What do you need to know to hire in Malaysia?

Employer EPF (Employees Provident Fund) is 13% where employee monthly salary is MYR 5,000 or below, and 12% above that ceiling. SOCSO (social security) adds 1.75% on wages up to MYR 6,000. EIS (Employment Insurance System) adds a further 0.4 percent on wages up to MYR 4,000. Malaysia has no 13th-month payment required by statute, though it is common in practice for bonuses. Teamed's Malaysia fee sits inside the total cost envelope, not outside it.

Teamed's Malaysia price is a starting rate, with zero FX in any currency pairing. No setup fees. No exit fees. Salaries, taxes, and benefits passed through at cost on every invoice.

The full breakdown, with worked examples at current statutory rates, is in the cost guide.

Forming a Malaysian Sdn Bhd requires registration with the Companies Commission (SSM), a paid-up capital of MYR 1, and ongoing statutory filings. Setup takes four to six weeks and comes with annual returns, auditor requirements above certain thresholds, and monthly payroll compliance. An Employer of Record is faster and cheaper at low headcount. Teamed runs Malaysian payroll, contracts, and statutory contributions from day one.

The crossover point depends on Malaysian salary levels and your accounting costs. For most tech roles it lands around 5 to 8 employees. The EOR vs entity guide runs those numbers.

Most EOR providers will not tell you when you have crossed it. We do, and we help you move. You progress from contractor to EOR to your own Malaysian entity on one platform under Teamed's Graduation Model, with tenure preserved.

The Employment Amendment Act 2022 brought the most significant overhaul to Malaysian labour law in decades. The standard working week dropped from 48 hours to 45 hours under Section 60A. Maternity leave extended from 60 days to 98 days of paid leave under Section 37. Statutory paternity leave of 7 days for married male employees with at least 12 months of service was introduced under Section 60FA.

The EA also extended coverage to all employees regardless of salary. Before 2023, Part-XII protections on hours and overtime applied only to employees earning MYR 2,000 a month or below. Coverage now applies broadly, with some provisions still salary-capped. The hiring guide covers the current scope in full.

Statutory annual leave rises with tenure under Section 60E of the Employment Act 1955. The floor is 8 days for the first two years. It rises to 12 days from two to five years and to 16 days after five years. These are working days, not calendar days. There are 11 paid federal public holidays, with states adding three to five more depending on location.

Sick leave is tiered too: 14 days under two years, 18 days from two to five years, and 22 days after five years. An additional 60 days of hospitalisation leave sits on top of ordinary sick leave each year. Maternity leave is 98 days paid for the first five surviving children. Statutory paternity leave is 7 days for married male employees with at least 12 months of service. The benefits guide covers each entitlement in full.

Malaysian payroll runs three parallel contribution streams. EPF (KWSP): employer 13% plus employee 11%, no upper wage ceiling. SOCSO (PERKESO): employer 1.75% plus employee 0.5%, capped at MYR 6,000 monthly wages. EIS (Employment Insurance): 0.4 percent each from employer and employee on wages up to MYR 4,000. All three contributions are due by the 15 daysth of the month following payment.

Employee income tax uses a progressive scale under the Income Tax Act 1967. The first MYR 5,000 of chargeable income is taxed at 0%. Rates then rise through 1% to 25% at MYR 100,001 to 400,000, and top out at 30% above MYR 2,000,000. PCB (monthly deduction at source) handles employee income tax within payroll. The tax and payroll guide sets out every band and threshold.

Notice under Section 12(2) of the Employment Act 1955 applies symmetrically to employer and employee. Termination benefits (severance) are owed once an employee completes 1 year of service and the termination is due to redundancy. The rate is 10 days of salary per year of service under two years, 15 days per year from two to five years, and 20 days per year after five years. Malaysia sets no monetary cap on total termination benefits.

Any employee can file a representation at the Industrial Court from day one of employment. There is no qualifying service period. Back wages at the Industrial Court are capped at 104 weeks of last drawn salary for confirmed employees. Any retrenchment due to redundancy or company closure requires filing a PK Form (Borang PK) with the nearest Labour Office at least 30 days before the termination takes effect. The termination guide runs the full process.

An employee can file an unfair dismissal claim from day one. Malaysia's Industrial Relations Act 1967 sets no minimum service period before a dismissed employee can seek representation at the Industrial Court. The court can award reinstatement or back wages up to 104 weeks of last drawn salary. This is a meaningful exposure for US employers used to at-will employment or to the UK's qualifying period model. The hiring guide covers how to structure a probation and how Teamed manages the process.

The EPF/SOCSO split confuses most cost models. EPF is a retirement savings fund with no wage ceiling: employer 13% plus employee 11%. SOCSO is the work-injury and social security fund, capped at MYR 6,000 of monthly wages. Running EOR cost models with only one of the two produces wrong numbers. The cost breakdown guide and the tax guide both walk through the correct combined figure.