Hire in Malaysia

Employer of Record(EOR) in Malaysia

Malaysia Workforce Unlocked: How Employer of Record Makes Hiring Easy

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At a Glance

Capital City
Kuala Lumpur
ChaadHR entity
Own Entity


Hire employees
$299.00 / month
Hire contractors
$49.00 / month


Malaysia’s ongoing economic growth is all due to its high labor productivity. The International Monetary Fund has considered Malaysia as the 4th largest economy in Southeast Asia. The manufacturing industry has been the greatest contributor to their success since the 1960s and continues to do so as the country is averaging at a 4.3% GDP growth rate.

Major Economic Hubs:

Kuala Lumpur, Georgetown And Johor Bahru

Skills in Demand:

Programmer Or Software Engineers, Information Technology (IT) Specialists, Data Scientists/ Data Analysts / Data Engineers. Computer Science – Cybersecurity, Digital Forensics, Blockchain

Public and Provincial Holidays

Employee Leaves


Resident Tax Information

All resident employees in Malaysia are taxed on their worldwide income, while nonresident individuals are taxed on their income derived in Malaysia.

The income tax rates in Malaysia are progressive depending on the income earned.

Income tax for Malaysian citizens and citizens are

Non-resident employees in Malaysia face a flat rate of 30% taxation on their total annual income.

The rate of tax for qualified knowledge workers in Iskandar Malaysia is 15%.

Malaysia is a country that has an approved returning expert program, and it taxes its residents at 15%. The tax rate applies for five more years on income from employment if they're working there as well.

Social Security

All employers must enrol their employees in Malaysian social security. Social security covers the following areas

  • Employment Injury Insurance Scheme (EIIS)
  • The Invalidity Pension Scheme (IPS)

The social security contributions (Employment Provident Funds or EPF) for employers and employees for Malaysian citizens include

Statutory Benefits

Statutory benefits are the most basic type of employee benefit and they're required by law. These types vary depending on what country you live in as well, but usually include medical insurance or retirement funds for example.

The statutory benefits in Malaysia include

All employees are automatically enrolled in Malaysia's social security system. This comprehensive plan provides ample benefits to individuals, including retirement funds and Provident Fund which can be used for any purpose of your choosing- whether it is medical emergencies or just an emergency fund!

The employer and employee each make a monthly contribution to their individual accounts.

  • Employment Injury Insurance Scheme (EIIS­
  • The Invalidity Pension Scheme (IPS)

The amount contributed depends upon the employee's monthly salary with a maximum ceiling of

  • MYR 69.05 for an employer
  • MYR 19.75 for an employee

The EIS is a great way to ensure that you will be able continue making contributions in case your employment ends. If an individual isn't working due loss of job, they can still receive benefits from this system which include help with finding another position as well re-training programs on what else might suit them better!

The employer must contribute 0.2% of an employee's average monthly salary with a maximum ceiling that cannot exceed MYR 790 per month (about $100).

All employees, whether they are hourly workers or not should be entitled to a certain number of leaves under the Malaysian employment laws. Employers commonly provide more than what is required by law so that their staff can take time off without worrying about job security while on leave-of course as long it doesn't disrupt any work schedules too much!

The employee is expected to pay holiday or 13th-month wages when they complete one year (or 12 months) with an employer. The contract must specify the amount that's due at each occasion

Malaysia's labor laws were recently updated to include a maximum of 48 hours per week, or eightqual time daily. Employees in the country commonly work between 9am-6pm on any given day and take care off their jobs related obligations outside office hours as well

Overtime hours and overtime pay is regulated by  

  • The Malaysian Employment Act
  • The employment contract
  • The collective agreements

As stated by the Employment Act, employers must pay an

  • Overtime rate of 150% of an employee's regular salaray
  • Overtime pay rate of 200% of an employee's regular salary if the employees have worked on weekends and rest days
  • Overtime pay rate of 300% of an employee's regular salary if the employee has worked overtime on public holidays.

Fringe Benefits

Fringe benefits are commonly provided to employees in addition to all the statutory benefits for a smoother execution of their roles and responsibilities.

Commonly provided fringe benefits in Malaysia include

  • Additional paid days off
  • House rent allowance
  • Flexible working hours
  • Company vehicle/transportation
  • Meal vouchers/canteens at the workplace
  • Contribution toward an employee’s education

Exempt Benefits

Long-term incentives are benefits commonly provided by employers to their employees who have a time horizon of one year (or 12 months).

These benefits include

  • All expenses that are of a domestic and private
  • Subscriptions that pertain to an individual's profession
  • Mortgage interest expenses
  • Medical expenses
  • Contributions toward governmental pension or provident funds
  • Education fees

Long-term Incentives

Long-term incentives are a great way to Show your appreciation for the hard work that goes into each day. These one year or 12 monthlong term benefits can be awarded at any time, and they're available almost immediately after an employee has met certain criteria (such as holding strategic position).

Certain long-term incentives commonly provided to employees include

  • Private life insurance
  • Group health insurance with dental covers
  • Performance-based incentives
  • Although not widely provided, certain employers (especially startups) provide employee stock options.

Termination/Severance in Malaysia

Termination Process

Malaysia observes a  pro-employee system.  When terminating an employment contract, Employers must send out a notice with a just reason for dismissal. Employees will then have the opportunity to provide an explanation, challenge the employer’s decision or accept it.

Notice Period

Malaysian employees under the probationary period will have up to 30 days of notice period. On the other hand, Malaysian employees after probation will have up to 3 months of probation period.

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With our Employer of Record(EOR) network you don't need to set up entities to hire full-time talent abroad. We help you hire in 150+ countries and ensure 100% compliance with local laws.

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We take care of all the details to make sure you comply with local laws, including those related to taxes, social security, the minimum salary, termination regulations, and more.

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