How does sick leave & hospitalisation leave work in Malaysia?

As the business landscape in Malaysia continues to evolve, so do the intricacies of managing employee leave. Navigating the realm of employee leave can be a daunting task, especially when it comes to complying with local legislation and ensuring the wellbeing of your team.

We’re here to help, so you can stay informed on what your employer obligations are, and make informed decisions that align with the best interests of your organisation and your employees. Here’s everything you need to know about sick leave and hospitalisation leave.

What is sick leave?

Sick leave, often referred to as medical leave, is a type of leave granted to employees to allow them to take time off work due to illness or injury. During sick leave, employees are generally not required to perform their regular job duties and are entitled to receive their regular pay.

It is a crucial benefit that supports the physical and mental wellbeing of employees, and provides them with the necessary time to recover from illnesses or injuries without the added stress of work responsibilities. It also helps prevent the spread of contagious diseases within the workplace.

In Malaysia, the Employment Act outlines regulations related to sick leave, including the number of days an employee is entitled to and the documentation needed to validate the leave.

Employers should have guidelines in place for requesting sick leave, which may include informing the company within a certain timeframe and providing medical certificates or other relevant documentation to verify the need for the leave. Companies may also have provisions for extending sick leave if an employee’s condition requires additional time for recovery.

What about hospitalisation leave?

Hospitalisation leave is a type of leave provided to employees when they are hospitalised due to illness, injury, or a medical condition that requires them to receive medical treatment and care in a hospital setting. This leave is distinct from regular sick leave and is typically granted when an employee’s health condition is severe enough to necessitate hospitalisation.

During hospitalisation leave, employees are excused from work duties to focus on their recovery and medical treatment. Like sick leave, hospitalisation leave aims to ensure that employees are not burdened with work responsibilities while dealing with health issues. This type of leave recognises the seriousness of the medical situation and provides employees with the necessary time to heal and recuperate.

The specifics of hospitalisation leave, including the duration allowed and the compensation provided, can vary based on employment laws, company policies, and the nature of the medical condition. In many cases, employees are required to provide a medical certificate or doctor’s note to validate their need for hospitalisation leave. This certificate usually includes information about the diagnosis, treatment, and expected duration of hospitalisation.

In Malaysia, hospitalisation leave is covered under the Employment Act. Employees who are hospitalised are entitled to a specific number of days of hospitalisation leave, along with the possibility of extending the leave if necessary. It’s important for both employers and employees to familiarise themselves with the legal requirements and company policies surrounding hospitalisation leave to ensure compliance.

Hospitalisation leave acknowledges the fact that some health conditions may require more extensive medical care and time away from work. By providing this type of leave, employers demonstrate their commitment to their employees’ wellbeing and recovery while maintaining a supportive work environment.

How many paid sick days are employees entitled to in Malaysia?

In Malaysia, an employee’s sick leave entitlement is dependent on their length of service, as follows:

In cases where hospitalisation is required, employees are entitled to 60 days of hospitalisation leave per year, on top of paid sick leave entitlement above. This must be certified by a registered medical practitioner, officer, or dental surgeon.

Does unused sick leave carry over to the next year?

The Employment Act does not specifically address the carry-over of unused sick leave from one calendar year to the next. As such, the practice of carrying over unused sick leave can depend on the employer’s policies and employment contracts.

You can choose to allow a certain amount of unused sick leave to be carried over to the next calendar year, within reasonable limits, or have a ‘use it or lose it’ policy where unused sick leave is not carried forward.

Can sick leave be used for family members’ illnesses?

Sick leave is generally intended to be used for the employee’s own illnesses or medical conditions. It is not typically intended to be used for family members’ illnesses. However, there might be instances where employers offer compassionate leave or special leave that can be used for family emergencies or critical situations involving immediate family members. The terms and conditions of such leave would be determined by the employer’s policies or employment contracts.

Can an employer refuse sick leave or hospitalisation leave?

Employers generally cannot refuse an employee’s entitlement to sick leave or hospitalisation leave if the employee meets the eligibility criteria and has provided the required documentation as specified by the Employment Act. However, there are certain conditions and situations where an employer might have valid reasons to question or investigate sick leave or hospitalisation leave requests:

• Medical certificate (MC) authenticity: Employers have the right to verify the authenticity of the medical certificate provided by the employee. If there are concerns about the validity of the MC or if it appears to be forged or manipulated, the employer may request clarification or additional documentation from the attending medical professional.

