PRINCIPLES OF ORDINARY RATE CALCULATION UNDER MALAYSIAN LAW
Jan
Date: 16.1.2025
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Under Malaysian law, specifically the Employment Act 1955, the Ordinary Rate of Pay (ORP) represents the daily earnings an employee is entitled to for their standard working hours. This calculation integrates the basic salary alongside consistent supplements such as housing allowances and sales commissions. However, specific payments like overtime pay, mileage reimbursements, and bonuses for working on public holidays or rest days are strictly excluded from this figure. Legal precedents from the Industrial Court reinforce these rules by confirming that commissions qualify as wages for the purpose of these calculations. Ultimately, the ORP serves as a foundational metric for determining an employee’s standard daily compensation while filtering out irregular or performance-based incentives.
