8 Things To Know About The Minimum Retirement Age In Malaysia - Retirement, Superannuation & Pensions - Malaysia (2024)

1. Minimum Retirement Age Act 2012

The minimum retirement age for employees in Malaysia isregulated by the Minimum Retirement Age Act 2012 which came intoforce on 1 July 2013.

2. Minimum retirement age is 60

The minimum retirement age of an employee shall be upon theemployee reaching the age of 60 years, pursuant to Section 4(1) ofthe Minimum Retirement Age Act 2012.

3. Minimum Retirement Age Act 2012 does not apply to allemployees

The Minimum Retirement Age Act 2012 does not apply to thefollowing types of employees:

• persons who are employed on a permanent, temporary orcontractual basis and are paid emoluments by the FederalGovernment, State Government, statutory body or localauthorities;
• persons who work on a probationary term;
• apprentices who are employed under apprenticeshipcontracts;
• foreign/non-citizen employees;
• domestic servants;
• persons who are employed in any employment with average hoursof work not exceeding 70% of the normal hours of work of afull-time employee;
• students who are employed under any contract for a temporaryterm of employment but do not include employees on study leave andemployees who study on a part-time basis;
• persons who are employed on a fixed-term contract of service,inclusive of any extension, of not more than 24 months; and
• persons who, before the date of coming into operation of theMinimum Retirement Age Act 2012, have retired at the age of 55years or above and subsequently are re-employed after they haveretired.

4. It is an offence to retire an employee before the employeeattains the age of 60

An employer cannot prematurely retire an employee before theemployee attains the age of 60. Under Section 5(2) of the MinimumRetirement Age Act 2012, an employer who contravenes this commitsan offence and shall be liable to a fine of not more than RM10,000upon conviction.

5. A prematurely retired employee may complain to the DirectorGeneral of Labour or file representation of unfair dismissal

An employee who has been prematurely retired by his/her employermay, within 60 days from the date of his/her prematureretirement:

• Complain in writing to the Director General of Labour; or
• File a representation of unfair dismissal under Section 20 of theIndustrial Relations Act 1967.

If the employee complains to the Director General, he/she shallnot file a representation of unfair dismissal under Section 20 ofthe Industrial Relations Act 1967 until his/her complaint to theDirector General has been resolved. The Director General will notconduct any inquiry on the employee's complaint if he/she hasalready filed a representation of unfair dismissal under Section 20of the Industrial Relations Act 1967.

Upon inquiry, if the Director General is satisfied that theemployee has been prematurely retired by his/her employer, theDirector General may direct the employer to:

• Reinstate the employee in his/her former employment and to paythe employee his/her backwages; or
• Pay the employee compensation in lieu of reinstatement, notexceeding the amount of total wages of the employee calculated fromthe date the employee's premature retirement to the date theemployee attains the minimum retirement age of 60.

An employer who fails to comply with the direction of theDirector General above, commits an offence and shall be liable to afine not exceeding RM10,000 upon conviction. If an employer hasbeen convicted of the offence under Section 11(1) of the MinimumRetirement Age Act 2012, the Court may order the employer to paythe employee the amount directed by the Director General above. Ifthe employer fails to comply with this Court order, the Court mayissue a warrant to levy the employer's property for the amountordered to be paid.

Upon inquiry, if the Director General dismisses theemployee's complaint, the employee may then, within 30 daysfrom the communication of the dismissal,:

• Appeal to the High Court; or
• File a representation of unfair dismissal under Section 20 of theIndustrial Relations Act 1967.

6. Employee and employer may agree to optional retirement

An employee may voluntarily retire upon reaching the age ofoptional retirement as agreed in the employment contract orcollective agreement. In other words, an employer may retire anemployee upon the employee reaching any determined age below 60with the employee's consent.

7. Retirement age below 60 in existing employment contractssubstituted with age of 60

Any retirement age of less than 60 in an employment contract orcollective agreement made before, on or after the coming into forceof the Minimum Retirement Age Act 2012, which is less than the ageof 60 provided under the Minimum Retirement Age Act 2012, shall bedeemed void and invalid. It shall be substituted with the minimumretirement age of 60.

In relation to an employee's retirement age, both employerand employee cannot contract out of the Minimum Retirement Age Act2012.

8. What if the employment contract is silent on theemployee's retirement age?

The Industrial Court in the case of Yeoh Yin Ying v Saatchi& Saatchi Worldwide Sdn Bhd [2013] 1 ILR 316 held thatwhere the employment contract is silent on the employee'sretirement age, it is not a sensible proposition to assume that theemployee is entitled to be employed for life.

In Colgate Palmolive (M) Sdn Bhd v Yap Kok Foong [1998]3 ILR 843 (Award No. 368 of 1998), the Industrial Court held thatin the absence of any contractually agreed terms regarding theretirement age, an employee is entitled to work until the normalretirement age for employees in that category.

As such, retiring an employee under this circ*mstance willrequire legal, contractual and technical considerations andpractices in order to avoid (i) breaching the employment contractand (ii) a dismissal without just cause and excuse.