Notice Period in Malaysia: What Employers and Employees Need to Know

What Is a Notice Period?

A notice period is the period between the date notice is given and the final day of employment. It can apply when an employee resigns, when an employer terminates employment, or when a contract allows either side to end employment by giving notice.

The purpose is simple. Employment does not usually end suddenly unless there is a serious reason or payment in lieu of notice. The notice period gives both parties time to prepare.

For employers, notice period allows time to plan handover, redistribute work, find a replacement and protect business continuity. For employees, it allows time to complete pending work, transfer knowledge, prepare final documents and leave professionally.

Worksy explains that termination notice periods in Malaysia should be understood together with Section 12 of the Employment Act 1955, especially where employees are covered by the Act and the employment contract does not provide clear terms.

Reference: Worksy Termination Notice Period in Malaysia

Where Does the Notice Period Come From?

In Malaysia, notice period usually comes from the employment contract. Most offer letters or employment agreements will state how much notice is required during probation and after confirmation.

For example, a company may require one month notice after confirmation and shorter notice during probation. Senior roles may require two or three months because replacement hiring and handover take longer.

If the contract is clear and lawful, both employer and employee should follow it. Problems usually happen when the contract is silent, unclear or applied inconsistently.

Where there is no clear contractual notice period, the Employment Act 1955 may provide the minimum notice period for employees covered by the Act. This is why employers should not rely only on verbal understanding. Notice terms should be written clearly from the start.

Employment Act Notice Period in Malaysia

Section 12 of the Employment Act 1955 is commonly referenced when discussing Employment Act Notice Period. It provides that either party may give notice to terminate the contract of service. Where the contract does not specify the notice period, the minimum notice period depends on length of service.

The general statutory minimum periods are:

• Four weeks notice if the employee has been employed for less than two years
• Six weeks notice if the employee has been employed for two years or more but less than five years
• Eight weeks notice if the employee has been employed for five years or more

Mylaw Malaysia reproduces Section 12 of the Employment Act 1955 and states that notice shall be written and may be given at any time, with the day notice is given included in the notice period.

Reference: Mylaw Section 12 Employment Act 1955

Employers should remember that the Employment Act may set minimum protection. It does not stop employers from giving more favourable terms in a contract.

Does the Same Notice Period Apply to Employer and Employee?

In many employment contracts, notice requirements apply to both employer and employee. This means the employee must give notice when resigning, and the employer must give notice when terminating employment, unless another lawful process applies.

The principle is fairness. If the company requires the employee to give one month notice, the company should also be prepared to give the employee the agreed notice or pay in lieu where applicable.

However, employers should be careful. Termination by employer can involve more than giving notice. Malaysia employment law also recognises the need for just cause or proper basis in many termination situations. Notice alone does not automatically make every termination safe.

For example, termination for poor performance, misconduct or redundancy may require proper process, documentation and fair handling. Notice period is only one part of the exit process.

Payment in Lieu of Notice

Payment in lieu of notice means the employment relationship can end without serving the full notice period, as long as the appropriate payment is made.

Section 13 of the Employment Act allows either party to terminate without notice, or without waiting for the notice period to expire, by paying an indemnity equal to the wages that would have accrued during the notice period or the remaining part of it.

Reference: ILO Eplex Malaysia Employment Protection Information

For employers, payment in lieu of notice can be useful when an immediate exit is better for business reasons. For employees, it may be relevant if they need to leave earlier and the employer agrees, or if the contract allows payment instead of serving notice.

However, payment calculation should be handled carefully. Employers should check the employment contract, payroll practice and applicable law before finalising the amount.

Resignation and Notice Period

When an employee resigns, the resignation should usually be given in writing. A proper resignation letter should state the resignation date, notice period and proposed last working day.

Employees should avoid disappearing from work or leaving without written confirmation. If an employee leaves before completing notice without approval, the employer may be entitled to recover payment in lieu of the unserved notice, depending on the contract and applicable law.

For employees, serving notice properly protects professional reputation. Many industries in Malaysia are closely connected, and how a person leaves can affect future references.

For employers, resignation should be acknowledged in writing. HR should confirm the last working day, handover requirements, unused leave treatment, final salary timeline and return of company property.

Can Annual Leave Be Used During Notice Period?

Employees sometimes ask whether they can use annual leave during notice period. The answer depends on company policy, employment contract and employer approval.

Some employers allow employees to offset annual leave against the notice period. Others require employees to serve notice physically or complete handover before leave is approved.

Employers should state the policy clearly. If the company allows leave offset, it should be documented in writing so both sides agree on the final working day.

Employees should not assume that annual leave automatically shortens the notice period unless the employer approves it. The safest approach is to submit a request and get written confirmation.

Notice Period During Probation

Notice period during probation is often shorter than notice after confirmation. For example, an employment contract may state one week notice during probation and one month notice after confirmation.

Employers should make probation notice terms clear in the offer letter. If the contract is unclear, disputes may arise when either side wants to end employment during probation.

Even during probation, employers should avoid treating termination casually. Probationers are still employees. If the employer ends the employment because of performance or conduct, it is safer to keep proper records, feedback and assessment notes.

A clear probation clause helps both sides understand their obligations and reduces confusion.

Termination, Retrenchment and Notice Period

Notice period may also apply during retrenchment or redundancy situations. However, retrenchment can involve additional obligations beyond notice.

Jabatan Tenaga Kerja Semenanjung Malaysia notes that employers are required to submit Borang PK to the nearest labour office within 30 days before certain retrenchment related actions under Section 63 of the Employment Act 1955 and the Notification of Retrenchment of Employees 2004.

Reference: JTKSM Employees Retrenchment

JTKSM also states that employees may generally claim statutory benefits such as pay in lieu of notice, termination benefits, payment of annual leave balance and salary balance where applicable.

