Termination Benefits (Malaysia)
Updated November 2026 · Free · No sign-up
Calculate Malaysian termination and lay-off benefits — the regulations’ scale: 10 days’ wages per year (under 2 years), 15 (2-5), 20 (5+), for EA-covered employees terminated on business grounds.
Quick answer: Termination benefits (EA regulations): 10 days’ wages per year of service (<2 yrs) / 15 days (2-5) / 20 days (5+) — pro-rated for part years, payable on retrenchment/redundancy/closure for covered employees with 12+ months’ service. 6 years at RM3,900: 6 × 20 × 150 = RM18,000.
The Scale
| Service | Benefit per year of service |
|---|---|
| 1 - 2 years | 10 days’ wages |
| 2 - 5 years | 15 days’ wages |
| 5+ years | 20 days’ wages |
The applicable band covers ALL years (not sliced): 6 years → 20 days × 6. Daily wage = monthly ÷ 26 (ORP). Triggers: retrenchment, redundancy, closure, non-renewal on business grounds, and 4+ weeks of unpaid lay-off under the lay-off provisions. NOT payable: misconduct dismissal, resignation, retirement, or refusal of suitable alternative employment on no-worse terms.
Worked Example
RM3,900 (daily RM150), 6.5 years: 20 × 6.5 = 130 days × 150 = RM19,500 — plus notice (or PIL), accrued leave payout, and any contractual VSS enhancement. Payment due within 7 days of termination.
Who’s Covered — The Honest Note
These REGULATIONS historically attach to EA-scope wage bands (the RM4,000/manual-work line post-2023 for some provisions) — higher earners rely on contract/VSS and the Industrial Court’s unjust-dismissal jurisprudence, where retrenchment without benefits invites reinstatement claims. Practice: most structured Malaysian retrenchments pay the scale or better to everyone; verify your coverage with JTK or counsel.
Process Rights
Retrenchment must follow LIFO within categories (or justify deviation), the PK form filing to JTK 30 days ahead, and foreign-worker-first principles — procedural failures turn retrenchments into unfair-dismissal awards (up to 24 months’ back wages at the Industrial Court). Keep the offer letters, PK copies, and payment computations.
Frequently Asked Questions
How are termination benefits calculated in Malaysia?
10 days’ wages per year of service (1-2 years), 15 days (2-5), or 20 days (5+) — the band covers all years; daily wage = monthly ÷ 26.
Who qualifies?
EA-covered employees with 12+ months’ continuous service terminated for business reasons (retrenchment, closure, redundancy, extended lay-off) — not misconduct or resignation.
When must it be paid?
Within seven days of the termination date — late payment is itself an offence claimable at JTK.
What if I’m offered another role?
Unreasonable refusal of suitable alternative employment on no-worse terms forfeits the benefit — reasonable refusals (relocation, demotion) don’t.
What about employees above the EA wage line?
The regulations’ floor may not attach — but VSS packages, contracts, and Industrial Court unjust-dismissal exposure mean structured retrenchments typically pay the scale or better anyway.
✓ Formula verified • Last updated: November 3, 2026