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!

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Currency

Malaysian Ringgit (MYR)

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Language

Bahasa Malaysia

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Capital

Kuala Lumpur

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.

Employment Contract

Employment Contracts must be in written form and include below contents:

  • 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 National Public Holidays in Malaysia in 2025 is shown as following. Please refer to announcement of Malaysia government.

Holiday Name Date 
New Year Day 1 January 2025
Chinese New Year 29 January 2025
Chinese New Year Holiday 30 January 2025
Nuzul Al-Quran 18 March 2025
Hari Raya Aidilfitri 31 March 2025
Hari Raya Aidilfitri Holiday 1 April 2025
Labour Day 1 May 2025
Wesak Day 12 May 2025
Agong’s Birthday 2 June 2025
Hari Raya Haji 2 June 2025
Awal Muharram 27 June 2025
Merdeka Day 31 August 2025
Merdeka Day Holiday 1 September 2025
Prophet Muhammad’s Birthday 5 September 2025
Malaysia Day 16 September 2025
Deepavali 20 October 2025
Christmas Day 25 December 2025

Working Hours

Normal Working Hours

  • No more than 8 hours per day, or no more than a spread over a period of 10 hours in one day for non-continuous working hours; and no more than 45 hours per week.
  • With mutual agreement between the employee and the employer, the number of working hours on one day or more days of the week is less than 8, the limit of daily working hours may be exceeded the limited on the remaining days of the week, but no employee shall be required to work for more than 9 hours in one day or 45 hours in one week.
  • Shift Work

The average number of working hours of any period of 3 weeks, or over any period exceeding three weeks, upon approval by the Director-General, shall not exceed 45 hours per week.

  • Task Work

<Work Regulation (Part-Time Workers) 2010> requires employers to provide part-time workers benefits similar to those provided to full-time employees, including overtime pay, annual leave and sick leave, and public holidays.

The regulation mentioned above identifies part-time employees who are working 30-70 percent of full-time working hours. Employees who work below 30 percent of full-time working hours are classified as casual workers, who are exempt from this regulation, while those who work more than 70 percent of full-time working hours are considered as full-time employees.

Rest Time

  • An employee, who works more than 5 consecutive hours, is entitled to at least 30 minutes break.
  • Every employee is allowed to have one rest day every week. The rest day may be non-fixed, which are determined from time-to-time by the employer. It is not applicable during the employee’s maternity leave, sick leave, or temporary disability period.

Night Work

  • No employer shall require any female employee to work from 7:00 pm in the evening one day and 5:00 am in the next morning.
  • No commence work for the day without having had a period of 11 consecutive hours free from such work.

Overtime

  • Any hours worked in excess of standard working hours are considered overtime.
  • No employer shall require any employee under any circumstances to work for more than twelve hours in any one day. The maximum number of overtime hours that an employee can be required to work is 104 hours per month.
  • Overtime pay during weekdays: at least 1.5 times of normal rate
  • Overtime pay during rest days and weekends:2 times of normal rate
  • Overtime pay during holidays:3 times of normal rate
  • A hourly or daily paid employee who works on rest days should receive the corresponding wage according to the duration of his or her work:
    1. ≤half of normal working hours per working day, one day’s wage of normal rate;
    2. > half of normal working hours per working day, two days’ wage of normal rate.
  • A monthly paid employee who works on rest days should receive the corresponding wage according to the duration of their work:
    1. ≤half of normal working hours per working day, 1.5 days’ wage of normal rate;
    2. > half of normal working hours per working day, two days’ wage of normal rate.

Probationary Period

No statutory provisions, normally it is 3 months in practice. Employers also have the right to prolong the probationary period if the new staff is not up to scratch. Standard practice in Malaysia market is not exceeded 6 months.

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 Singaporean 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!

Find out more?

Explore our award-winning platform

One-all-one HR global platform with integrated features to manage your business.

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