Hiring in Malaysia: Complete Guide 2027
Everything you need to know about hiring and managing employees in Malaysia
Overview
Malaysia pairs a bilingual, English-contract workforce with employer on-costs of about 15% of gross: EPF at 13%, SOCSO at 1.75% and EIS at 0.2%, plus a 1% HRD Corp levy once an employer has ten Malaysian staff in a covered sector. The Employment Act 1955 has covered all employees since the 2022 amendments, and the Industrial Relations Act gives every dismissed employee a route to the Industrial Court. For a foreign hire, the Employment Pass is tied to the sponsoring employer, so an EOR with its own Sdn Bhd is the only way to employ without incorporating. EOR fees run USD 300 to 600 a month.
Currency
Primary Language
Payroll Tax
Pay Frequency
Overview
Employer Costs
Employer Social Contributions
Mandatory Benefits
EOR Service Fee
Total Additional Cost
Employee Deductions
Income Tax
Employee Social Contributions
Mandatory Employee Benefits
PAYROLL & SETUP
Setting Up Payroll in Malaysia
Payroll in Malaysia runs monthly, with wages due within seven days of the end of the wage period. An employer registers with SSM, then with KWSP (EPF), PERKESO (SOCSO and EIS) and LHDN for an employer E number. EPF: employee 11%, employer 13% on wages up to RM5,000 a month and 12% above, read from the Third Schedule tables and rounded up to the ringgit; non-Malaysian employees and their employers each pay 2% since the October 2025 wage cycle. SOCSO: 1.75% employer and 0.5% employee for the Employment Injury and Invalidity schemes, EIS 0.2% each, both on wages capped at RM6,000. HRD Corp takes a 1% levy from employers with 10 or more Malaysian staff in covered sectors. Income tax is withheld monthly as PCB and remitted by the 15th; the EA form goes to each employee by the end of February, Form E to LHDN by 31 March. Minimum wage: RM1,700 a month since 1 February 2025. An EOR files all of it under its own employer numbers.
Key Labor Laws &
Requirements
Employment Contracts
- Written contract required under the Employment Act 1955
- Probation usually 3 to 6 months
- 45-hour week, overtime at 1.5x
Leave & Time Off
- 8 to 16 days annual leave by tenure
- 14 to 22 days sick leave plus 60 hospitalised
- Maternity 98 days, paternity 7 days, 11 public holidays
Termination Rules
- Notice 4 to 8 weeks by tenure
- Just cause and excuse required; claims go to the Industrial Court
- Retrenchment benefit 10 to 20 days per year of service
COMPLIANCE
Employment Pass and Termination Compliance in Malaysia
Two things decide a Malaysian hire. For a non-Malaysian, the Employment Pass goes to a sponsoring employer registered with the Expatriate Services Division: Category I from RM10,000 a month, Category II from RM5,000, Category III from RM3,000. The pass does not move with the employee, so the EOR's own Sdn Bhd holds it. For everyone, termination needs just cause and excuse under the Industrial Relations Act 1967: a dismissed employee has 60 days to file at the Industrial Court and an award can reach 24 months' back wages. Notice runs 4, 6 or 8 weeks by tenure; retrenchment benefits under the 1980 Regulations are 10 to 20 days' wages per year of service. A 3 to 6 month probation does not remove the just-cause test.
Key Challenges
- Employment Pass tied to the sponsoring employer, so the EOR's own entity must hold it
- EPF at 13% employer up to RM5,000 a month, 12% above, read from wage tables
- Unfair dismissal awards at the Industrial Court can reach 24 months' back wages
- Monthly PCB withholding, EA forms by end of February, Form E by 31 March
- HRD Corp levy of 1% once an employer has 10 Malaysian staff in a covered sector
Country Highlights
Advantages
- English contracts are standard
- Employer on-costs of about 15% of gross, among the lowest in the region
- Minimum wage RM1,700 a month since 1 February 2025, well under regional hubs
- Kuala Lumpur shared-service centres and the Penang electronics cluster
- Onboarding through an EOR in 2 to 5 days
Popular Industries & Roles
Technology
Avg. Salary: RM90k-RM180k
Kuala Lumpur and Cyberjaya host regional engineering teams for fintech, e-commerce and SaaS, with English as the working language
Shared Services & Finance
Avg. Salary: RM72k-RM150k
Kuala Lumpur runs finance, HR and procurement shared-service centres for multinationals, staffed by bilingual accountants and analysts
Electronics & Semiconductors
Avg. Salary: RM66k-RM140k
Penang's electronics cluster supplies semiconductor test, packaging and process engineers to the world's chipmakers
Top 3 Providers in Malaysia
Based on our analysis of pricing, compliance record, service quality, and customer reviews
GotPaid (Great Pyramid)
- Malaysia + ASEAN EOR — 5 countries
- 450+ clients; SOBA Award 2022–2023
- RemoFirst partner; 8 immigration passes
- Founded 2008; IPO planned 2029
AYP Group
- APAC-owned entities in 14+ markets
- From $488/month EOR; $28/month payroll
- JuzTalent HRIS platform included
- No minimum headcount, transparent pricing
Multiplier
- 110+ owned entities; 150+ countries
- Flat $459/month annual or $499 monthly
- APAC heritage; 3,700+ companies served
- ESOP and equity administration included
Frequently asked questions
Hiring in Malaysia through an EOR, in short.
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Two minutes, ten providers ranked for your brief.
How much does an employer pay on top of salary in Malaysia?
Employer contributions in Malaysia come to ≈15%; the largest mandatory line is EPF 13%. With the other statutory benefits and a typical EOR fee, budget ~25–40% on top of gross salary.
What does an EOR charge per employee in Malaysia?
Published EOR fees in Malaysia run $300–600/mo per employee per month, with any setup fee negotiated separately. The fee is flat, so it weighs less as the salary rises.
What does an employee in Malaysia pay in tax and contributions?
Income tax is 0–30% progressive and employee social contributions are 11.7% (11% EPF), both withheld by the employer on every pay run.
How long does it take to hire through an EOR in Malaysia?
2-5 Days once the employee's documents are in. The contract is issued by the EOR's local entity and payroll runs on the local cycle (Monthly).
Which EOR providers rank best in Malaysia?
GotPaid (Great Pyramid), AYP Group and Multiplier hold the first three places in our ranking for hiring in Malaysia. The full top 10, with the questions to put to each provider before signing, is here: Top 10 EOR providers in Malaysia.
Find a better EOR — without risk
Compare EOR providers to gain insights on cost, coverage, and contract flexibility, ensuring compliance and payroll continuity.
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