Published: 2025
Why MTUC Is Speaking Up on Minimum Wage and Payroll Issues
The Malaysian Trades Union Congress (MTUC) has been vocal on several fronts regarding the minimum wage — pushing not just for higher pay, but also stricter enforcement, fairer wage structures, and clarity on what “minimum wage” truly means in practice.
- Non‑Compliance Concerns
According to MTUC President Mohd Effendy Abdul Ghani, despite the existing minimum wage order (previously RM1,500), some employers are still not complying. He’s urging the Labour Department to crack down on these non-compliant businesses, warning that weak enforcement undermines the purpose of a minimum wage policy. - New Minimum Wage Takes Effect
A new Minimum Wage Order came into force on 1 February 2025, raising the monthly minimum wage to RM1,700 for employers with five or more workers.- MTUC’s Sarawak division has reminded both employers and employees that the “minimum wage” refers to basic salary, and does not include allowances, incentives, or other additional pay.
- For very small employers (with fewer than five workers), the RM1,700 wage floor will take effect from 1 August 2025.
- MTUC encourages workers to report any violations of this order to the Labour Department.
- Structured Wage Framework Requested
MTUC is advocating for a skills-based wage framework: they argue that wages should better reflect education, qualifications, and job roles — not just default to the minimum for everyone.- Effendy warns that paying degree-holders or skilled workers just the minimum wage devalues their training and contribution.
- He also calls on both the government and employers to set up career progression pathways and a structured pay scale to reward higher-skilled workers.
- Penalties for Non-Compliance
In Sarawak, MTUC has highlighted that failure to comply with the minimum wage order could lead to significant penalties: fines up to RM 10,000 per affected employee, with repeat offenders potentially facing up to RM 20,000 or even jail time.- These warnings underscore how seriously MTUC is taking enforcement, especially now that the RM1,700 wage floor is active.
What This Means for Employees
- Minimum wage is now RM1,700 for many workers, but not all pay components (like allowances) are included in that floor.
- Employees should check their pay slips to ensure their basic salary meets the new minimum.
- There is stronger backing from MTUC for those whose employers might be non‑compliant — workers are encouraged to report violations.
- Skilled and educated workers may continue to push for wages higher than the minimum, especially as MTUC calls for a structured wage system that values qualification.
Recommended Actions (for Businesses)
- Communicate with Staff: Let employees know about the new minimum wage and what exactly is covered.
- Audit Payroll Structure: Run simulations to ensure current payroll meets the new legal floor.
- Document Everything: Maintain clear records of base pay changes, especially for auditing and compliance.
- Train Relevant Teams: HR, finance, and operations staff should understand the implications of the new wage order.
- Engage with Trade Unions / Stakeholders: If your business works closely with unions or labor representatives, maintain open dialogue — this can help with compliance and avoiding disputes.
Final Thoughts
MTUC’s active role in calling for fairer wages and stronger enforcement reflects how important the minimum wage issue is for Malaysian workers — and for businesses that want to stay compliant and ethical. For payroll/accounting companies, it’s an opportunity to help clients navigate this transition, and to ensure their payroll systems are fully ready for the new minimum pay realities.
