Author : Adriana Hairi
Unpaid salary Malaysia cases carry real legal weight. This affects both employees and employers, not just administration. Late or missing wages breach the Employment Act 1955. This can escalate quickly into formal complaints, labour court proceedings, or reputational damage. (The Employment Act 1955 applies in Peninsular Malaysia and Labuan. Sabah and Sarawak have their own Labour Ordinances). In this post, SunFish HR by DataOn explains the legal deadlines, what employees can do about unpaid salary, and how employers can avoid ending up on the wrong side of a complaint.
Understanding the Legal Deadline for Unpaid Salary in Malaysia
Section 19 of the Employment Act 1955 sets a clear rule. Employers must pay wages no later than the seventh day after the last day of each wage period. A wage period cannot exceed one month. This covers basic wages and other cash payments for work done, such as commission. Note that the Act’s definition of “wages” excludes certain items, for example travelling allowances and gratuity, so employers should check how each allowance is treated. Failing to comply breaches the law and can lead to legal action.
Since the Employment (Amendment) Act 2022 took effect on 1 January 2023, the Act covers all employees regardless of salary, so the Section 19 payment deadline protects everyone. Only some provisions, such as overtime, rest day and public holiday pay, and retrenchment benefits, still apply only to employees earning RM4,000 or less a month (plus certain categories such as manual labourers, regardless of wage). Employees who resign because their employer stops paying them may also have a constructive dismissal claim under the Industrial Relations Act, explained below.
Salary Delay vs Unpaid Salary
Section 19 treats both situations as a breach, but they carry different practical risk. A salary delay happens when payment arrives after the seventh day but is eventually made. Unpaid salary is more serious. It happens when an employer fails to pay altogether without valid reason. This often forces the employee to escalate the matter. Both breach the Act, but unpaid salary carries a higher risk of formal complaints and penalties.
First Steps When Dealing With Unpaid Salary
Before escalating, employees should first rule out a genuine delay. This could be a banking error or an administrative issue. Contact HR or your manager for clarification first. If that doesn’t resolve things, consider sending a written letter of demand. Then gather evidence. This includes the employment contract or offer letter, payslips, bank statements, and any written communication about the delay. It’s also worth checking EPF and SOCSO (PERKESO) contribution records. Missing statutory contributions often accompany unpaid salary and count as a separate breach.
Making a Formal Complaint about Unpaid Salary
If informal discussions go nowhere, employees can approach the Labour Department. This is Jabatan Tenaga Kerja, or JTK. In Peninsular Malaysia and Labuan, complaints can be made in person at the nearest JTK office, by letter, by email, by phone, through the Public Complaint Management System (SISPAA), or through the Working for Workers (WFW) app. Sabah and Sarawak have their own JTK offices. Bring supporting documents such as your employment contract or offer letter and your latest payslip. JTK investigates and may summon both employee and employer for a hearing. If the matter is not settled, it may proceed to the Labour Court, where claims for unpaid wages are heard under Section 69 of the Employment Act.
Salary level does not stop you from claiming unpaid wages. Since 2023, Sections 19 and 69 apply to all employees. A separate route exists if non-payment forces you to resign: you may file a constructive dismissal representation with the Director General of Industrial Relations under Section 20 of the Industrial Relations Act 1967. This must generally be filed within 60 days, and the Act has no salary ceiling. It is a dismissal remedy, not a way to recover wages, so it is usually pursued alongside or instead of a wage claim depending on the employee’s goals.
Unpaid Salary When an Employer Becomes Insolvent
If a company is winding up or insolvent, employees have a specific route. They can submit a Proof of Debt to the appointed liquidator. This lets them claim unpaid wages, unused leave pay, and other benefits. Under Section 527 of the Companies Act 2016, wages or salary for services rendered in the four months before the winding-up order rank as preferential debts, up to RM15,000 per employee. They are paid after the costs of winding up but ahead of ordinary unsecured creditors. Amounts above the cap, and other claims, are recovered only if assets remain. The Director General of Insolvency oversees and verifies these claims before distribution.
Unpaid EPF Contributions
Salary issues often go hand in hand with unpaid EPF contributions. Employers must pay EPF contributions by the 15th of the following month. Employees can log in to their KWSP i-Akaun to check this. This shows whether their employer has made the required payments. If contributions are missing, late or lower than they should be, they can lodge a complaint directly with EPF. EPF has enforcement powers that may include legal proceedings or travel restrictions against the employer. Under the EPF Act 1991, failing to pay on time can lead to a fine of up to RM10,000, imprisonment of up to three years, or both, plus late payment charges and dividend payable to the employee’s account. Deducting the employee’s share from wages without paying it to EPF is treated more seriously, with higher penalties reported at up to RM20,000 and six years’ imprisonment. Employers should confirm current figures on the KWSP website.
