Sick Leave and Hospitalization Leave in Malaysia: What Employers Need to Know About Labor Law Compliance

With the evolution of Malaysia’s labor market, compliance regulations have evolved to better protect the interests of employees and employers. In practice, these laws promote employee well-being, prevent abuse of policies, and help businesses run efficiently.

However, the dynamic nature of labor laws poses a compliance risk that can lead to legal action and costly penalties. Beyond these costs, non-compliance has deeper impacts on workplace culture. A Milieu study revealed that 68% of the 1,000 Malaysian employees surveyed chose not to take sick leave despite being physically unwell, a trend also seen across Southeast Asia.

This reluctance often stems from work overload, fear of missing out, and guilt over absences. Over time, it fuels a culture of presenteeism, employee burnout, and disengagement that undermines productivity and employee satisfaction.

The solution starts with a clear understanding of your obligations as an employer around sick leave and hospitalization leave in Malaysia. Here’s what you need to know to keep your business compliant.

What is hospitalization leave Malaysia?

Hospitalization leave allows employees to recover from serious illnesses, injuries or medical conditions. Under the Employment Act 1955, eligible employees are entitled to up to 60 days of paid hospitalization leave per calendar year, which includes any sick leave taken.

To qualify, employees must: 

• Be covered under the Employment Act,

• Have worked with you for at least three months, and
• Inform you (or attempt to) within 48 hours of their absence.

Hospitalization leave applies regardless if the employee is formally admitted to a hospital, as long as a certified medical practitioner deems hospitalization or extended medical care necessary.

What’s the difference between sick leave and hospitalization leave Malaysia?

Although closely related, sick leave and hospitalization leave Malaysia serve different purposes and provide different entitlements. 

Typically, sick leave is granted for minor illnesses or injuries that do not require hospitalization, such as colds or mild infections. Under the Act, employees are entitled to up to 14 days of paid sick leave per calendar year if they are certified unfit for work by a registered medical practitioner.

On the other hand, hospitalization leave covers more serious medical conditions that require hospital care or extended recovery. Employees are allowed a combined maximum of 60 days per year, meaning if 14 days of sick leave are used, only 46 hospitalization days remain. 

Is a medical certificate required?

You might be wondering, “Is a medical certificate required for sick leave and hospitalization leave Malaysia?” The answer is yes. 

A valid MC issued by a registered medical or dental practitioner under the Medical Registration Act or Dental Registration Act is mandatory. The MC should include details like the diagnosis, treatment plan, and recommended duration of leave. 

To prevent misuse, you can require employees to obtain MCs from designated and certified clinics that you trust or your company’s medical insurance panel. If they are unable to do so, employees must provide a reasonable explanation when applying for sick leave and hospitalization leave Malaysia.

Can hospitalization leave Malaysia be carried forward?

Under the labour law, Malaysia medical leave carryforward is not mandated. Many companies operate on a ‘use it or lose it’ basis for sick and hospitalisation leave Malaysia, meaning any unused days are forfeited at the end of the year. 

For example, if an employee has 5 unused sick leave days and 30 unused hospitalization leave days in 2025, they are not added to 2026’s entitlement. Each year starts with a fresh 14- and 60-day allocation, respectively. 

However, companies may choose to allow leave carryover as part of their company policy or employment contracts. Employers must communicate this clearly to employees to prevent misuse and ensure compliance.

Common Employer Pitfalls to Avoid

Just like any other leave entitlements, sick leave and hospitalization leave Malaysia come with their own set of rules and regulations that may cause compliance issues if not managed properly. 

To remain compliant and maintain employee trust, avoid these common mistakes: 

Rejecting valid medical certificates

If your employee provides you with a valid MC as per company guidelines, you must grant the leave entitlement as it is mandated by the Employment Act.

Misclassifying leave

Hospitalization leave Malaysia needs to be recorded separately from sick, maternity and annual leave. Without clear categorization in your HR system or company policy, it’s easy to misclassify leave types, leading to inaccurate records or confusion.

