Amendments to the Minimum Wage Order 2020

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On 1 February 2020, the Minimum Wages Order 2020 (“the Principal Order”) came into effect and introduced a minimum wage for employees whose place of employment is located in a City Council or Municipal Council areas as outlined in the Schedule to the Principal Order.
  
The Minimum Wage Order 2020 rates are as below:



For an employee whose place of employment is in an area other than the City Council or Municipal Council areas, the minimum wage rates are as follows:
  
 
  
The Principal Order has been amended through the Minimum Wages (Amendment) Order 2022 (“the Amendment”) which has been gazetted on 20 January 2022 and will come into effect on 1 February 2022.

Under the Amendment, the definition of “City Council or Municipal Council area” has been added, and such areas shall now be understood as “any areas declared or established as City Council or Municipal Council areas under the Local Government Act 1976, Local Government Ordinance 1961 or Local Authorities Ordinance 1996 or Putrajaya or Labuan”. Furthermore, the Schedule to the Principal Order listing the 16 City Council areas and 40 Municipal Council areas is deleted.

Thus, from 1 February 2022 onwards, it will be irrelevant with regard to the applicable minimum wage rate, whether an employee’s place of employment is located in the 56 areas listed in the Schedule to the Principal Order. Following the Amendment, it will now be decisive whether the place of employment is located in an area that has been or is hereafter declared or established as a City Council or Municipal Council area under the local government legislation. It is expected that this will provide uniformity with regard to the wage rates in areas with the status of City Council or Municipal Council.

The Amendment does not increase the minimum wages as set out in the Principal Order, and as such the current minimum wages remain competitive to other major jurisdictions in the ASEAN region. However, recent comments of the Human Resource Minister of Malaysia suggests an increase of the monthly minimum wage to RM 1,500 by the end of this year which, as to the Malaysian Employer Federation, might impact the economic recovery of Malaysia.

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