Malaysia annual leave guide 2026
Learn annual leave entitlement, pro-rated leave calculations, probation rules, resignation scenarios and common employment questions in Malaysia.
Key Takeaways
Calculate Your Annual Leave Entitlement
Estimate annual leave based on your length of service and completed months of employment.
Calculate My Annual Leave →On This Page
What Is Annual Leave?
Annual leave is paid time off provided to employees for rest, travel and personal matters. Under the Employment Act 1955, statutory annual leave is separate from rest days and paid public holidays.
The minimum entitlement increases with continuous service, while an employment contract or company policy may provide additional leave beyond the statutory minimum.
Annual Leave Entitlement in Malaysia
Section 60E provides the following minimum annual leave for every twelve months of continuous service with the same employer.
| Length of Service | Minimum Paid Annual Leave | Practical Meaning |
|---|---|---|
| Less than 2 years | 8 days | Minimum entitlement for employees in the first service band. |
| 2 years or more but less than 5 years | 12 days | Minimum increases after reaching 2 years of service. |
| 5 years or more | 16 days | Minimum entitlement for employees with at least 5 years of service. |
How Pro-Rated Annual Leave Works
Section 60E specifically provides proportional annual leave where an employee has not completed twelve months of continuous service in the year in which the contract of service terminates. The statutory calculation is based on the number of completed months of service.
Example: 6 Completed Months
An employee in the 8-day entitlement band leaves after completing 6 months of service:
| Annual entitlement | 8 days |
| Completed months | 6 months |
| Calculation | 8 × 6 ÷ 12 |
| Pro-rated entitlement | 4 days |
Annual Leave During Probation
Probation does not automatically remove statutory annual leave entitlement. Section 60E is based on continuous service with the same employer and does not create a separate exclusion simply because an employee is still on probation.
An employer may have procedures on when accrued leave can be scheduled or approved during probation, but company policy should not be used to eliminate statutory entitlement.
When Must Annual Leave Be Taken?
Under section 60E, the employer must grant and the employee must take statutory annual leave no later than 12 months after the end of each twelve-month period of continuous service.
If the employee fails to take the leave by the end of that period, the statutory entitlement can cease. However, if the employer asks the employee not to take all or part of the leave and the employee agrees in writing, payment in lieu may be made.
What If You Become Sick During Annual Leave?
If an employee who is on paid annual leave becomes entitled to statutory sick leave or maternity leave during that period, the relevant days are treated as sick leave or maternity leave instead.
The annual leave for those overlapping days is deemed not to have been taken.
Sick Leave
Qualifying statutory sick-leave days can replace overlapping annual-leave days.
Maternity Leave
Qualifying maternity-leave days are not treated as annual leave.
Leave Balance
The annual leave corresponding to those statutory leave days is treated as not taken.
Documentation
Employees should submit the medical or leave documentation required under the applicable rules.
Annual Leave During Resignation and Termination
When employment is ending, section 60E gives employees specific rights in relation to annual leave already due and leave accrued for completed months in the final service year.
| Situation | General Statutory Position |
|---|---|
| Leave due from the preceding completed service period | The employee is entitled to take it before termination. |
| Leave accrued in completed months of the current service period | The employee is entitled to the proportional accrued leave before termination. |
| Contract ends before entitled leave is taken | Employer must generally pay the ordinary rate of pay for each outstanding leave day. |
| Dismissal under section 14(1)(a) | The statutory payment-in-lieu rule on termination does not apply in the same way. |
Annual Leave Pay and Encashment
An employee taking statutory annual leave should receive the ordinary rate of pay for each day of leave.
During ongoing employment, statutory leave is generally intended to be taken. Payment in lieu is expressly allowed where the employer requests the employee not to take the leave and the employee agrees in writing. On termination, outstanding statutory leave may also become payable under section 60E.
Common Annual Leave Examples
Example 1: New Employee / Short Service
An employee in the 8-day entitlement band who terminates after 6 completed months would have a statutory pro-rated entitlement of 4 days, before deducting leave already taken.
Example 2: Employee With 3 Years of Service
An employee who has reached at least 2 years but less than 5 years of continuous service is in the 12-day statutory band.
Example 3: Employee With 6 Years of Service
An employee with at least 5 years of continuous service is in the 16-day statutory band.
Example 4: Resignation With Unused Leave
If an employee has 5 outstanding statutory leave days when the contract ends and those days were not taken before termination, payment may be due at the ordinary rate of pay, subject to the statutory rules and reason for termination.