Reference: JTKSM Employees Retrenchment Frequently Asked Questions

Employers should not treat retrenchment as a normal resignation matter. It should be planned carefully with proper documentation, selection criteria, notification and payment calculations.

Notice Period Is Not the Same as Severance

Notice period and severance are different. Notice period is the time given before employment ends, or the payment made instead of serving that time. Severance or termination benefits may apply in certain retrenchment or termination benefit situations.

Teamed Global explains that Malaysia termination and severance rules should be understood together because employers may need to consider notice and statutory termination benefits depending on the reason for termination and employee eligibility.

Reference: Teamed Global Malaysia Termination and Severance

Aniday also explains Malaysia termination and retrenchment rules by separating notice, severance and process considerations.

Reference: Aniday Malaysia Termination and Retrenchment Rules

This distinction is important for employers. Paying notice does not automatically settle every termination obligation if other statutory benefits or process requirements apply.

Common Employer Mistakes With Notice Period

Many notice period disputes happen because employers do not manage the process clearly.

Common mistakes include:

• Not stating notice period in the employment contract
• Using different notice rules for similar employees without reason
• Assuming notice alone makes every termination safe
• Failing to confirm resignation acceptance in writing
• Misunderstanding annual leave offset
• Forgetting final salary and unused leave calculation
• Starting replacement hiring too late
• Not preparing proper handover
• Ignoring retrenchment notification requirements

Employers can reduce these risks by having clear employment contracts, written HR policies and consistent communication.

Common Employee Mistakes With Notice Period

Employees also make mistakes when handling resignation or notice.

Common mistakes include:

• Resigning verbally without written record
• Assuming leave automatically offsets notice
• Leaving early without approval
• Not checking the contract before accepting a new offer
• Failing to complete handover
• Damaging relationships during the final weeks
• Not clarifying final salary and payment date

Employees should read their employment contract before resigning. They should also plan their new start date carefully so it does not conflict with the existing notice period.

A professional exit helps protect future job opportunities, especially in industries where reputation and references matter.

Notice Period and Hiring Planning

For employers, notice period is directly connected to hiring planning. If a key employee resigns with one month notice, the company may not have enough time to find, interview, offer and onboard a replacement before the person leaves.

This is why employers should build a replacement hiring plan as soon as a resignation is confirmed. Waiting until the final week often creates rushed hiring decisions.

Employers should ask:

• Is the role still needed in the same form?
• Should the job description be updated?
• Can internal staff cover the gap temporarily?
• How much handover is required?
• What salary range is realistic now?
• How fast can interviews be arranged?
• Do we need recruitment support?

A notice period gives time, but only if the company uses it properly.

Notice Period in a Candidate Driven Market

In a competitive hiring market, notice period can affect how quickly companies secure candidates. Strong candidates may be tied to one month, two month or three month notice periods.

Employers should plan for this. If a role is urgent, the company may need to consider candidates who are immediately available, candidates serving shorter notice or temporary coverage while waiting for the preferred candidate.

Reference: Malaysia Candidate Driven Market 2026

At the same time, employers should not pressure candidates to leave current jobs unprofessionally. A candidate who handles resignation properly is often showing good character and responsibility.

How a Recruitment Agency Can Help

A professional Recruitment Agency can help employers manage the hiring impact of notice periods. Eternity Recruitment supports businesses by understanding vacancy urgency, candidate availability, market salary expectations and realistic onboarding timelines.

Recruiters can help employers identify whether candidates are immediately available, currently serving notice or likely to require a longer transition. This helps hiring managers plan interview timing, offer release and start dates more effectively.

Reference: Top Hiring Trends in Malaysia Every Employer Should Know in 2026

For hard to fill roles, recruitment support can also reduce the time lost during replacement hiring. Instead of waiting passively for applicants, employers can use structured sourcing and screening to identify suitable candidates earlier.

When Headhunters Are Useful

Notice period becomes more important when the role is senior, specialised or urgent. These candidates may already be employed and may need longer notice before joining a new company.

This is where headhunting can help. Headhunters can approach passive candidates earlier, check interest, understand notice requirements and help employers plan a more realistic hiring timeline.

Reference: How Headhunters in Malaysia Help You Hire Faster and Smarter

For key roles, earlier sourcing can reduce business disruption. Waiting until a resignation happens may already be too late.

Practical Notice Period Checklist

Employers and employees can reduce confusion by following a simple checklist.

For employers:

• Keep notice terms clear in every employment contract
• Confirm resignation acceptance in writing
• Calculate last working day correctly
• Clarify leave offset policy
• Prepare final salary and payment items
• Plan handover and replacement hiring early
• Seek advice before termination or retrenchment

For employees:

• Check the employment contract before resigning
• Submit resignation in writing
• Confirm the final working day
• Request leave offset only with approval
• Complete handover professionally
• Return company property
• Keep final salary communication clear

A clear process helps both sides end employment professionally and avoid unnecessary conflict.

Final Thoughts

The Notice Period in Malaysia is more than a formality. It protects business continuity, gives employees clarity and helps both sides manage employment endings in a structured way.

For employers, clear notice terms reduce disputes and support better workforce planning. For employees, understanding the notice period helps prevent salary issues, professional damage and start date conflicts with new employers.

The Employment Act Notice Period is important where the contract is silent or where statutory minimums apply. However, employers and employees should always review the employment contract, company policy and relevant law before making decisions.

With support from Eternity Recruitment, a trusted Recruitment Agency, employers can plan replacement hiring earlier, manage talent movement better and reduce the business impact of resignations. In a competitive hiring market, knowing how notice period works can help companies protect continuity while finding the right people for every role.