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.
· Calculated with AiStaffo
The rules in Malaysia
| Law | Employment Act 1955, section 60J; Employment (Termination and Lay-Off Benefits) Regulations 1980 |
|---|---|
| Who is covered | Employees 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 service | 12 months of continuous service |
| Under 2 years | 10 days' wages for every year of service |
| 2 to under 5 years | 15 days' wages for every year of service |
| 5 years or more | 20 days' wages for every year of service |
| Part years | Pro rata (the regulations round an incomplete year to the nearest month) |
| Daily wage | Monthly ordinary rate of pay ÷ 26 |
| Not paid | Resignation, 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.
Sources
Questions people ask
How is termination benefit calculated in Malaysia?
Do I get termination benefits if I resign?
What is the minimum service for termination benefits?
Do employees earning above RM4,000 get termination benefits?
Is the 20 days applied to all years?
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