Salary Payment Penalty Under the Employment Act
Beyond the deadline itself, employers face direct financial consequences for late payment. Under Section 99A of the Employment Act 1955, employers found guilty of late or unpaid salary can face a fine of up to RM50,000 per offence. This limit was raised from RM10,000 by the Employment (Amendment) Act 2022. Where many employees are affected, the exposure can multiply quickly, since each breach may be pursued separately. Failing to comply with an order from the Director General of Labour is a further offence, with a fine of up to RM50,000 and up to RM1,000 per day for a continuing offence. This sits on top of the reputational and morale damage that comes with repeated late payments.
How Employers Can Prevent Unpaid Salary Claims
Most unpaid salary cases don’t start with bad intent. They start with manual payroll processes that break down under pressure. A missed calculation, a delayed approval, or a data entry error can push payment past the statutory deadline.
Budget 2027 changes employers should plan for. Tabled on 9 October 2026, Budget 2027 announced that:
- The minimum wage rises from RM1,700 to RM2,000 a month from June 2027. MSMEs with annual sales below RM50 million are exempted.
- A RM2,500 starting monthly salary framework will be introduced for semi-skilled workers and graduates, as an initial measure under wage reform. Details are still to be announced.
- Companies other than MSMEs can claim tax deductions on wage expenses only if wages are paid through bank accounts in line with the payment methods allowed under the Employment Act 1955.
These are Budget announcements, so employers should watch for the gazetted orders and legislation before finalising payroll changes.
SunFish HR by DataOn removes this risk through automation. The Enterprise Payroll module calculates EPF, SOCSO, EIS, and PCB accurately. It also processes payroll on a consistent schedule, helping HR teams meet the 7-day deadline every cycle. SunFish HR integrates with Time Management and Compensation & Benefits. This means payment variables like overtime, leave, and claims flow into payroll automatically, cutting down the manual steps that typically cause delays.
Keeping Records for Unpaid Salary Claims
A recurring theme across unpaid salary disputes is documentation. Employees need payslips and contribution records to build their case. Employers need the same records to defend against one. Manual systems make this harder than it needs to be. This is especially true when records sit scattered across spreadsheets or disconnected local tools, and a complaint demands quick answers.
With HR Core, SunFish HR by DataOn keeps payslips, contracts, and statutory contribution records in one auditable system. If a Labour Department complaint or mediation ever arises, employers can pull accurate records immediately. This beats scrambling to reconstruct a payment history across multiple sources.
How SunFish HR by DataOn Helps Prevent Unpaid Salary Issues
Avoiding unpaid salary disputes comes down to having a payroll system employers can actually rely on. SunFish HR by DataOn brings payroll, compensation, attendance, and performance management into one platform. DataOn built it specifically for Malaysian statutory compliance. Instead of juggling spreadsheets or chasing approvals across departments, HR teams get a single, auditable source of truth for every payment.
Media Contact Akmal Razman, Marketing Executive at SunFish HR Malaysia by Dataon.com | mailto:sunfish.malaysia@dataon.com
FAQs
- Can employees earning above RM5,000 claim unpaid salary?
Yes. Since 2023, the Employment Act covers all employees regardless of salary, so Section 19 and the JTK complaint route apply to everyone. Only some benefits, such as overtime and rest day pay, are limited to employees earning RM4,000 or less. If non-payment forces you to resign, you can also file a constructive dismissal claim with the Industrial Relations Department within 60 days.
- What should you check before reporting unpaid salary?
Contact HR or your manager first to rule out a genuine delay like a banking error. If unresolved, gather evidence including your contract, payslips, bank statements, and written communication about the delay before escalating further.
- Does the Employment Act apply in Sabah and Sarawak?
No. The Employment Act 1955 covers Peninsular Malaysia and Labuan. Sabah and Sarawak are governed by their own Labour Ordinances, and complaints go to the JTK offices in those states.
- Can you claim unpaid salary if company shuts down?
Yes. Submit a Proof of Debt to the appointed liquidator to claim unpaid wages, unused leave pay, and other benefits. Wages for the four months before the winding-up order rank as priority debts up to RM15,000 per employee. Recovery beyond that depends on the company’s remaining assets, and claims are verified under the oversight of the Director General of Insolvency.
- What is the penalty for late salary payment in Malaysia?
Under Section 99A of the Employment Act 1955, employers can be fined up to RM50,000 per offence. Separate EPF penalties apply if statutory contributions are not paid on time.
