Payroll & Employment Guide: Malaysia

Hiring Guide

If you want to hire remote workers in Malaysia, ensure compliance with employment contracts, minimum wage regulations, and mandatory social security contributions such as EPF, SOCSO, and EIS. Explore salaries, benefits, payroll taxes, employment costs, and legal requirements for hiring in Malaysia.

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Employee Benefits

Employers in Malaysia must offer statutory benefits required by labour regulations. Many companies also provide additional perks to attract and retain talent.

Mandatory Benefits

• Statutory paid leave (minimum 8–16 days)
• Sick leave and hospitalisation leave
• Maternity & paternity leave
• EPF (Employees Provident Fund)
• SOCSO (Social Security Organisation)
• EIS (Employment Insurance System)
• Overtime pay as applicable

Leave Policies

Annual Leave:

8–16 days per year depending on tenure.

Sick Leave:

14–22 days, depending on tenure; additional hospitalisation leave up to 60 days.

Parental Leave:

• Maternity leave: 98 days
• Paternity leave: 7 days (private sector adoption varies)

Healthcare

Malaysia has both public healthcare and private medical systems.

• Employees covered under SOCSO receive certain medical protections.
• Many employers offer private medical insurance as a competitive benefit.

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Taxes in Malaysia

Income taxes in Malaysia support public services and social programs. Employers must deduct monthly tax through the MTD (Monthly Tax Deduction) system.

Personal Income Tax Rates:

Progressive 0% to 30% depending on income levels.

Tax Allowances & Reliefs:

Employees may benefit from:

• Personal tax relief
• Spouse/child relief
• EPF/insurance relief
• Lifestyle and education allowances

Employers are responsible for deducting tax and statutory contributions.

Payroll in Malaysia

Employers must pay employees according to the employment contract and ensure compliance with statutory minimums.

Base Salary

Base salary depends on role, industry, and tenure, but must meet or exceed statutory minimum wage.

Payment Schedule

Salaries are typically paid monthly, on the last working day of the month.

Additional Payments

• Bonus (commonly annual or performance-based)
• Allowances (transport, meal, housing) depending on company policy

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Taxes and Social Security

Employers must contribute to:

EPF (Employees Provident Fund)

• Employer: ~12–13%
• Employee: 11%

SOCSO (Social Security)

Covers workplace accident and disability.

EIS (Employment Insurance System)

Provides unemployment benefits.

Payroll Reporting

Monthly:

• EPF, SOCSO, and EIS payments
• Monthly tax deductions

Annual:

• Employee tax forms (EA form)
• Employer annual return (Form E)

Payroll Deadlines:

• Salary: Monthly
• Contributions: Monthly
• Tax filings: As per LHDN deadlines

Payroll Currency: MYR

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Legal Regulations

Malaysia's labour laws are set out in:

• Employment Act
• Industrial Relations Act
• EPF Act
• SOCSO Act

Total Employment Cost:

Employer contributions typically add 15–20% to gross salary.

Work Permits & Visas for Malaysia

Foreign nationals require a valid work permit or pass depending on the job.

Types of Permits

• Employment Pass
• Professional Visit Pass
• Residence Pass – Talent (RP-T)

Learn more about work permits in Malaysia

Employer of Record in Malaysia

EOR services in Malaysia allow companies to hire employees legally without establishing a local entity, while ensuring full compliance with Malaysian labor regulations.

This enables businesses to enter the Malaysian market quickly and cost-effectively. All local employment responsibilities are managed on your behalf, reducing administrative and compliance risks.

Your EOR handles:

• Employment contracts compliant with Malaysian labor laws
• Monthly payroll processing and salary disbursements
• EPF, SOCSO, and EIS statutory contributions
• Employee onboarding and offboarding processes
• HR compliance and employment administration

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PEO Services in Malaysia

PEO services in Malaysia support companies with a local entity by managing HR, payroll, and compliance functions, helping businesses operate efficiently while staying compliant with local labor laws.

This allows employers to streamline workforce operations while retaining full control over their employees. Local HR expertise ensures ongoing compliance with Malaysian employment regulations.

PEO services assist with:

• HR administration and employee record management
• Monthly payroll processing and statutory deductions
• EPF, SOCSO, and EIS benefits administration
• Compliance with Malaysian labor laws and regulations
• Employee onboarding and offboarding support

Learn More About PEO in Malaysia

Payroll Calculator

Estimate salaries, contributions, and deductions in Malaysia using Dhi ADT's payroll calculator.

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