From annual leave and sick leave to maternity leave and public holidays, Malaysian labour laws outline specific rights and responsibilities to each type of leave for ensuring fair treatment of all employees in the workplace. Here’s a simple guide to help you understand your annual leave entitlement and plan your time off better.
What Is Annual Leave
Annual leave is a paid time off from work that is typically entitled on a yearly basis. The employees can use it as per their own wish and will for personal reasons such as rest, travel, personal emergency or vacation. As per Malaysian laws, the minimum number of annual leaves entitled to the employees depends on their service length, following the legal entitlement stated in the Employment Act 1955. It is usually
- Paid
- A yearly benefit
- Provided by the employer
- Calculated based on length of service
Annual Leave Entitlement in Malaysia
The minimum number of annual leaves entitled to an employee is based on their length of service, as legally amended in 2022.
Less than 2 years of service – 8 days / year
2 to 5 years of service – 12 days / year
5+ years of service – 16 days / year
Annual leave once earned must be used within 12 months, otherwise they will become unusable. In case of incomplete year of service, annual leave entitlement is based on the months of service completed.
Tip: Many companies in Malaysia offer more than the minimum annual leave entitlement, so check your company’s policy to know the exact annual leave days you can take. 
Who Is Eligible for Annual Leave Entitlement
The eligibility for annual leave depends on each employee’s employment status and length of service.
Eligible employees:
- Full-time employees
- Contract employees (under a valid employment contract)
Special cases:
- Employees in probation period (pro-rated basis; based on company policy), but certain categories of employees (those earning RM4,000 or less, manual labourers, domestic servants) are entitled regardless of probationary status)
- Part-time employees (based on working hours and company terms)
Note: Freelancers and independent contractors are not automatically covered for annual leave entitlement.
How to Calculate Annual Leave Entitlement
Annual leave entitlement is done based on the length of service of the employee, as already stated. In case an employee joins halfway through a year or leaved mid-year, the calculation of their entitled annual leave would be on a pro-rated basis.
Calculating the number of prorated annual leave can be done using a simple formula:
(Annual Leave Entitlement / 12) * Number of months
Important note: For new recruits, the number of months should be calculated from their start date to the end of the year. For departing employees, it is from the start of the year to their last working day in the company.
When Can You Take Annual Leave
Annual leave in Malaysia can be taken at any time the employer approves, but the leave earned for the year must be exhausted within the year-end. If not, the entitlement may be lost. Though carry forward of annual leave is not confirmed by law, it largely depends on the company policy to provide such perks to their employees. Many companies in Malaysia offer such carry forward policy. In certain cases, employees may be able to convert their unused annual leave into a monetary benefit, known as leave encashment (paid based on the employee’s ordinary rate of pay).
For resigning employees, the unused annual leaves can either be used to shorten their notice period or can be encashed.
Effective Management of Annual Leave
For managing annual leave entitlement effectively, it is necessary to follow the legal requirements and calculate the number of leaves accurately. When manually done, it can be repetitive and prone to errors. Using digital tools is a smart solution for this. Modern HRMS system like that of Info-Tech provides features like automated leave calculations, real-time leave balance viewing, simple approvals, and compliance with labour laws.
Annual Leave Entitlement FAQs
How is annual leave calculated in Malaysia?
Annual leave in Malaysia is calculated based on an employee’s length of service.
Who is entitled to annual leave?
Employees in Malaysia are entitled to annual leave if they are working full-time, on contract basis, or have worked for at least 12 months.
How many days per month for annual leave?
Monthly accrual of annual leave is based on its total yearly entitlement.
8 days per year → 0.67 days per month
12 days per year → 1 day per month
16 days per year → 1.33 days per month
What can resigned employees do with annual leaves?
Unused annual leaves can either be used to decrease the notice period or be encashed (subject to company policy) by the resigned employees.