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Global Expansion Guide

Malaysia

Manage and pay your employees easily with BIPO in Malaysia and 170+ other markets. Build your international teams today with our global Employer of Record service!

employment guide_currency

Currency

Malaysian Ringgit (MYR)

employment guide_language

Language

Bahasa Malaysia

employment guide_capital

Capital

Kuala Lumpur

Employer of Record Malaysia

Employment Contract

Statutory Contributions

Minimum Wage

Public Holidays

Working Hours

Probationary Period

Leave

Termination and Compensation

BIPO as your Employer of Record

Benefits of BIPO EOR Service in Malaysia

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Employer of Record Malaysia

Embark on your business expansion in Malaysia with BIPO’s Employer of Record (EOR) services. Designed to assist you in navigating the intricacies of local employment laws and regulations, we can help ensure a smooth transition for your business and workforce.

As an Employer of Record (EOR), we act as your legal employment entity, streamlining the process of business expansion. Allowing businesses to focus on their core business operations while the EOR manages all aspects of compliance, payroll, HR, and employee benefits when venturing into the Malaysian market. An EOR provider addresses the common challenges associated with local employment laws, payroll regulations, and work permit requirements.

This guide was last updated on 8 April 2025. The content in this guide is current as of this date and based on common business practices.

Employment Contract

Employment Contracts must be in written form and include the following details:

  • Type of employment
  • Scope of employment
  • Compensation & benefits
  • Notice of terminations
  • Retirement
  • Confidentiality
  • Transfer

Statutory Contributions

Item  Detail  Employer Contribution  Employee Contribution
Pension (EPF / KWSP: Kumpulan Wang Simpanan Pekerja)  Retirement Benefits

I. Employees ≥ 60 years old:

  1. Malaysian: 4%
  2. PR non-Malaysians (registered as member before 1 August 1998) whose monthly salary ≤ RM 5,000: 6.5%
  3. PR non-Malaysians (registered as member from 1 August 1998) whose monthly salary ＞ RM 5,000: 6%

II.Employees ＜ 60 years old:

  1. Malaysian or PR whose monthly salary ≤ RM5,000: 13%
  2. Malaysian or PR whose monthly salary ＞ RM5,000: 12%
  3. Non-Malaysians: RM 5 per person

I. Employees ≥ 60 years old:

  1. Malaysian: 0
  2. PR non-Malaysians (registered as member before 1 August 1998): 5.5%
  3. PR non-Malaysians (registered as member from 1 August 1998): 5.5%

II. Employees ＜ 60 years old:

  1. Malaysian or PR whose monthly salary ≤ RM5,000 : 11%
  2. Malaysian or PR whose monthly salary ＞ RM5,000: 11%
  3. Non-Malaysians: 11%
Employment Insurance System (EIS)  Employment Security 

I.Employees ≥ 60 years old: 0

II. Employees ＜ 60 years old:

  1. Malaysian or PR whose monthly salary ≤ RM6,000: 0.2%
  2. Malaysian or PR whose monthly salary ＞ RM6,000: RM 11.9 per month

III.Non-Malaysians: N/A

I.Employees ≥ 60 years old: 0

II. Employees ＜ 60 years old:
  1. Malaysian or PR whose monthly salary ≤ RM6,000: 0.2%
  2. Malaysian or PR whose monthly salary ＞ RM6,000: RM 11.9 per month

III. Non-Malaysians: N/A
Pertubuhan Keselamatan Social Malaysia in BM (SOCSO/ PERKESO)  Social security 

I. Employees ≥ 60 years old and non-Malaysians: 1.25%, capped at RM74.40

II. Employees ＜ 60 years old:
  1. Malaysian or PR whose monthly salary ≤ RM6,000: 1.75%
  2. Malaysian or PR whose monthly salary ＞ RM6,000: RM 104.15

I. Employees ≥ 60 years old and non-Malaysians: 0

II. Employees ＜ 60 years old:
  1. Malaysian or PR whose monthly salary ≤ RM6,000: 0.5%
  2. Malaysian or PR whose monthly salary ＞ RM6,000：RM 29.75
Human Resources Development Fund (HRDF) Training and improvement of professional skills 

