2025 Employment Law Updates in Malaysia
Two major developments are set to reshape Malaysia’s employment landscape in 2025: the formalisation of the Gig Workers Economy Bill and the implementation of a new RM1,700 minimum wage. These changes will affect millions of workers and nearly every employer in the country.
1. The Gig Workers Economy Bill
For years, the legal status of gig workers (such as e-hailing drivers and p-hailing riders) has been a grey area.
- The Legal Question: Are they “independent contractors” (with no benefits) or “employees” (protected by the Employment Act 1955)?
- The Bill’s Aim: This new Bill seeks to provide an answer. It aims to create a new framework that grants gig workers basic statutory protections, such as EPF and SOCSO contributions, without classifying them as full-time employees.
This is a hybrid model that platforms and operators will need to integrate, creating new legal obligations for managing their workforce.
2. New Minimum Wage: RM1,700
The Minimum Wages Order 2024 (which takes full effect in 2025) mandates a new minimum wage of RM1,700 per month.
- Who is Covered? This applies to all employers and employees under the scope of the Order, regardless of the size of the company.
- Employer’s Duty: Employers must immediately review and update their payroll and employment contracts to reflect this new wage. Failure to comply is an offence and can result in significant fines.
Case Spotlight: Constructive Dismissal
Separately, a recent 2025 decision in Jagdeep Kaur v. LYL Capital reiterates a key employee right. The Industrial Court found that transferring an employee to a new role without a clear job description, effectively leaving them in a “cold storage,” amounted to constructive dismissal. This is a reminder to employers that a fundamental breach of the employment contract—even without a formal termination—can expose them to legal action.
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