Which approach shall you offer, Overtime or Allowance?
Overtime & Allowance in HRMS Payroll Malaysia
In HRMS Malaysia, overtime and allowance are calculating in different way. Although overtime and allowance are given to employee under certain conditions or circumstances but still the different between in terms affect in HRMS Payroll System.
Before we begin, lets us have an understanding that what is Overtime and Allowance in HRMS Payroll.
Learn more about iFLEXiHRMS Payroll System towards employee Overtime & Allowance Calculator Malaysia
iFLEXiHRMS Payroll System allow you to one click process employee overtime & allowance calculation. It is a simple and easy payroll software system by allowing your company employee’s allowance and overtime calculation in Malaysia can be done easily and efficiency.
iFLEXiHRMS Payroll System free up your time from tedious and complex payroll calculations, preparation of pay slips and all statutory submissions. It built for your business, and grow with your business.
What is Overtime?
Overtime is the amount of time (usually measured in hour) while an employee works beyond normal working hours. Which it is usually counted more than 8 hours per day in general. Put it in another words, employees who work more than usual working hour is considered overtime.
In Malaysia, overtime calculation in Payroll HRMS should be strictly follows by Malaysia’s labor laws. Under Employment Act 1955, an employee shall not be required under their contract of service to work:
- More than 5 consecutive hours without a 30 minutes’ break.
- More than 8 hours per day.
- In excess of a spread over a period of 10 hours in 1 day.
- More than 48 hours per week.
The above conditions commenced to those employees who work 6 hours per week. Which in result for having a maximum 8 working hours per day per week in general.
Overtime can be widely applied for factory workers, F&B staff, and many of the related fields.
Employees have the right to apply for overtime claims once their conditions are meet to the category above.
What is Allowance?
Allowance is an amount given by employer to employee while certain conditions are meet or specific purposes.
Allowance doesn’t affect by employee working hour, it is an additional sum of money that given to employee.
There are popular allowance including petrol allowance, child care allowance, travelling allowance, car allowance, toll allowance, business allowance and many more. These resources are given by company to the employee.
However, each company has its own claimable allowance. Differ from overtime, allowance isn’t a compulsory section in payroll HRMS.
So What Should I Give? Overtime or Allowance?
So after knowing what is Overtime and Allowance, it is time for putting them in to practice.
Employees are able to claim Overtime when they worked more than 8 hours a day and 6 days per week.
Employees are able to claim company allowance if they are entitled to company beneficial list.
Alright, that is enough for definition, how it differs when processing employee Payroll HRMS?
According to the mainly situation for overtime and allowance in payroll and HRMS, amount of employee overtime amount required a deduction on EPF but amount of employee allowance required a deduction on EPF, SOCSO and EIS (Fixed allowance).
So during processing payroll, we have to careful about overtime calculation and allowance calculation for HRMS Malaysia.
Find it difficult to processing employee payroll? No Worries, we have fully functioned HRMS Solution which allow you to one click auto calculate employee payroll with deduction of EPF contribution, SOCSO & EIS Contribution. Learn More here.
Overtime Calculation for Payroll HRMS in Malaysia
How do we calculate employee overtime period in Payroll HRMS in Malaysia?
Overtime had been charged (calculated) in a different way affected by the events on working day. What is the mean of it? Which means that Overtime rate is different when there is a normal working day, off day and public holiday.
Overtime rate for normal working day, off day and public holiday are 1.5, 2.0, 3.0 respectively.
The overtime calculation formula as per shown below:
Basic pay/26 days/8 = Hourly rate of pay
Hourly rate of pay x Overtime Rate x Overtime hour
So be careful on overtime in different days, the calculation methods are varying.
Learn more about iFLEXiHRMS Payroll System towards employee's overtime & allowance calculation Malaysia
iFLEXiHRMS Payroll System allow you to one click process employee’s overtime and allowance calculation. It is a simple and easy payroll software system by allowing your company employee’s overtime and allowance calculation Malaysia can be done easily and efficiency.
iFLEXiHRMS Payroll System free up your time from tedious and complex payroll calculations, preparation of pay slips and all statutory submissions. It built for your business, and grow with your business.
Overtime Calculation Sample for Payroll HRMS in Malaysia
So after knowing what is Overtime in Payroll HRMS Malaysia, we shall proceed to the following example for Overtime payroll calculation.
- Flexi has a salary of RM2,000 per month, he works 9 hours per day and 6 days per week, how to calculate his overtime amount per month?
Flexi works 9 hours per day and 6 days per week.
Overtime is calculated more than 8 hours per day.
9 hours – 8 hours = 1 hour (Overtime per day)
Working 6 days in a week
1 hour x 6 days = 6 hours Overtime per week
1 months = 4 weeks (roughly)
6 hours x 4 weeks = 24 hours
Total time of Overtime amount for Flexi during a month is 24 hours.
- Flexi has a salary of RM2,000 per month, he works 9 hours per day and 7 days this week due to the celebration of Christmas. How much he gained for Overtime in this week?
Flexi works 9 hours per day and 7 days in a week. (All days working)
Overtime is calculated more than 8 hours per day.
9 hours – 8 hours = 1 hour (Overtime per day)
Working 6 days in a week (Working day)
1 hour x 6 days = 6 hours Overtime working day
Working 1 day in Sunday (off day)
9 hours
Overtime Calculation
Basic pay/26 days/8 = Hourly rate of pay
Hourly rate of pay = RM2000/26/8 = RM9.62
Hourly rate of pay x Overtime Rate x Overtime hour
Normal Working Day Overtime
= RM9.62 x 1.5 x 6
= RM173.12
Off Day Working Overtime
= RM9.62 x 2.0 x 9
= RM173.16
Total Overtime amount
=RM173.12 + 173.16
=RM346.28
Total Overtime amount of Flexi is RM346.28.
Allowance Calculation Sample for Payroll HRMS in Malaysia
So after knowing what is Allowance in Payroll HRMS Malaysia, we shall proceed to the following example for Allowance payroll calculation.
- Flexi has a salary of RM2,000 per month, he has a fixed petrol allowances RM200, how much he gained throughout a month?
Flexi has a salary of RM2,000 and allowance RM200
Salary Before Deduction
= RM2000 + RM200
= RM2200
EPF Contribution
According to the EPF Contribution rate
From RM2180.01 to RM2200.00
Employee’s share: 198.00
According to the SOCSO Contribution rate
From RM2100.01 – RM2200.00
Employee Contribute: 10.75
According to the EIS Contribution rate
From RM2100.01 – RM2200.00
Employee Contribute: 4.30
Total Deduction
= 198.00 + 10.75 + 4.30
= 213.05
Salary after deduction
= RM2200 – RM213.05
= RM1986.95
Flexi gain the net salary of RM1986.95
How to calculate employee's overtime and allowance in just one GO?
iFlexiHRMS is a HRMS software which include payroll module by allowing you to one click process employee’s overtime and allowance. Learn more iFlexiHRMS software with us for easier employee’s overtime and allowance calculation now!
Learn more about iFLEXiHRMS Payroll System towards employee's overtime & allowance calculation Malaysia
iFLEXiHRMS Payroll System allow you to one click process employee’s overtime and allowance calculation. It is a simple and easy payroll software system by allowing your company employee’s overtime and allowance calculation Malaysia can be done easily and efficiency.
iFLEXiHRMS Payroll System free up your time from tedious and complex payroll calculations, preparation of pay slips and all statutory submissions. It built for your business, and grow with your business.
Related Products from iFLEXi
Found Our Solutions Helpful To You?
Hit the request demo button, fill in a simple form and our staff will contact you as soon as possible.