Retrenchment & Termination Benefits in Malaysia

If you're retrenched or your contract is terminated, the Employment (Termination and Lay-Off Benefits) Regulations 1980 give you a statutory minimum payout. It applies to employees covered by the Employment Act with at least 12 months of continuous service.

How much?

The payout is a number of days' wages for each year of service:

• Less than 2 years' service: 10 days' wages per year
• 2 to less than 5 years: 15 days' wages per year
• 5 years or more: 20 days' wages per year

A day's wage is your monthly wage ÷ 26, and incomplete years are pro-rated by month. Example: on RM2,600/month with 3 years' service → 15 × 3 × (2,600 ÷ 26) = RM4,500.

When it is NOT payable

You're not entitled if you resigned, were dismissed for misconduct, reached retirement age, or your contract was renewed on equal or better terms. Your employment contract may promise more than this statutory minimum — the higher of the two applies.

Work out your figure with the Retrenchment & Termination Benefits Calculator. If you've been retrenched, you may also qualify for the PERKESO Job Search Allowance — check the EIS Benefits calculator.

Informational guide only, not legal advice. Confirm your entitlement with the Labour Department (JTKSM) or a lawyer.