Failing to track leave balances

Failure to track usage of sick leave and hospitalisation leave in Malaysia would result in inaccurate records. This means you are exposed to potential underpayment, overpayment, or non-compliance penalties.

Using a system like Omni ensures that leave balances are automatically updated and accurately reflected in real-time. With built-in compliance settings and leave policy configurations, Omni helps HR teams avoid these costly manual errors while simplifying employee leave tracking. Paired with our self-service portals, employees can easily apply for and track sick leave and hospitalization leave Malaysia anytime, anywhere.

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Best Practices for Managing Sick Leave and Hospitalization Leave Malaysia

Many companies still track these time-offs manually through paper forms or spreadsheets. This manual process is slow, diverting your HR team’s attention, and error-prone, making it difficult to ensure leave fairness and visibility throughout the organization.

That’s why it’s important to implement controls to ensure accurate tracking of sick leave and hospitalization leave Malaysia. This helps you: 

• See who is working and who isn’t.
• Plan for time off and have enough manpower to avoid disruption.
• Maintain compliance and support employee well-being.

Here are some best practices for hospitalization leave Malaysia management that you can adopt:

1. Clear communication

Your employees should clearly understand your compliance policies around labour law Malaysia medical leave. They should know about hospitalization leave entitlements, eligibility criteria, and procedures for application.

2. Regular policy updates

When it comes to labour law, Malaysian medical leave regulations are updated frequently. That’s why it’s essential to review and update your company’s sick leave and hospitalisation leave policies to remain compliant.

With an HR tool like Omni, you can store and manage your company’s leave policies in a centralized document management system for easy access and configuration. You’ll also receive updates when regulations change, ensuring that you are always informed and compliant. HR teams can also configure eligibility, approval flows, and leave types within Omni’s time-off module, reducing manual work and guesswork. 

To make your policies even more employee-friendly, consider gathering feedback from your employees to understand how you can better support them or facilitate the process of applying for sick or hospitalization leaves. Using this input, adjust your policies to make the hospitalization leave management process more seamless and efficient.

3. Accurate recording

Having detailed, accurate leave records is crucial for compliance and supporting your employees’ well-being. You need reliable and easy access to hospitalization leave dates, durations, MCs, and other supporting documents, especially when it comes time for audits or payroll processing.

Omni simplifies this with automated leave tracking that instantly updates leave balances in real time when an application is submitted or approved. Automated workflows ensure relevant managers are notified, and leave records are adjusted, allowing for accurate reporting and time-off visibility across teams.

These records are stored securely in our central database, creating a single source of truth. Whether you need to retrieve an MC, verify leave usage, or generate a leave utilization report, everything is available on our unified platform. Additionally, our reports and analytics feature allows HR to monitor leave trends, spot potential burnout risks, and ensure employees are taking the time off they need. 

Omni Helps Malaysian HR Teams Stay Compliant

Navigating sick leave and hospitalization leave in Malaysia efficiently requires HR professionals to invest in modern leave management systems and processes.

Omni’s time-off management capabilities help managers and HR teams swiftly navigate employee leave management. Omni’s platform allows you to approve leave applications on the go and keep track of who’s in and out of the office with at-a-glance scheduling.

Our employee self-service portal enables employees to submit their time-off requests, which are automatically routed to the appropriate manager thanks to customizable approval workflows. Omni’s user-friendly mobile application further simplifies the process, allowing employees to apply for time-off requests on the go.

For further leave management ease, Omni seamlessly integrates with common work tools such as Slack, enabling managers to manage time-off approvals with a simple push of a button. With automated calculations, employees and managers can easily view leave balances in real time and track how many vacation days they have left without having to go through HR.

Our localized solutions and interconnected system merge your sick leave and hospitalization leave Malaysia management efforts with payroll processing, facilitating automatic, accurate calculations and compliance with local regulations for various regions.

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If you’re ready to take your leave management to the next level, book a demo with us today. We’ll walk you through our platform’s capabilities and demonstrate how Omni can transform your leave management processes, saving you time, reducing administrative burdens, and enhancing overall efficiency.