I.Employers with 10 employees: mandatory, 1%

II. Employers with 5-9 employees: voluntary, 0.5%

 –
– Total About 15%  About 11.7% 

Minimum Wage

Effective 1st of February 2025, the minimum wage rates of Malaysia are set as follows:

Minimum Wage Rates
Monthly Daily Hourly
RM 1,700 Number of working days in a week RM 8.72
6 5 4
RM 65.38 RM 78.46 RM 98.08

Public Holidays

The public holidays in Malaysia for 2025 are listed below. Please refer to official announcements from the Malaysian government for the latest updates.

Holiday NameDate 
New Year Day1 January 2025
Chinese New Year29 January 2025
Chinese New Year Holiday30 January 2025
Nuzul Al-Quran18 March 2025
Hari Raya Aidilfitri31 March 2025
Hari Raya Aidilfitri Holiday1 April 2025
Labour Day1 May 2025
Wesak Day12 May 2025
Agong’s Birthday2 June 2025
Hari Raya Haji2 June 2025
Awal Muharram27 June 2025
Merdeka Day31 August 2025
Merdeka Day Holiday1 September 2025
Prophet Muhammad’s Birthday5 September 2025
Malaysia Day16 September 2025
Deepavali20 October 2025
Christmas Day25 December 2025

Working Hours

Normal Working Hours

  • Employees may work up to 8 hours per day and no more than 45 hours per week.
  • For non-continuous working hours, the daily hours may be spread over a maximum span of 10 hours.

  • With mutual agreement between employer and employee, working hours may be redistributed so that on certain days employees work fewer than 8 hours.

    • In such cases, working hours on the remaining days may exceed 8 hours, but must not exceed 9 hours per day, and weekly hours must still not exceed 45 hours.

Shift Work

  • For shift workers, the average working hours over any 3-week period must not exceed 45 hours per week.
  • For periods exceeding 3 weeks, prior approval from the Director-General is required.

Task Work

  • Under the Employment (Part-Time Employees) Regulations 2010, part-time employees must receive benefits similar to full-time staff, including overtime pay, annual leave, sick leave, and public holidays.

  • Definitions under the regulations:

    • Part-time employees: Work 30–70% of full-time hours.
    • Casual employees: Work below 30% of full-time hours (exempt from the regulation).
    • Full-time employees: Work more than 70% of full-time hours.

Rest Time

  • Employees working more than 5 consecutive hours are entitled to a minimum 30-minute break.

  • Employees are entitled to one rest day per week.

    • The rest day may be non-fixed and determined from time to time by the employer.
    • This does not apply during maternity leave, sick leave, or periods of temporary disability.

Night Work

  • Female employees must not be required to work between 7:00 pm and 5:00 am.
  • No employee may start work for the day without having had 11 consecutive hours of rest beforehand.

Overtime

  • Any hours worked beyond standard working hours are considered overtime.

  • Employers must not require employees to work:

    • More than 12 hours in a single day, under any circumstances.
    • More than 104 overtime hours per month.

  • Overtime pay rates:

    • Weekdays: At least 1.5× the normal hourly rate
    • Rest days / Weekends: 2× the normal hourly rate
    • Public holidays: 3× the normal hourly rate

Rest-Day Work Compensation

  • Hourly or daily-rated employees:

    • ≤ Half of normal daily hours: 1 day’s wage at the normal rate
    • Half of normal daily hours: 2 days’ wages at the normal rate

  • Monthly-rated employees:

    • ≤ Half of normal daily hours: 1.5 days’ wages at the normal rate
    • Half of normal daily hours: 2 days’ wages at the normal rate

Probationary Period

There are no statutory provisions governing probationary periods.

In practice, the standard duration is three months. Employers may extend the probation period if the employee’s performance is deemed unsatisfactory; however, it is common practice in the Malaysian market not to exceed six months in total.

