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Termination and Lay-Off Benefits Calculator (Malaysia, 2026)

Malaysian termination benefits = 10 days' wages per year of service if employed under 2 years, 15 days if 2 to under 5 years, and 20 days if 5 years or more, with part years pro rata (Employment (Termination and Lay-Off Benefits) Regulations 1980). They are due after at least 12 months' service when the employer terminates or lays off the employee, not on resignation or dismissal for misconduct.

The rules in Malaysia

LawEmployment Act 1955, section 60J; Employment (Termination and Lay-Off Benefits) Regulations 1980
Who is coveredEmployees under the Employment Act earning up to RM4,000 a month, and manual and other workers listed in the First Schedule. Since 1 January 2023, employees earning more than RM4,000 are not entitled to these benefits unless their contract gives them
Minimum service12 months of continuous service
Under 2 years10 days' wages for every year of service
2 to under 5 years15 days' wages for every year of service
5 years or more20 days' wages for every year of service
Part yearsPro rata (the regulations round an incomplete year to the nearest month)
Daily wageMonthly ordinary rate of pay ÷ 26
Not paidResignation, and dismissal for misconduct after due inquiry

Worked example

Monthly wage RM3,000, 6 years of service, made redundant. Daily wage 3,000 ÷ 26 = RM115.38. Service of 5 years or more earns 20 days for every year.

115.38 × 20 × 6 = RM13,846.15.

The RM4,000 line

Since 1 January 2023 the Employment Act covers all employees in Peninsular Malaysia and Labuan, but under the First Schedule some parts, including the termination and lay-off benefits regulations, apply only to employees earning RM4,000 a month or less and to listed categories such as manual workers. Higher earners get termination benefits only if their contract or a collective agreement provides them. Sabah and Sarawak have their own labour ordinances.

For employers: gratuity is one line of what a role costs

Gratuity, leave, statutory contributions and notice periods all sit on top of salary. Routine back-office roles such as data entry, follow-ups, reconciliations and reporting can be handed to AI workers that carry none of these costs. Book a free automation audit and we will put your own figures on it.

Please note: this calculator follows the published law and common practice as checked on 21 October 2026. It is a guide, not legal advice. Contracts can give more than the legal minimum, and special cases (part-time work, free zones, disputes) can change the figure, so confirm the final amount with your HR team or a lawyer before paying or accepting a settlement.

Questions people ask

How is termination benefit calculated in Malaysia?
Daily wage (monthly ÷ 26) × 10, 15 or 20 days × years of service, depending on whether service is under 2 years, 2 to under 5 years, or 5 years or more.
Do I get termination benefits if I resign?
No. The benefits are paid when the employer terminates the contract or lays the employee off, not on resignation.
What is the minimum service for termination benefits?
At least 12 months of continuous service with the employer.
Do employees earning above RM4,000 get termination benefits?
Not under the Regulations. Since 2023 they apply only to employees earning up to RM4,000 a month and First Schedule workers; higher earners depend on their contract.
Is the 20 days applied to all years?
Yes. The rate depends on total service: once you have 5 years or more, 20 days apply to every year, including the first five.

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