Malaysian severance pay is daily rate × entitlement days × years of service. Under the Employment (Termination and Lay-Off Benefits) Regulations 1980 the statutory minimum is 10 days of pay per year for under 2 years of service, 15 days for 2 to under 5 years, and 20 days for 5 years or more. An employee on RM4,000 with 6 years of service is entitled to 120 days of pay — about RM15,781 on the statutory basis.
Use basic pay plus fixed allowances — not your net take-home pay.
Your Estimated VSS Payout
| Calculation basis | Daily rate | Total days of salary | Gross compensation |
|---|---|---|---|
| Statutory minimum (Regulations 1980 formula) | RM131.51 | 120.0 | RM15,780.82 |
| Ordinary rate of pay basis (salary ÷ 26) | RM153.85 | 120.0 | RM18,461.54 |
Estimated tax on this compensation
Your statutory minimum payout is RM15,781 — roughly 3.9 months of salary, based on 20 days of pay per year for 6.0 years of service.
Why this score
- 6.0 years of service entitles you to 20 days per year of service.
- That is 120.0 days of pay at the statutory rate of RM131.51/day.
What to check
- If your employer uses the salary ÷ 26 basis, the payout rises to RM18,462 — a RM2,681 difference. Check your VSS offer letter.
- This falls within the RM60,000 tax exemption, so no tax is expected.
- This excludes outstanding wages, payment in lieu of notice, and unused annual leave.
Next steps
- Ask your employer to state the daily-rate formula used, in writing.
- Apply for PERKESO Job Search Allowance within 60 days of losing employment.
- Park the payout in a high-interest savings account before taking on any new commitment.
Sehingga RM225 Ganjaran — GX Bank FlexiCredit & Biz FlexiLoan
RM225Had kredit peribadi & perniagaan sehingga RM150,000. Kelulusan dalam minit.
Salary ÷ 26 or × 12 ÷ 365? The Gap Can Be Thousands
This is the detail that decides whether two people on identical salaries get identical payouts — and they often do not. Two daily-rate bases are in live use in Malaysia, and both are defensible:
| Basis | Daily rate (RM4,000 salary) | Payout, 6 years | Who uses it |
|---|---|---|---|
| Salary × 12 ÷ 365 | RM131.51 | RM15,781 | The Regulations 1980 formula — the statutory floor |
| Salary ÷ 26 | RM153.85 | RM18,462 | Ordinary rate of pay — what most HR teams apply |
Bottom line: the ÷ 26 basis pays more — RM2,681 more in the example above. Your employer cannot offer less than the statutory minimum, but may offer more. Ask for the daily-rate formula in writing in your VSS offer letter.
Entitlement by Length of Service: 10, 15 or 20 Days
| Length of service | Days of pay per year | Example (RM4,000 salary) |
|---|---|---|
| Under 2 years | 10 days | 1.5 years ≈ RM1,973 |
| 2 to under 5 years | 15 days | 4 years ≈ RM7,890 |
| 5 years or more | 20 days | 6 years ≈ RM15,781 |
Source: Employment (Termination and Lay-Off Benefits) Regulations 1980, via Jabatan Tenaga Kerja Semenanjung Malaysia (JTKSM). Incomplete years are pro-rated to the nearest complete month.
Tax on Severance: RM10,000 Exempt Per Completed Year
LHDN exempts RM10,000 for every completed year of service with the same employer or a company within the same group. If the termination is due to certified ill health, the compensation is fully exempt.
Example: 6 completed years gives an exemption of up to RM60,000. A RM15,781 payout falls entirely within it, so no tax is expected. If your VSS package were RM95,000, then RM35,000 would be taxable at your normal income tax rate.
Source: Lembaga Hasil Dalam Negeri (LHDN) — compensation for loss of employment, including VSS and MSS. Seek professional tax advice for your specific case.
What to Do After a VSS Offer
- 1Read the offer letter: confirm the daily-rate formula and length of service are stated in writing.
- 2Compare the offer against the statutory minimum using the calculator above. It cannot be lower.
- 3Add up what else is owed: outstanding wages, payment in lieu of notice, unused annual leave.
- 4Apply for PERKESO Job Search Allowance within 60 days of losing employment.
- 5Park the payout in a high-interest account first — avoid new commitments until income is stable again.
Life & Medical Insurance · Underwritten by FWD · 4.8 from 323,000+ reviews
Lost Your Company Medical Card? Replace It from RM1.38 a Day
A company medical card usually ends on your last working day, not at month end. Most people find out at a hospital counter. No medical check-up is required, so you can still get covered while you are between jobs.
Cover options
| Plan | Premiums start from | Plan maximum cover |
|---|---|---|
i-Med — Medical Card 18–45 | RM1.38/day ≈RM41/mo | RM60,000 annual limit · Unlimited lifetime limit · RM150/day hospital |
i-Care — Life Insurance 18–60 | RM0.32/day ≈RM10/mo | RM500,000 death · RM500,000 TPD · RM250,000 additional accidental death |
i-Protect — Critical Illness 18–60 | RM0.25/day ≈RM8/mo | RM100,000 cover · Cancer, stroke, heart attack |
The starting price and the maximum cover in this table are two separate things — the lowest premium does not buy the highest cover.
A real illustration from the Product Disclosure Sheet
A 30-year-old male on i-Care Plan C pays RM741.00 a year for RM500,000 death cover, RM500,000 TPD and RM250,000 additional accidental death.
Know before you buy
- Premiums are yearly renewable and NOT guaranteed — they increase with your age at renewal.
- Cover runs to age 81, subject to paying the renewal premium.
- Benefits are protected by PIDM up to limits.
- Exclusions apply (for example suicide within the first year, hazardous pursuits). The list is non-exhaustive — read the policy.
Why this fits after losing a job
- No medical check-up — eligibility does not depend on an employer
- Policy issued in about 2 minutes, no agent calls
- Small monthly cost while income is unsettled
Starting prices, which vary by age and gender. Monthly figures are the daily rate times 30. Check your actual quote and policy terms before buying. Not insurance advice. · August 2026
Related Calculators
Disclaimer: This calculator provides estimates only and is not legal, tax or employment advice. Actual compensation depends on your contract of service, employer policy and the daily-rate formula applied. Confirm with the Labour Department, PERKESO or an employment lawyer before making decisions. See the full disclaimer.