Leave

Statutory leave in Malaysia includes:

Type

Applicable to

Details

Paid Annual Leave

All Employees

8-16 days (according to the length of services)

Pregnancy and Maternity Leave

Female Employees

98 days (effective 1st January 2023, only provided for the first five children of eligible employees)

Paternity Leave

Male Employees

7 days (effective 1st January 2023)

Paid Sick Leave

All Employees

14-22 days, hospitalisation leave is up to 60 days.

Termination and Compensation

Termination Notice

Length of Employment

Notice Period of Termination

Employed ＜ 2 years

4 weeks

Employed ≥ 2 year, but ≤ 5 years

6 weeks

Employed ＞ 5 years

8 weeks

Compensation

Length of Employment

Severance Payment

Employed ＜ 1 year

On a pro-rata basis according to the latest monthly wage

Employed ＜ 2 years

10 days wage for every served year

Employed ≥ 2 year, but ≤ 5 years

15 days wage for every served year

Employed ＞ 5 years

20 days wage for every served year

BIPO as your Employer of Record

BIPO’s total HR solutions include our award-winning HR Management System, Global Payroll Outsourcing, Employer of Record service, and Athena BI.

As your EOR partner, our services are designed to provide a comprehensive, hassle-free experience:

  • Initial Consultation: The journey typically begins with an in-depth discussion to understand your specific business needs, ensuring our EOR services perfectly align with your objectives.
  • Payroll Management: We offer a streamlined payroll system that ensures timely and accurate salary disbursement, complete with statutory deductions and contributions in full compliance with Malaysian regulations.
  • Contributions and Taxes: Our expertise in managing local social security requirements ensures your business complies with in-country financial obligations.
  • Compliance with Minimum Wage and Working Hours: We guarantee that your employment practices adhere to the Malaysian minimum wage and working hours standards, safeguarding your business against potential legal issues.
  • Leave and Paid Time Off Management: Implement and manage leave policies that comply with Malaysia’s laws, ensuring a fair and transparent leave management system for your employees.
  • Regulatory Compliance: Stay ahead of local labour laws and regulations with our up-to-date compliance services, minimising legal risks for your business.
  • Other services: Work visa, permit applications, termination procedures.
Services may vary across countries.

Benefits of BIPO Employer of Record Service in Malaysia

Unlock your growth potential with BIPO’s Employer of Record service in Malaysia. Our EOR service empowers businesses with seamless scalability while ensuring regulatory compliance.

From smooth onboarding to risk mitigation, BIPO handles the administrative HR tasks, enabling companies to concentrate on core business functions and accelerating growth. Our local expertise and global reach ensure efficient operations, enhancing flexibility and reducing operational complexities.

Stay up to date with the latest employment regulations.

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Frequently Asked Questions

An Employer of Record (EOR) is a partner company that acts as the official employer for your employees. 

An EOR company handles all the HR aspects and processes, including the legal complexities associated with regulatory and tax compliance.

As your EOR, BIPO supports your organisation by providing a comprehensive range of HR, payroll and advisory services to ensure your business stays compliant. These include end-to-end on/offboarding services for your employees (e.g.: payroll processing, HR and benefits administration, labour contracts, visa applications, payroll/tax compliance, and more).

By engaging BIPO as your EOR, your business benefits from: 

  • Compliance in the global markets where you operate
  • Reduced costs and risk mitigation
  • Overall workforce productivity, effectiveness, and efficiencies

A global EOR benefits organisations regardless of size or industry. It is especially useful for organisations that want to:

  • Scale their global business and be fully operational in foreign markets quickly
  • Reduce financial and HR complexities while expanding internationally
  • Minimise time spent trying to understand local labour laws and foreign tax systems
  • Stay compliant across global markets while reducing HR and administrative workflows
  • Benefit from a centralised and intuitive cloud HR platform to manage international teams

A global EOR enables businesses to fast-track their market entry into international market, and reduce the complexities of setting up multiple foreign entities.

When you partner with BIPO, we take on the the day-to-day administrative tasks, while you maintain full control of the business and delegate HR workflows and hiring needs.

Our vast network of business partners across 170+ markets globally supports your business expansion plans, with in-country HR experts providing localised support. Going global has never been easier!

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