• Frequent absences: If an employee frequently takes sick leave or hospitalisation leave, you can inquire about the underlying health condition or request further medical documentation to ensure that the leave entitlements are being used legitimately.

• Prior notice and communication: Employees are generally required to inform their employers as soon as possible about their need for sick leave or hospitalisation leave. Employers have the right to carry out further questioning if the employee fails to do so.

• Non-compliance with company policies: Employers may have specific policies in place for requesting and documenting sick leave or hospitalisation leave. If an employee fails to follow these policies, you can ask for proper documentation or explanation before approving the leave.

• Excessive absences impacting work: If an employee’s frequent sick leave or hospitalisation leave significantly impacts their job performance or the overall operations of the company, you might need to address the situation through appropriate channels, such as discussions with the employee or HR.

While these are situations where you may inquire or seek clarification as an employer, the right to sick leave and hospitalisation leave is protected by law in Malaysia. Employers should exercise caution and adhere to employment laws and regulations when handling leave requests and related matters.

If an employee believes that their entitlement to sick leave or hospitalisation leave has been unfairly denied or violated, they can seek advice from relevant authorities or legal experts to understand their rights and potential courses of action.

When can employers ask for proof from a registered medical practitioner?

Employers have the right to ask for proof from a registered medical practitioner when an employee requests sick leave or hospitalisation leave. This proof usually comes in the form of a medical certificate (MC) or doctor’s note.

Here are some common scenarios when employers can ask for proof from a registered medical practitioner:

• Absences lasting multiple days: If an employee’s sick leave or hospitalisation leave request extends beyond a certain number of days (as determined by the company policy), you can request a medical certificate to verify the legitimacy of the absence.

• Frequent absences: If an employee frequently takes sick leave or hospitalisation leave, ask for medical certificates to ensure that the leave is being used for genuine medical reasons.

• Critical periods: During critical business periods, projects, or deadlines, you can request medical documentation to assess the necessity of the leave and plan for adequate coverage.

• Suspicion of misuse: If there is reasonable suspicion that an employee is misusing sick leave or hospitalisation leave, you can request medical proof to validate the need for the leave.

• Company policy: If the company’s leave policy specifies that medical certificates are required for certain circumstances or durations of leave, enforce these policies by requesting proper documentation before each sick leave or hospitalisation leave request.

What happens when employees exhaust their paid sick leave?

When employees exhaust their paid sick leave, the next steps vary depending on company policies and the specific circumstances. Here are some common actions you can take when your employees have used up all their paid sick leave:

• Unpaid leave: You can choose to allow employees to take unpaid leave after they have used up their paid sick leave. This means that the employee will be granted time off from work, but they won’t receive their regular salary during this period.

• Use of other leave types: Employees can be allowed to use other types of available leave, such as annual leave or personal leave, if they have exhausted their sick leave. This is usually at your discretion as an employer, and is subject to the company’s leave policies.

• Special leave: In certain situations, you might grant special leave for specific circumstances, if an employee has used up their sick leave. This could include compassionate leave or other types of leave meant for unique situations.

In cases where employees face serious illnesses or medical conditions that prevent them from returning to work for an extended period, they might need to explore other options such as taking long term no-pay leave until they have fully recuperated.

Explore reasonable accommodations, if possible, to support employees who are on extended no-pay leave. These include flexible work arrangements upon the employee’s return to work or adjusting job responsibilities temporarily.

Can employers terminate employment for someone on long-term sick leave?

In Malaysia, employers cannot terminate an employee’s employment solely based on the fact that the employee is on long-term sick leave. The Employment Act and other relevant employment laws provide protection to employees who are ill or injured and require extended periods of leave for medical treatment and recovery.

However, if the medical condition of the employee has severely crippled their ability to perform their designated tasks and recovery is unlikely, employers may have no choice but to terminate the employee on medical grounds — this process is also known as a ‘medical board out’.

Aside from the statutory sick leave and hospitalisation leave entitlements provided by the Employment Act, Malaysian law does not dictate requirements for a medical board out procedure. There are no regulations stating that it is compulsory for the company to put employees on no-pay sick leave for a specified period of time before resorting to termination on medical grounds.

