately with payment in lieu of notice in Malaysia?
Yes. Under Section 13(1), either party may terminate the contract without notice by paying an indemnity equal to the wages that would have accrued during the statutory or contractual notice period.
How is severance pay calculated for incomplete years of service?
Under Regulation 6(2), termination benefits for incomplete years of service are calculated on a pro-rata basis to the nearest completed month of employment.
What is the tax treatment of retrenchment compensation in Malaysia?
LHDN provides a statutory exemption of RM 10,000 for each completed year of service with the same employer. Any compensation in excess of this threshold is taxed under the progressive individual income tax schedule.
Are fixed-term contract completions eligible for statutory severance?
No. The expiry and natural completion of a genuine fixed-term contract does not constitute a termination under the Termination and Lay-Off Regulations, so statutory severance is not mandatory.