Retrenched in Malaysia? Don't Sign Yet: How Termination Benefits Are Calculated, Plus PERKESO's Higher SIP Payouts From October
The closure of Lee Biscuits' factory, with about 300 jobs reportedly lost, raises a common question: what does your employer legally owe you if you're retrenched? The statutory formula, three worked examples and the higher PERKESO SIP payouts from 1 October.
Source: Source: Employment (Termination and Lay-Off Benefits) Regulations 1980, Employment (Amendment of First Schedule) Order 2022, PERKESO via RinggitPlus (Oct 2026), RTM, SAYS
The short version: in Peninsular Malaysia and Labuan, if you've worked at least 12 months continuously for the same employer and earn RM4,000 a month or less, your employer must pay you statutory termination benefits when you're retrenched: 10 days' wages for each year if you've served under two years, 15 days for two to five years, and 20 days for five years or more. Once you've lost your job, apply to PERKESO for SIP (Employment Insurance System) benefits within 60 days.
JomGuide's advice: when the company hands you exit papers, don't rush to sign. Work out what you're owed first.
Information as of 12 November 2026. This is general information, not legal advice; for your own case, check with the Labour Department or a lawyer.
Why this matters now
Lee Biscuits, the 92-year-old maker of Marie biscuits, reportedly stopped production at its Pontian, Johor factory at the end of October, with about 300 employees losing their jobs. Reports link the closure to the parent group's restructuring and exit from snacks.
The company's compensation terms haven't been made public, so this article doesn't comment on that case. It explains what the law gives employees in general when they're retrenched.
Step 1: Are you covered by the statutory formula?
Statutory termination benefits come from the Employment (Termination and Lay-Off Benefits) Regulations 1980. You need to meet these conditions:
| Condition | Details |
|---|---|
| Where you work | The Employment Act 1955 covers Peninsular Malaysia and Labuan; Sabah and Sarawak have their own labour ordinances |
| Length of service | At least 12 months under a continuous contract |
| Monthly wages | RM4,000 or less |
| Reason for leaving | Retrenchment, closure and similar; resigning or being dismissed for misconduct doesn't count |
If you earn more than RM4,000 a month: under the First Schedule of the Employment Act as amended in 2022, section 60J, which covers statutory termination benefits, doesn't apply to employees earning above RM4,000. That doesn't mean you'll get nothing. It means your entitlement depends on your employment contract, company policy or collective agreement.
The statutory formula: how many days' wages per year?
| Length of service | For each year of service |
|---|---|
| Under 2 years | 10 days' wages |
| 2 to under 5 years | 15 days' wages |
| 5 years or more | 20 days' wages |
- Incomplete years are pro-rated to the nearest month.
- A day's wage is your average daily pay over the 12 months before termination. The examples below use a common estimate: monthly salary ÷ 26.
Three worked examples
| Example | Monthly salary | Service | Calculation | Roughly |
|---|---|---|---|---|
| A | RM2,500 | 1 year 7 months | 10 days × 1.58 years × RM96.15 | RM1,522 |
| B | RM4,000 | 3 years 5 months | 15 days × 3.42 years × RM153.85 | RM7,885 |
| C | RM3,000 | 6 years | 20 days × 6 years × RM115.38 | RM13,846 |
These are estimates of the statutory minimum. Many contracts and company policies pay more; your contract takes precedence if it does.
What else you're owed
- Notice, or pay in lieu: 4 weeks if you've served under two years, 6 weeks for two to five years, 8 weeks for five years or more, or longer if your contract says so.
- Your final month's salary.
- Unused annual leave: when you're retrenched, you can ask for your pro-rated leave to be paid out. See Does Unused Annual Leave Expire?.
- Payment deadline: statutory termination benefits must be paid within 7 days of the termination date. Missing that deadline is an offence.
Don't sign yet: five things to check first
- Get a letter in writing stating that you're being let go because of retrenchment or closure. You'll need it for your SIP claim too.
- Do the sums yourself using the formula above and compare them with the company's figure.
- Check each item is listed separately: termination benefits, notice pay, final salary and leave encashment.
- Don't sign anything that calls it a voluntary resignation. Resigning rules you out of SIP and statutory termination benefits. A Voluntary Separation Scheme (VSS) or Mutual Separation Scheme (MSS) is different, and SIP recognises both.
- Ask before you sign if anything's unclear; the Labour Department (JTKSM) can advise.
If the company underpays or doesn't pay: you can file a claim with the Labour Department. If you believe you were dismissed unfairly, you can make a representation to the Industrial Relations Department within 60 days of your dismissal.
After you lose your job: claim PERKESO SIP within 60 days
SIP (Sistem Insurans Pekerjaan, or the Employment Insurance System) is the small deduction you see on your payslip every month. If you're retrenched, you can claim the following.
Who can claim?
- You contributed for at least 12 months in the 24 months before losing your job.
- You're aged 18 to 60.
- You lost your job through retrenchment, closure, a VSS, an MSS or constructive dismissal. Resigning, being dismissed for misconduct, a contract ending and retirement don't count.
- You're actively looking for work, including registering on MYFutureJobs.
What can you get?
Job Search Allowance (EMP): based on your insured monthly wage, paid for three to six months depending on your contribution record:
| Month | 1 | 2 | 3–4 | 5–6 |
|---|---|---|---|---|
| Share of insured monthly wage | 80% | 50% | 40% | 30% |
For example, on an insured wage of RM3,000, if you qualify for the full six months, the EMP comes to about RM8,100 (RM2,400 + RM1,500 + RM1,200 + RM1,200 + RM900 + RM900). Contributions are capped at a wage of RM6,000.
Higher benefits from 1 October (for anyone who lost their job on or after 1 October 2026):
| Benefit | Before | From 1 October |
|---|---|---|
| Early Re-employment Allowance (EBSA) | 25% of unclaimed EMP | 50% |
| Training allowance | RM10–RM20 a day | RM30 a day |
| Training fee cap | RM4,000 | RM7,000 (paid to the training provider) |
| Mobility Assistance Allowance (new) | None | RM1,000 one-off (for a new job more than 100km from home) |
The government says SIP benefits can reach up to RM25,000, but that's not a single payment, and you'd need to qualify for everything to come close. Most people will receive much less.
How to claim
- Apply within 60 days of losing your job, through the LINDUNG Kerjaya portal or at any PERKESO counter.
- Have your employer's termination letter ready, with the reason clearly stated.
- PERKESO hotline: 1-300-22-8000.
FAQ
I was retrenched after less than a year. Do I get anything?
The statutory formula requires 12 months of continuous service. Below that, check your contract. You're still entitled to notice or pay in lieu.
I earn RM5,000 a month. Am I entitled to termination benefits?
The statutory formula doesn't apply above RM4,000, so it depends on your employment contract and company policy.
The company wants me to sign a resignation letter. Should I?
Not yet. Resigning rules you out of SIP and statutory termination benefits. If you're offered a VSS or MSS, get the terms in writing before deciding.
When do I need to apply for SIP?
Within 60 days of losing your job.
Useful? Forward it to someone who needs it.
Malaysian policy and hot topics, 2–3 items a week, each with a one-line “so what”.
