Employer of Record (EOR) in Malaysia

Introduction

With more than 5% GDP growth in these two years, Malaysia is telling the world about the rapid development of its economy. As one of the most prosperous emerging markets in Southeast Asia, Malaysia has attracted numerous investors to develop their businesses there. Planning to build a remote team in this island country but having no idea of it? You will acquire a more comprehensive understanding of recruitment in Malaysia after reading this article. Furthermore, we will include how we can help you with the Employer of Record (EOR) in Malaysia.

Working hours

The standard working hour per week is 40, which is 5 full days with 8 hours each day.

Payroll in Malaysia

Basic required regulations
  • Employers should provide pay slips to their employees. It should include the accurate amount of payment and related deductions.
  • Employers should keep the employees’ records, which include their payroll information.
  • Employers can pay employees through direct cash, bank transfers, or a cheque.
  • The salary payments should be made before the 7th of each month.
Minimum wages

The average minimum wage in Malaysia is RM1,500.

Overtime payments

Employees working more than eight hours per day or 45 hours per week should receive compensation of at least 1.5 times their basic income for overtime work.

Mandatory welfare in Malaysia

Employees Provident Fund (EPF)
  • EPF is mandatory for Malaysian employees but voluntary for foreign workers and expatriates without permanent resident status.
  • The percentage of a Malaysian employee’s income that contributes to EPF depends on their total income and age.
Social Security Organization (SOCSO) insurance
  • Includes the Employment Injury Scheme and the Invalidity Pension Scheme
  • Foreigners working in Malaysia do not have to make a SOCSO contribution; but employers should cover that for them
  • Employees below 60 years old who work for a private company in Malaysia are covered
Employment Insurance System (EIS)
  • Only Malaysian citizens and permanent residents can be protected under this system.
  • Both employees and employers need to pay 0.2% of the employees’ income for EIS until reaching the maximum of RM 9.90.
Leaves
  • Annual leaves
    • < 2 years with the employer: 8-day annual leave
    • > 2 but < 5 years with the employers: 12-day annual leave
    • > 5 years with the employer: 16-day annual leave
  • Public holidays
  • Sick leaves
  • Maternity leaves
  • Paternity leaves
  • Hospitalization leaves, etc.

Taxation in Malaysia

Malaysia has a progressive tax rate for personal income tax. It ranges from 0% to 30%, depending on which tax band an employee falls into. As for the corporate income tax, the standard tax rate is 24% for both resident and non-resident companies.

Recruitment in Malaysia

  • Recruitment of employees in Malaysia requires a legally written employment contract.
  • Please note that the recruitment and employment processes should strictly adhere to the Employment Act 1955 in Malaysia.

How can FastLane HR offer help?

FastLane HR aims to provide comprehensive and high-quality advisory services in EOR, including payroll, taxation, recruitment, labor welfare, etc. No matter which type of business you are going to operate, you can immensely enjoy cost-effective services when building your remote team with our professional help. Besides, we ensure all services are compliant with regulations and laws. Should you have any inquiries regarding the EOR services, please contact us via WhatsApp, WeChat, or phone calls. You can also schedule a meeting with us for further information. We look forward to seeing you.