Anywhere in the world, any working individual can retire anytime they want, and the age at which one decides to stop working is entirely dependent on them. However, in Malaysia, no employer can retire their employee before they reach the minimum age set by the law.
This article will explore the law on the retirement age of a Malaysian working in the private sector. Here are six fundamental points to know about the minimum retirement age in Malaysia.
The minimum retirement age in Malaysia is governed and regulated under the Minimum Retirement Age Act 2012, which first came into force in 2013 and was last amended in 2016.
The Act does not apply to all working Malaysians. According to the Schedule contained in Section 2 of the Act, there are nine categories of employees who are excluded from the Act;
According to Section 4(1) of the Act, the minimum retirement age in Malaysia is set at 60 for those working in the private sector. Section 5(1) states that no employer shall retire their employee before they reach the age of 60. Meanwhile, Section 5(2) of the Act expressly states that the violation of Section 5(1) is considered an offence and any employer who commits such is subject to a fine of not more than RM10,000 if found guilty.
If an employee has been prematurely retired by the employer, Section 8 provides the following options to the employee:
However, it is essential to highlight that if an employee has filed a complaint to the Director General, they must not file the application for unfair dismissal until their former complaint to the Director General has been resolved. If found that the application for unfair dismissal has been made, the Director General will not conduct any inquiry on the complaints made due to redundancy of the application.
If the Director General is satisfied that the employee has been made prematurely retired by their employer, the Director, under the power given to them under Section 8 (5) (b) of the Act, shall order the following to the employer:
Suppose the Director General, upon his inquiry, has dismissed the complaint of premature retirement made by the employee, the dissatisfied employee may then file an appeal to the High Court within 30 days of the communication of the dismissal or resort to the application of unfair dismissal at the Industrial Court.
If the employee has signed a contract of service or a collective agreement with a specific clause mentioning the age of optional retirement, the employee may voluntarily retire upon reaching the age stated in such a particular clause. Therefore, with mutual agreement between the employer and employee, an employer may retire an employee upon reaching any age below 60.
However, if the contract of service is silent on the age of optional retirement, an employee is entitled to work until the average retirement age for employees in their field.
There have been a few debates urging for the revision of the retirement age, however up until the year 2022, the government is not keen to increase the statutory retirement age as the previous increment of the retirement age from 55 to 60 before the coming of this Act has led to a loss of approximately million job opportunities for millennials.