When an Employee Took Unpaid Leave

Photo: Shelly Chang

If a full-time, monthly-paid employee takes unpaid leave throughout the month, they are regarded to have performed an incomplete month of work.

Employment (Amendment) Act 2022

Section 18A of the Employment Act 1955 ("the Act") outlines the formula that should be used to determine the salary where an employee has not completed a whole month of service under the following scenarios:-

• Employee's employment commenced after the first day of the month;

• Employee's employment terminated before the end of the month;

• The employee took a leave of absence without pay; or

• The employee was called up for National Service.

The formula shall be as follows

Therefore, the amount that will be deducted for each day of unpaid leave will be determined as the monthly wages divided by the number of days in the month/wage period.

Step 1: To record the unpaid leave

Suppose you process your payroll with any payroll software. In that case, the system will automatically compute the amount that must be deducted from an employee's pay by section 18A of the Act whenever you record an employee taking unpaid leave.

Step 2: To calculate the total deduction for unpaid leave

The total amount of the deduction for the month will be calculated by multiplying this deduction (derived from Step 1) by the number of days of unpaid leave taken.

For instance

An employee's salary for August (which had 31 days in that month/wage period) is RM6,200, but they took 2 days of unpaid leave.

The daily deduction for unpaid leave equals 6,200 divided by 31 for a total of RM200.

Consequently, the overall monthly deduction is RM200 multiplied by 2, which equals RM400.

The payslip will reflect Unpaid Leave of RM400 as a deduction and a net salary of RM5,800, which is RM6,200 – RM400.

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