Termination Benefits Calculator Malaysia 2026
Work out the minimum termination or lay-off benefit under the Employment Act 1955 and the 1980 Regulations from your wage and length of service.
Preview page. The rates are checked against official sources; the page is awaiting final review before it is published.
Result
This is an estimate for planning. Confirm the final figure with the bank, JPJ or LHDN before you commit.
How it's calculated
The Employment (Termination and Lay-Off Benefits) Regulations 1980 set a minimum payment when employment ends through termination or lay-off. It is a number of days’ wages for every year of service, and the number of days depends on your total service:
- Less than two years: 10 days’ wages for every year.
- Two years or more but less than five: 15 days for every year.
- Five years or more: 20 days for every year.
benefit = a day’s wages × days per year × years of service
Worked example (the default inputs). An average wage of RM 3,500.00 and service of 6 years and 4 months, which is 6.33 years. Five years or more means 20 days for every year. A day’s wages by JTKSM’s formula is RM 3,500 × 12 ÷ 365 = RM 115.07.
The benefit is RM 115.07 × 20 × 6.33 = RM 14,575.34. Using the ordinary rate of pay instead, RM 3,500 ÷ 26 = RM 134.62 a day, the same service gives RM 17,051.28.
Retrenchment in practice
The statutory figure is a floor. Many employers pay a retrenchment package above it, often based on a month’s pay for each year of service, especially where a collective agreement applies. Read the offer letter carefully: it should separate the termination benefit, notice pay, unused leave and any ex gratia payment. Accepting a voluntary separation scheme is generally treated as a termination by mutual agreement, and the scheme’s own terms decide the amount.
Tax and EPF on the payment
Compensation for loss of employment has a partial income tax exemption for each completed year of service; the amount and conditions are set by LHDN, so check them for the year you are paid. Whether EPF is deducted depends on how each item is classified under the EPF Act, so ask your employer’s payroll to show the treatment of every line before you sign the final settlement.
FAQ
How much termination benefit am I entitled to in Malaysia?
Under the Employment (Termination and Lay-Off Benefits) Regulations 1980, at least 10 days’ wages for every year of service if you have worked for the employer for less than two years, 15 days if two years or more but less than five, and 20 days if five years or more, with an incomplete year pro-rated to the nearest month. Your contract or a collective agreement can give more, not less.
Who qualifies for termination benefits?
Employees with at least 12 months of continuous service whose employment is terminated or who are laid off, for example in a retrenchment. Benefits are not payable on retirement under the contract, dismissal for misconduct after due inquiry, resignation, or when the employer offers a renewal or re-engagement on terms no less favourable and the offer is unreasonably refused. Since 2023 the statutory minimum does not apply to employees earning more than RM 4,000 a month, except manual workers and the other First Schedule categories.
How is a day’s wages calculated?
The Regulations use the average true day’s wages over the 12 completed months before termination. JTKSM’s own formula takes 12 months’ salary and divides by 365. Some employers use the ordinary rate of pay, monthly wage divided by 26, which gives a higher figure; the calculator shows both so you can see the range.
When must termination benefits be paid?
Not later than seven days after the date the employment ends, together with a written statement of the amount and how it was calculated. Late payment is an offence under the Regulations. If you are not paid, you can lodge a claim at the nearest Labour Department office.
Is termination benefit the same as notice pay?
No. Notice pay, or payment in lieu of notice under section 13 of the Act, is separate and is paid in addition to the termination benefit. Unused annual leave for the year is also paid out separately. Ask for each item to appear on its own line in the final payslip.