Employment Act · 2026 Revised Edition · Part · Rest Days, Hours of Work, Holidays and Other Conditions of Service
75. Payment of annual salary supplement or other variable payment
Official textFrom Attorney General's Chambers, unchanged
Where a contract of service or collective agreement made before the commencement of this Act provides for the payment by the employer of any annual salary supplement, annual bonus or annual salary increase, such payments shall continue to be payable by the employer until the employer and his employees or a trade union representing his employees have negotiated and agreed to vary such payments.
contract of service
“contract of service” means, subject to section 10, any agreement, whether in writing or oral and whether express or implied, whereby one person agrees to employ another as an employee and that other agrees to serve him as an employee, and includes a contract of apprenticeship;
An employer and his employees or a trade union representing his employees may negotiate for and agree to a variable payment based on the trading results, productivity or on any other criteria agreed upon by the parties concerned.
employer
“employer” means any person who employs another person under a contract of service and includes — (a) the Government, in respect of such categories, classes or descriptions of public officers or employees of the Government as are declared by the Minister, with the approval of His Majesty the Sultan and Yang Di-Pertuan, to be employees for the purposes of this Act; (b) any statutory body; (c) the duly authorised agent or manager of the employer; (d) the person who owns or is carrying on or for the time being responsible for the management of the profession, business, trade or work in which the employee is engaged;
Where an employer has not paid any annual salary supplement prior to the commencement of this Act, any contract of service or collective agreement made on or after such commencement between the employer and his employees or a trade union representing his employees shall not contain a provision for the payment of an annual salary supplement exceeding the equivalent of one and one-half month’s salary of the employees.
annual salary supplement
“annual salary supplement” means a single annual payment to employees that is supplemental to the total amount of annual salary earned by them, whether expressed as a percentage thereof or otherwise;
Employment
Any —
person who, or trade union of employees which, requests
(whether orally or in writing) or invites negotiations for the payment by an employer of an annual salary supplement which is in excess of the amount specified in subsection (3); and
employer who pays an annual salary supplement exceeding the amount specified in subsection (3), is guilty of an offence.
Notwithstanding that an annual salary supplement may be payable under subsection (1) or (3), an employer may, in the event of exceptionally poor business results for any year, invite the employees or a trade union representing his employees to negotiate for a lower quantum of annual salary supplement or for no annual salary supplement to be paid for that year.
Terms defined in this Act
annual salary supplement
Defined · s 77“annual salary supplement” means a single annual payment to employees that is supplemental to the total amount of annual salary earned by them, whether expressed as a percentage thereof or otherwise;
collective agreement
Defined · s 2“collective agreement” means an agreement relating the regulation of the relations of employers and employees;
commencement of this Act
Defined · s 2“commencement of this Act” means the date of commencement of the main substantive provisions of this Act;
contract of service
Defined · s 2“contract of service” means, subject to section 10, any agreement, whether in writing or oral and whether express or implied, whereby one person agrees to employ another as an employee and that other agrees to serve him as an employee, and includes a contract of apprenticeship;
employer
Defined · s 2“employer” means any person who employs another person under a contract of service and includes — (a) the Government, in respect of such categories, classes or descriptions of public officers or employees of the Government as are declared by the Minister, with the approval of His Majesty the Sultan and Yang Di-Pertuan, to be employees for the purposes of this Act; (b) any statutory body; (c) the duly authorised agent or manager of the employer; (d) the person who owns or is carrying on or for the time being responsible for the management of the profession, business, trade or work in which the employee is engaged;
salary
Defined · s 2“salary” means all remuneration including allowances payable to an employee in respect of work done under his contract of service, but does not include — (a) the value of any accommodation or the supply of any food, fuel, electricity, water or medical attendance, or of any amenity or service excluded by order of the Minister published in the Gazette; (b) any contribution paid by the employer on his own account to any pension fund or provident fund; (c) any travelling allowance or the value of any travelling concession; (d) any sum paid to the employee to reimburse him for special expenses incurred by him in the course of his employment; (e) any gratuity payable on discharge or retirement; and (f) any retrenchment benefit payable on retrenchment;
variable payment
Defined · s 77“variable payment” means such payment, however expressed and whether paid annually or otherwise, which serves as an incentive to all employees to increase their productivity or as a reward for their contribution.
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