Cracks in the Code: Forms and Legal Loopholes Fueling Wage Theft in Malaysia in Comparison with Australia

Abstract

Wage theft remains a pervasive issue in Malaysia despite the existence of legal frameworks such as the Employment Act 1955 and related enforcement mechanisms, as Malaysian law addresses wage-related violations without expressly criminalising wage theft. In contrast, Australia has adopted a stronger regulatory approach by criminalising intentional wage theft under the Fair Work Act 2009. This study examines the legal frameworks, forms and impacts of wage theft in Malaysia by drawing comparative insights from Australia’s more stringent legal and enforcement model. It specifically analyses the legal loopholes that allow wage theft to persist in Malaysia and evaluates how Australia’s approach may offer useful lessons for reform. Using a qualitative comparative methodology, the study analyses primary legal materials, including International Labour Organization instruments, Malaysia’s Employment Act 1955, the Employment Act (Amendment) 2022 and Australia’s Fair Work Act 2009, alongside secondary sources such as academic literature, policy papers, research reports and newspaper articles. The findings reveal that wage theft occurs through non-payment, late payment, illegal deductions, withholding of statutory entitlements and discriminatory wage practices, all of which cause significant financial, social and psychological harm to workers. These problems persist due to legal loopholes, weak enforcement, limited deterrence and barriers faced by workers in accessing remedies. This research contributes to the existing literature by identifying specific legal and enforcement gaps in Malaysia and proposing actionable reforms to strengthen worker protection, improve enforcement effectiveness and support a fairer labour regulatory framework.