For employees paid on a monthly basis, overtime entitlements under the Employment Act are as follows:
1. Working in excess of normal working hours on a normal work day: 1.5x hourly rate of pay**
2. Rest day (follow normal working hours):
For monthly or weekly rate of pay,
Where work does not exceed half his normal hours of work: 0.5 days' wages at the ordinary rate of pay
Where work is more than half but does not exceed normal hours of work: 1 day's wages at the ordinary rate of pay
For daily and hourly rate of pay,
Where work does not exceed half his normal hours of work: 1 day's wages at the ordinary rate of pay
Where work is more than half but does not exceed normal hours of work: 2 days' wages at the ordinary rate of pay
3. Rest day (working in excess of normal working hours): 2x hourly rate of pay**
4. Public Holiday (follow normal working hours): 2 additional days of wages at ordinary rate of pay*
5. Public holiday (excess of normal working hours): 3x hourly rate of pay**
* “Ordinary rate of pay” - employee’s “daily” wage, which is calculated by dividing the employee’s monthly salary by 26.
** “Hourly rate of pay” - the ordinary rate of pay divided by the normal hours of work.
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How to calculate Ordinary Rate of Pay and Hourly Rate of Pay?
For example, an employee who works 8 hours a day for a monthly salary of RM2,600.00:
1. He/she will have an ordinary rate of pay of RM100 (RM2,600 / 26 = RM100).
2. The same employee’s hourly rate of pay would be RM12.50 (RM100 / 8 hours = RM12.50)
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In the event that an employee was asked to work on a public holiday during his/her normal working hours, his/her overtime payment for that day would be RM200 (RM100 x 2).
Do note that employees not under the Employment Act are not entitled to overtime payments.
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How to process Overtime Days or Overtime Hours in Talenox?
1. Under Payroll Settings > Process Payment - Step 2, head to Hourly/Daily Attendance tab and choose either "Overtime Days" or "Overtime Hours" pay item from the list.
