EPF adds 13% to every salary you pay in Malaysia for employees under 60. That’s the employer’s mandatory contribution to the Employees Provident Fund — on top of the employee’s own 11%. Total system contribution is 24% of gross salary. This is not optional, it does not scale back for senior roles, and it applies from the first payslip. Get this into your cost model before you extend an offer.
Malaysia Employment at a Glance
| Detail | Value |
|---|---|
| Currency | Malaysian Ringgit (MYR) |
| Official Language | Bahasa Malaysia (English widely used in business) |
| Labour Regulator | Department of Labour (JTKSM) |
| Working Week | 45 hours maximum |
| Annual Leave | 8–16 days depending on tenure |
| Probation Period | Typically 3–6 months |
Mandatory Contributions
EPF (Employees Provident Fund)
Malaysia’s primary retirement savings scheme — mandatory for all employees:
| Employee Age | Employer | Employee |
|---|---|---|
| Under 60 | 13% | 11% |
| 60 and above | 4% | 0% |
SOCSO (Social Security Organisation)
Covers work injury and invalidity benefits:
- Employment Injury Scheme: 1.25% employer only
- Invalidity Scheme: 0.5% employer + 0.5% employee (for employees under 60)
EIS (Employment Insurance System)
Provides unemployment benefits:
- 0.4% employer + 0.4% employee (capped at MYR 4,000/month salary)
Human Resource Development Fund (HRDF)
Applicable to certain industries with 10+ employees: 1% of monthly wages. Your EOR identifies whether your headcount and industry triggers this levy.
Employment Act 1955
The Employment Act covers employees earning up to MYR 4,000/month and all manual workers regardless of salary. Key entitlements:
- Annual Leave: 8 days (1–2 years’ service), 12 days (2–5 years), 16 days (5+ years)
- Sick Leave: 14–22 days per year depending on tenure
- Maternity Leave: 98 consecutive days
- Public Holidays: 11 gazetted federal holidays
Employees above MYR 4,000/month are not covered by all Employment Act provisions, but core protections against unjust dismissal under the Industrial Relations Act 1967 still apply to everyone.
Using an EOR in Malaysia
EOR providers with strong Malaysia coverage:
- Deel — owns a Malaysian entity, strong coverage
- Multiplier — excellent Malaysia coverage, ASEAN-focused team
- Remote — covers Malaysia
- Oyster — covers Malaysia
Multiplier is consistently recommended for Malaysia given its Singapore HQ, ASEAN operational depth, and competitive pricing in this market.
Key Considerations
Foreign workers: Malaysia’s foreign worker categories — Employment Pass (EP), Professional Visit Pass (PVP), and others — have specific eligibility requirements, salary thresholds, and employer quota obligations. EOR providers manage permit applications for eligible roles, but confirm the specific pass category your hire qualifies for before committing.
Minimum wage: The national minimum wage is MYR 1,500/month as of February 2023. Your EOR applies this floor; for employees working in higher cost-of-living areas, check whether any sector-specific or municipal adjustments apply.
Termination: The Employment Act and Industrial Relations Act both protect against unfair dismissal. Termination for cause requires documented grounds and a fair process — failure to follow procedure can result in an Industrial Court claim for reinstatement or compensation. Your EOR manages the process; don’t attempt termination unilaterally without their involvement.
