Severance pay in Malaysia 2026: notice, severance and unemployment benefit
When a job ends in Malaysia, the calculator above estimates the statutory severance pay, the notice period, the payment for unused leave and the unemployment benefit, with the tax on each part. Below you will find the rules in brief and examples for different lengths of service.
The rules in brief
- Termination benefits: Employees covered by the termination provisions (wages up to RM4,000 a month) with at least 12 months of service get 10 days’ wages for each year under 2 years, 15 days for 2 to 5 years and 20 days from 5 years, pro rata for part years. Compensation for loss of employment is tax-free up to RM10,000 per completed year of service. Notice is 4, 6 or 8 weeks by service unless the contract gives more.
- Employment Insurance System: If you lose your job involuntarily, the EIS pays a job search allowance of 80% of your insured monthly wage (up to RM6,000) in the first month, falling to 30% by the sixth, for 3 to 6 months depending on your contributions, while you look for work through MYFutureJobs.
Example: MYR 4,000 gross a month
| Years of service | Severance, net (MYR) | Notice period |
|---|---|---|
| 1 | 1,538 | 4 weeks |
| 2 | 4,615 | 6 weeks |
| 3 | 6,923 | 6 weeks |
| 5 | 15,385 | 8 weeks |
| 10 | 30,769 | 8 weeks |
| 15 | 46,154 | 8 weeks |
| 20 | 61,538 | 8 weeks |
| 25 | 76,923 | 8 weeks |
Case: “Retrenched or terminated (not for misconduct)”, leaving on 31 December 2026, without unused leave. These are legal minimums; a contract or collective agreement may give more.
What you receive: an example
With 9.8 years of service and 10 days of unused leave, ending on 31 December 2026:
| Item | Gross (MYR) | Net (MYR) |
|---|---|---|
| Termination benefit (10, 15 or 20 days’ wages per year of service; tax-free up to RM10,000 per completed year) | 30,263.44 | 30,263.44 |
| Unused leave (5 days) | 923.08 | 400.15 |
| Total | 31,186.51 | 30,663.59 |
Unemployment benefit
In this example the unemployment benefit comes to about MYR 10,800 in total (EIS job search allowance: 80% of your insured monthly wage (up to RM6,000) in the first month, then 50%, 40%, 40%, 30% and 30%, for 3 to 6 months depending on your contributions, if you lost your job involuntarily and register on MYFutureJobs). The conditions, such as the contributions you need, are listed in the rules above.
Frequently asked questions
How much severance do I get after 10 years in Malaysia?
About MYR 30,769 net with MYR 4,000 gross a month, for “Retrenched or terminated (not for misconduct)”. The notice period is 8 weeks.
How long is the notice period?
In the example: 4 weeks after 1 year, 8 weeks after 5 years, 8 weeks after 10 years and 8 weeks after 20 years.
Do I get unemployment benefit?
In the example, about MYR 10,800 (EIS job search allowance: 80% of your insured monthly wage (up to RM6,000) in the first month, then 50%, 40%, 40%, 30% and 30%, for 3 to 6 months depending on your contributions, if you lost your job involuntarily and register on MYFutureJobs). The conditions are listed in the rules above.
Are these amounts exact?
They are estimates of the legal minimum under the 2026 rules. Your contract, a collective agreement or a court decision can give more.
Rules and official sources: see “Rules applied (2026)” above. Last checked: October 2026. The amounts are estimates for information, not financial or legal advice.