Employer of Record in Malaysia

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Effortless hiring in

Malaysia

Malaysia is a diverse and multicultural country located in Southeast Asia. It is known for its iconic Petronas Twin Towers in Kuala Lumpur and the cultural heritage of Malacca and George Town. The country’s natural attractions include the rainforests of Borneo, Mount Kinabalu, and the beaches of Langkawi. Malaysian cuisine, a fusion of Malay, Chinese, and Indian influences, features dishes like nasi lemak and laksa. Festivals such as Hari Raya, Chinese New Year, and Deepavali reflect its rich cultural tapestry.

Languages

Malay

Population

33.8 Million

Capital City

Kuala Lumpur

Currency

Malaysian Ringgit (MYR)

Cost of living ranking

94th

VAT (Value Added Tax)

10%

Hiring in

Malaysia

Employment Contracts

Employment contracts can be oral or written; however, it is advisable to provide written contracts to ensure clarity. Contracts should detail:
Job responsibilities.
Compensation.
Working hours.
Leave entitlements.
Termination conditions.
The Employment Act 1955 mandates that any employment lasting more than one month must have a formal written agreement.

Probationary Period

While not mandated by law, probationary periods are common and typically last between three to six months. This allows employers to assess a new employee's suitability for the role.

Payroll Management in

Malaysia

Payroll Frequency

Employees are generally paid on a monthly basis, with payments made on or before the seventh day after the last day of any wage period.

Minimum Wage

As of May 2022, the minimum wage is set at RM1,500 per month for employees paid on a monthly basis. Regional variations may apply.

Overtime

The standard workweek is 48 hours. Overtime is compensated as follows:
1.5 times the hourly rate for normal working days.
2 times for work on rest days.
3 times for work on public holidays.
Overtime is limited to a maximum of 104 hours per month.

Bonuses

While not legally required, many employers provide annual bonuses or a 13th-month salary to enhance employee satisfaction and retention.

Taxation in

Malaysia

Employee Contributions

Employees Provident Fund (EPF): Employees contribute approximately 11% of their monthly salary.
Social Security Organization (SOCSO): Provides social security protection; contributions vary based on salary.
Employment Insurance System (EIS): Offers unemployment benefits; employees contribute around 0.2% of their salary.
Monthly Tax Deductions: Employers withhold income tax based on the employee's earnings.

Employer Contributions

EPF: Employers contribute approximately 12% of the employee's salary to the fund.
SOCSO: Employers also make contributions to ensure social security coverage.
EIS: Employers contribute approximately 0.4% of the employee's salary to the unemployment insurance system.

Leave in

Malaysia

Types of Leave in Malaysia

Annual Leave

Employees are entitled to paid annual leave based on their length of service:
Less than 2 years: 8 days.
2 to 5 years: 12 days.
More than 5 years: 16 days.

Sick Leave

Sick leave entitlements vary with tenure:
Less than 2 years: 14 days.
2 to 5 years: 18 days.
More than 5 years: 22 days.
An additional 60 days of hospitalization leave is provided if necessary.

Maternity Leave

Female employees are entitled to 98 consecutive days of maternity leave for each confinement, with full pay provided by the employer.

Paternity Leave

Male employees are entitled to 7 consecutive days of paid paternity leave for each confinement, up to five confinements.

Benefits in

Malaysia

Mandatory Benefits

EPF: A retirement savings scheme with contributions from both employer and employee.
SOCSO: Provides benefits in cases of employment injury and invalidity.
EIS: Offers financial assistance and employment services to unemployed workers.

Additional Benefits

Employers may offer supplementary benefits such as medical insurance, performance bonuses, and housing allowances depending on company policy.

Termination in

Malaysia

Notice Period

The required notice period for termination depends on the length of employment:

Less than 2 years: 4 weeks.
Between 2 to 5 years: 6 weeks.
More than 5 years: 8 weeks.

Termination Benefits

Employees earning up to RM4,000 per month are entitled to termination benefits based on their length of service:

Less than 2 years: 10 days' wages for each year of service.
Between 2 to 5 years: 15 days' wages for each year of service.
More than 5 years: 20 days' wages for each year of service.

Unfair Dismissal

Employees who believe they have been unfairly dismissed can file a complaint with the Industrial Relations Department within 60 days of dismissal.

ON THIS PAGE

Overview

Hiring

Payroll

Taxes

Leave

Benefits

Termination

Employment Contracts

Probationary Period

Payroll Frequency

Minimum Wage

Overtime

Bonuses

Employee Contributions

Employer Contributions

Types of Leave in Malaysia

Mandatory Benefits

Additional Benefits

Notice Period

Termination Benefits

Unfair Dismissal

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