The medical board out procedure is thus subject to the employment contract and company’s policies and procedures. It is essential for employers to follow an open and transparent board out procedure that has been formally documented and fairly conducted to demonstrate that the termination was not made on unfair grounds.

Employers should take into account several factors before contemplating termination on medical grounds. These include:

• The nature of the employee’s illness;
• The length of the employee’s absence during the recovery period;
• The nature and functions of the employee’s job;
• The likelihood of the illness/disability recurring;
• The need of the employer to employ another employee to get the work done;
• The impact on other employees;
• Whether the employee is able to be re-designated and perform in that capacity; and
• Whether the employee is aware of the difficult situation the company is faced with in respect of their medical condition.

As an employer, you must ensure that you have thoroughly contemplated all the circumstances surrounding the illness or disability, and that termination on medical grounds is just.

An example would be the case of MHS Aviation Sdn Bhd v Zainol Akmar Mohd Noor [2001], where the company had dismissed the employee, a pilot, after he was diagnosed with acute inferior and posterior myocardial infarction, and deemed unfit to carry out flying duties for six to nine months.

The basis for terminating the employee was frustration — that the employee was now unable to carry out the terms of his employment contract due to an event caused by no fault of either party. The Court ruled that the termination was unfair, as health issues are unexpected, and the company had also not made any enquiries on the illness suffered by the employee — instead, terminating him on the assumption that his medical condition was permanent in nature. The claimant’s complaint for unfair dismissal was allowed and he was reinstated to his former post with backwages to be paid.

In another case, Linda Lui Chooi Kim v MSL Travel Sdn Bhd [2014], the Court found that the employee was dismissed solely because she was diagnosed with cancer, and the company assumed that the employee was no longer fit to perform her job due to that diagnosis. They did not investigate the illness or how it affected her work performance. As a result, the Court ruled that she was unfairly dismissed, and she was awarded compensation in lieu of reinstatement along with backwages.

It is no doubt a difficult situation, having to balance business interests of having a productive and efficient workforce, whilst having compassion and empathy for employees who are unable to work due to an unexpected health diagnosis. Even though employers are not expected to go to unreasonable lengths to accommodate sick or disabled employees, you should approach the situation with utmost care, sympathy and understanding.

Consult and discuss all issues with the affected employee extensively, so you can get a full understanding of their medical illness and the required recovery period. Try to exhaust all other means of support before resorting to termination and dismissal — and even so, ensure that you adhere to a fair process with justifiable reasons.

Tips for supporting employees on sick leave

Supporting employees on sick leave is essential in maintaining a positive work culture and employee wellbeing. If you’re looking for tips on how to be a better employer and effectively support employees during their medical leave, we’ve got some up our sleeves.

1. Provide clarity on leave requests and medical benefits

Ensuring that every employee is aware of the process for requesting and documenting sick leave is of utmost importance. Especially if there’s a need for medical certificates to justify the use of their sick leave entitlements. This makes it easier and fuss-free for employees to submit sick leave requests quickly, and also allows direct managers to approve them as soon as possible. When you have a clear cut and straightforward leave management process — your employees can take time off to recuperate in peace without any worries.

Do your employees have access to the company’s sick leave policies and are they aware of their rights and responsibilities? Provide them with access to these important documents so they can refer to them at any time. You should also ensure that your employees are aware of the medical benefits available to them, such as insurance coverage and any other resources for medical treatment or counselling.

2. Be open to flexible work arrangements

With the introduction of the Employment (Amendment) Act 2022, it has provided employees with the legal right to submit a written application to their employer, for a flexible working arrangement to vary the hours of work, days of work, or place of work. Employers who receive such applications will then be required to approve or refuse the application within 60 days, and inform the employee of the decision made in writing.

Believe it or not, flexible work arrangements are actually good for businesses. It provides employees with a greater work-life balance, but more importantly, in cases of sick leave, it gives employees better control over their work schedules, so they can focus on recovering and taking things slow.

This helps to discourage presenteeism (which is more detrimental than we realise) and creates a more engaged workforce. Check out how you can create a flexible working policy by following this template.