Special Annual Leave Rules Employees Should Know
| Rule | Why It Matters |
|---|---|
| Annual leave is additional to rest days and paid public holidays | An employer should not count a statutory rest day or paid holiday as an annual-leave day. |
| Unauthorised absence above 10% of working days | An employee may lose annual-leave entitlement for that 12-month service period if the statutory conditions are met. |
| Unpaid leave exceeding 30 days in a 12-month period | The excess unpaid-leave period is disregarded when computing length of service for annual-leave purposes. |
| Sick / maternity leave overlaps annual leave | The qualifying sick / maternity days are not treated as annual leave. |
Annual Leave Approval and Company Policy
Employees normally need to follow a reasonable leave-application and approval process so that employers can manage staffing and operations.
However, company policy should be applied consistently with the statutory requirement that the employer grants and the employee takes the minimum leave within the permitted period.
Apply Early
Follow the company's notice and leave-application procedure.
Get Approval
Do not simply assume annual leave is approved because a request was submitted.
Check Balance
Compare opening balance, accrued leave, leave taken and remaining entitlement.
Watch Expiry
Know the statutory utilisation period and any more generous company carry-forward rules.
Annual Leave vs Medical Leave vs Public Holiday
| Leave Type | Main Purpose | Separate Statutory Entitlement? |
|---|---|---|
| Annual Leave | Paid personal time off | Yes |
| Medical Leave | Absence due to qualifying illness / medical reasons | Yes |
| Paid Public Holiday | Gazetted / applicable paid holiday | Yes |
Common Annual Leave Mistakes
- Assuming probation means there is no statutory annual-leave entitlement.
- Treating the 8 / 12 / 16-day minimum as optional company policy.
- Assuming all unused leave can be carried forward indefinitely.
- Using incomplete months as completed months for statutory termination pro-rating without checking the rule.
- Not applying the statutory half-day rounding rule to pro-rated leave.
- Counting public holidays or statutory sick leave as annual leave.
- Assuming annual leave automatically offsets the resignation notice period.
- Failing to settle outstanding statutory annual leave properly when employment ends.
Employee Annual Leave Checklist
- Confirm your continuous-service date with the employer.
- Check whether your statutory band is 8, 12 or 16 days.
- Compare statutory entitlement with the more generous contractual entitlement, if any.
- Review leave already taken and the remaining balance.
- Check the employer's application and carry-forward procedures.
- When resigning, verify accrued leave for completed months and outstanding leave from the prior service period.
- Keep leave approvals and final payroll records if there is a dispute.
Sources & Verification
This guide was last verified in August 2026 against section 60E of the Employment Act 1955 as published by the Department of Labour Peninsular Malaysia (JTKSM).
JTKSM — Employment Act 1955, Section 60E
JTKSM — Acts & Guidelines
Frequently Asked Questions
How many days of annual leave are employees entitled to in Malaysia?
The statutory minimum is 8 days for less than 2 years of service, 12 days for 2 years or more but less than 5 years, and 16 days for 5 years or more of continuous service with the same employer.
Is annual leave paid?
Yes. Statutory annual leave is paid leave and the employee is entitled to the ordinary rate of pay for each day of such leave.
Does annual leave accrue during probation?
Probation is not a separate exclusion under section 60E. Statutory entitlement is tied to continuous service, although the employer may have procedures governing when leave can be scheduled or approved.
How is annual leave pro-rated when employment ends?
If the employee has not completed 12 months of continuous service in the year of termination, entitlement is proportional to completed months of service. A fraction below half a day is disregarded and half a day or more is rounded to one day.
Can annual leave be carried forward forever?
No. Statutory leave must generally be granted and taken no later than 12 months after the end of the relevant 12 months of continuous service. More generous contractual leave may have separate company rules.
Can unused annual leave be paid instead?
During employment, payment in lieu is allowed where the employer requests the employee not to take the leave and the employee agrees in writing. Outstanding statutory leave may also be payable when employment terminates, subject to section 60E.
What happens to unused annual leave when I resign?
The employee is generally entitled to take due leave and accrued leave for completed months before termination. If the contract ends before entitled leave is taken, payment at the ordinary rate is generally required, subject to the statutory exception for certain misconduct dismissals.
Can annual leave shorten my notice period automatically?
No. Annual leave and contractual notice are separate matters. Any arrangement to take leave during notice or adjust the termination date should be properly agreed with the employer.
What if I become sick while on annual leave?
If you become entitled to statutory sick leave while on annual leave, those qualifying sick-leave days are treated as sick leave and the annual leave for those days is deemed not taken.
Are public holidays counted as annual leave?
No. Statutory annual leave is expressly in addition to rest days and paid public holidays.