How Is Your Final Salary Calculated After Resignation?

Written by: Izz Murtada

So you have handed in your resignation letter. Maybe you are excited about a new job, or maybe you just need a break. Either way, one question is probably sitting at the back of your mind: how much money will I actually get in my last paycheck?

This is a fair question, and it is one that many Malaysian employees do not fully understand until the day they leave. The good news is that the rules are not a mystery. They are written clearly in the Employment Act 1955, the main law that protects workers in Malaysia. Let us break it down in simple words for better understanding.

1.What Is Final Salary?

Final salary, sometimes called last pay or final pay, is the total amount of money your employer owes you when your job ends. This applies whether you resigned, your contract simply came to an end, or your employer let you go.

It is not just your basic pay for the days you worked. It is a full settlement that closes out everything you are owed under the law, so that when you walk out the door, there is nothing left hanging between you and your employer.

2.What Is Included in the Final Salary?

Your final salary may include more than just the wages for the days you worked in your last month.

First, you should receive your basic wages for the days worked. If you have unused annual leave, your employer generally has to pay you for those unused days under Section 60E of the Employment Act 1955, except in cases of dismissal for serious misconduct.

Your final payment may also include payment instead of serving the notice period.  if the required notice period was not served. On the other hand, lawful deductions, such as certain salary advances or loans, may be deducted within the limits allowed by law.

Payments such as travel allowances, annual bonuses and retirement gratuity are generally not considered wages under the Act, although your employment contract may provide for them.

3.When Should the Final Salary Be Paid?

The Employment Act 1955 also sets deadlines for when your final wages should be paid.

If you resign with proper notice or your contract ends normally, your final wages should be paid by the day your contract ends. If your employer terminates your employment without notice, your final wages should be paid by the day the termination takes effect. However, if you leave without giving the required notice, your employer has up to three days after your last working day to pay your final wages.

Knowing these deadlines can help you check whether your final salary has been paid on time and follow up if there is a delay.

4.How Is Final Salary Calculated?

Calculating your final salary may seem complicated, but it becomes easier when broken down into 5 simple steps:

Step 1: Calculate your pro-rated salary

If you leave in the middle of a month, your salary is calculated based on the number of calendar days in that month.

Formula:
Monthly salary ÷ total calendar days in the month × days worked

For example, if your salary is RM2,000 and your last working day is 15 September:

RM2,000 ÷ 30 × 15 = RM1,000

So, your pro-rated September salary is RM1,000. The divisor follows the number of calendar days in that month: 30/31, or 28/29 for February.

Step 2: Check your Annual Leave balance

Next, check how much Annual Leave you have earned and how much you have already used. If you have unused leave, it should generally be paid as part of your final salary. If you have taken more leave than you have earned, the excess may be deducted, subject to the applicable rules and company policy.

Step 3: Calculate your earned Annual Leave

Your earned leave can be calculated based on the number of completed months worked and your yearly entitlement.

Formula:
Months worked ÷ 12 × yearly Annual Leave entitlement

For example, if you worked 7 months and your yearly entitlement is 8 days:

7 ÷ 12 × 8 = 4.67 days

The actual treatment of incomplete months and rounding should be checked against the applicable rules and company policy.

Step 4: Calculate the value of unused Annual Leave

Unused Annual Leave is generally paid based on the ordinary rate of pay, which for monthly-rated employees is calculated using monthly wages ÷ 26.

For a RM2,000 salary:

RM2,000 ÷ 26 = RM76.92 per day

If you have 2 unused days:

RM76.92 × 2 = RM153.84

Step 5: Add everything together

Using the example above:

• Pro-rated salary: RM1,000
• Unused Annual Leave: RM153.84
• Gross final payment: RM1,153.84

This is before any applicable statutory or other lawful deductions. If there is payment instead of serving the notice period, the amount due for the unserved notice period should also be included in the final calculation.

Understanding your final salary should not feel like solving a puzzle. Every employee deserves clarity, and every employer benefits from getting it right the first time, avoiding disputes and keeping trust intact.

If you are a business owner or HR personnel who wants to make sure your payroll and final settlement process always stays compliant and stress free, Kita Strategies is here to help. From day to day HR support to full payroll management, our team makes sure every calculation is accurate and every payment is on time, so you can focus on running your business while we take care of the details.