3. Create a culture that prioritises wellbeing

Do your employees feel comfortable taking sick leave? Or do they feel guilty and stigmatised for taking it?

If your business is constantly busy, requiring employees to hustle non-stop with an overwhelming workload, your team might be reluctant to take sick leave even when they really need it. They might feel like they can’t afford to take time off because there are tight deadlines or other priority items, which means they come into work sick and risk passing illnesses to their colleagues. It’s a vicious cycle!

Good leadership in well-run businesses always includes managers reminding and encouraging their teams to request leave when they need it.

If you’re all for staff taking time off but they’re worried about who steps in while they’re off, make sure that you manage leave effectively. This means that you won’t have to worry about being understaffed, and you can ensure that your team can take the leave they need and come back refreshed and recharged.

4. Examine your health and safety policies

Did you know that sick days cost employers an estimated RM5 billion in 2022, according to the Malaysian Employers Federation? Well-organised and followed health and safety policies can make a significant difference to the risks of ill health at work. It’s critical that business leaders regularly conduct audits to ensure risks are minimised, build strong policies and plan for the unexpected. After all, in an ideal world, no one would have ill health caused by their job.

Employers should also put in place preventive measures such as investing in proper sanitation of the workplace, offering free vaccinations, providing recreation facilities and supporting workplace wellness programmes.

Find out more about employer obligations under the Occupational Safety and Health Act and the download our Malaysian workplace health and safety guide now.

5. Keep a lookout for recurring sick leave

If you’ve got an employee who seems to consistently take multiple sick leave days, chances are, there might be more than meets the eye. They may be unsatisfied with their role for a number of reasons, such as strict micro-management styles or a lack of support for employee wellbeing.

Burnout might also be at play, which is unsurprising after a tough few years with the pandemic. Our Wellness at Work Report found that the majority of workers were struggling with burnout at work. Coupled with the growing cost of living pressures, it’s no wonder employees are struggling to remain motivated at work.

With this in mind, a confidential check-in with the employee can be beneficial. Emphasise that you are concerned, and want to know if anything can be done to help the employee improve their attendance rates. If they raise any issues about the business, it could be a good opportunity to look into what can be done.

Manage sick leave easily with Employment Hero

Leave management is an integral part of creating a happy and healthy workplace. Get it right, and you’ll benefit from a supportive culture of employees who feel empowered to bring their best selves to work.

If you find yourself struggling with tracking leave dates and keeping tabs on everyone across the business, Employment Hero can help. Streamline your leave management processes, reduce administrative burdens and remain statutory compliant with our all-in-one HR and payroll software. That way, you no longer have to track leave entitlements manually and can focus on what matters most — your people.

You get a centralised leave management system where employers and managers can manage employee leave requests and view employees’ leave balances and entitlements, all in one place. Employees also enjoy self-service functionality by using Employment Hero — they can use their desktop or mobile to submit sick leave requests, upload their medical certificates, view their leave balances, and receive notifications about the status of their leave requests.

For more information on other types of leave, such as maternity leave or paternity leave, annual leave and more, visit the Malaysia SME BizHub or refer to our guide to HR compliance.

Check out our other resources: 

• How does compassionate and bereavement leave work in Malaysia?
• The legal requirements of hiring in Malaysia
• Key dates for small businesses in Malaysia

Disclaimer: The information in this article is current as at 17th August 2023, and has been prepared by Employment Hero Pty Ltd (ABN 11 160 047 709) and its related bodies corporate (Employment Hero). The views expressed in this article are general information only, are provided in good faith to assist employers and their employees, and should not be relied on as professional employment or legal advice. Any reference to government policies, regulations, or guidance is for informational purposes only and should not be considered official government advice. The information is based on data supplied by third parties. While such data is believed to be accurate, it has not been independently verified and no warranties are given that it is complete, accurate, up to date or fit for the purpose for which it is required. Employment Hero does not accept responsibility for any inaccuracy in such data and is not liable for any loss or damages arising directly or indirectly as a result of reliance on, use of or inability to use any information provided in this article. You should undertake your own research and seek professional advice before making any decisions or relying on the information in this article.

Note: The Employment Act is not applicable to Sabah and Sarawak, as they have their own Labour Ordinances respectively: the Sabah Labour Ordinance and Sarawak Labour Ordinance.