Prorated Salary Malaysia: How to Calculate Pay for a Part Month (Employment Act s.18A)

In Malaysia, a prorated salary for a part month is monthly salary × days eligible ÷ calendar days in that month. Section 18A of the Employment Act 1955 sets this formula for monthly-paid employees who join after the 1st, leave before month-end, or take unpaid leave.

So if your gaji is RM4,500 and you start on 15 October (a 31-day month), you're paid for 17 of 31 days: RM2,467.74. The rest of this guide covers how to count the days, worked examples, how EPF applies to a prorated amount, and the common ÷26 mix-up.

The official formula (Employment Act s.18A)

For an employee on a monthly rate of pay who hasn't completed a whole month of service, s.18A says wages for that month are:

Monthly wages × (number of days eligible in the wage period ÷ number of days of that wage period)

It applies in four situations:

1. You started work after the 1st of the month.
2. Your employment ended before the last day of the month.
3. You took unpaid leave for one or more days.
4. You were away for national service training or call-up under the relevant laws.

The divisor is the number of days in that particular wage period. For a normal monthly payroll, that's the calendar days in the month: 28 or 29 for February, 30 or 31 for other months. The section opens with "Notwithstanding section 60I", which means this formula is used instead of the ÷26 daily rate in these four cases (more on that below).

How to count "days eligible"

• New joiner: count from your first day of employment to the last day of the month, inclusive. Starting 15 October = 15th to 31st = 17 days.
• Leaver: count from the 1st to your last day of employment, inclusive. Last day 20 February = 20 days.
• Unpaid leave: take the calendar days in the month and subtract the unpaid leave days. Two days' unpaid leave in November = 30 − 2 = 28 days.

Because the divisor is calendar days, the count is calendar days too, so rest days and weekends that fall inside your employment period are included.

Worked example 1: joining mid-month

Aina's offer letter says RM4,500 a month. She starts on 15 October 2026.

• October has 31 days. Days eligible: 15th–31st = 17 days.
• Prorated gaji: RM4,500 × 17 ÷ 31 = RM2,467.74

EPF is then calculated on the RM2,467.74 actually paid, not the full RM4,500. Under KWSP's Third Schedule (Part A), that wage falls in the RM2,460.01–RM2,480 band, so the contribution is RM273 employee (11%) and RM323 employer (13%). (The band rules are explained in our EPF contribution guide.)

Worked example 2: resigning before month-end

Daniel earns RM3,600 and his last working day is 20 February 2027.

• February 2027 has 28 days. Days eligible: 1st–20th = 20 days.
• Final month's gaji: RM3,600 × 20 ÷ 28 = RM2,571.43
• EPF on RM2,571.43 (band RM2,560.01–RM2,580): RM284 employee, RM336 employer.

The same 20 days in a 31-day month would give RM3,600 × 20 ÷ 31 = RM2,322.58. That's why the month matters. Add any unused annual leave payout, notice pay or other items separately, according to the contract.

Under s.20 of the Act, when a contract ends normally (with notice under s.12 or at the end of its agreed term under s.11(1)), wages earned but not yet paid must be paid no later than the day the contract ends.

Worked example 3: two days of unpaid leave

Siti earns RM3,000 and takes 2 days' unpaid leave in November (30 days).

• Days eligible: 30 − 2 = 28.
• Gaji for November: RM3,000 × 28 ÷ 30 = RM2,800.00, a deduction of RM200.
• EPF on RM2,800: RM308 employee, RM364 employer.

If the employer used the ÷26 daily rate instead (RM3,000 ÷ 26 = RM115.38 a day), the deduction would be RM230.77, more than the s.18A formula allows for unpaid leave.

Where ÷26 *is* used: the ordinary rate of pay

Section 60I(1A) defines the ordinary rate of pay (ORP) for a monthly-paid employee as monthly rate of pay ÷ 26. The hourly rate is ORP ÷ normal hours of work. These rates are used for things like overtime and work on rest days or public holidays, not for prorating a part month.

Example: RM2,600 a month, 8 normal hours a day → ORP = RM2,600 ÷ 26 = RM100 a day → hourly rate RM12.50. Overtime is at least 1.5 × the hourly rate (s.60A(3)), so at least RM18.75 an hour.

Note that under the First Schedule, overtime and some rest-day and holiday pay provisions (including s.60A(3)) don't apply to employees earning more than RM4,000 a month, unless they're in a listed category such as manual labour. For them, the contract decides. Section 18A isn't on that exclusion list.

An employer may use a different formula, but s.60I(2) says it must not produce a rate lower than the statutory one.

When salary must be paid

Under s.19, wages for a wage period must be paid no later than the seventh day after the period ends. For a monthly payroll, that's 7 October for September wages. Overtime and rest-day/public-holiday pay can be paid by the last day of the next wage period.

Who this applies to

• The Employment Act 1955 applies to Peninsular Malaysia and has been extended to the Federal Territory of Labuan. Sabah and Sarawak have their own labour ordinances, so check those if you work there.
• The Act's First Schedule covers any person under a contract of service. Higher earners are excluded only from specific provisions such as overtime, not from s.18A.
• Your contract can be more generous than the Act (for example, paying a full month to anyone who joins by the 5th), but not less favourable. Under s.7, a less favourable term is void and the Act's provision applies instead.

Common mistakes

• Using ÷26 or ÷22 working days to prorate a joining, leaving or unpaid-leave month. For monthly-paid employees, s.18A uses calendar days.
• Using 30 days for every month. February and 31-day months give different answers for the same number of days.
• Excluding weekends from "days eligible". The divisor counts calendar days, so the days worked should be counted the same way.
• Calculating EPF on the full monthly salary. EPF is based on the wages actually paid that month.
• Prorating fixed allowances automatically. Whether an allowance is prorated depends on the contract or company policy, so check it.

Check the rest of your payslip

Once you know the prorated gross, run it through the KiraBoss salary calculator to estimate EPF, SOCSO, EIS and PCB for that month. For the full payroll checklist, see our HR payroll guide.

This guide is general information based on the Employment Act 1955 as published by the Attorney General's Chambers. It isn't legal advice. For disputes, contact JTKSM (the Labour Department) or a qualified adviser.