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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!

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Currency

Malaysian Ringgit (MYR)

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Language

Bahasa Melayu

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Capital

Kuala Lumpur

Employer of Record Malaysia

Employment Contract

Statutory Contributions

Minimum Wage

Public Holidays

Working Hours

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 15 April 2026. The content in this guide is current as of this date and based on common business practices.

Employment Contract

Types of employment contracts include fixed-term contracts, project-based contracts, short-term contracts, and open-ended contracts.

Fixed-term and project-based contracts exceeding one month must be in writing and include termination clauses.

Statutory Contributions

Scope of Application: Applicable to employees of private enterprises.

Employees Provident Fund (EPF)
Employee StatusMonthly WageAgeEmployee ContributionEmployer Contribution
Malaysian Citizen–< 60––
≥ 60–4%
≤ MYR 5,000< 6011%13%
> MYR 5,000< 6011%12%
Permanent Resident / Foreigner registered before 1 Aug 1998≤ MYR 5,000< 6011%13%
≥ 605.5%6.5%
> MYR 5,000< 6011%12%
≥ 605.5%6%
Foreigner registered on or after 1 Aug 1998––2%2%

Notes:

  • Minimum age for EPF registration and contribution: 14; maximum: 75.
  • Employers shall round up contributions to the nearest ringgit unless monthly wage > MYR 20,000.
  • Effective October 2025.
Social Security (SOCSO)
Employee StatusMonthly Wage CapAgeEmployee ContributionEmployer Contribution
Malaysian Citizen / Permanent ResidentMYR 6,000< 600.50%1.75%
≥ 60–1.25%
Foreigner––1.25%

Notes:

  • Monthly wage cap: MYR 6,000; effective October 2024.
  • Employers must use official contribution tables.
Employment Insurance System (EIS)
Employee StatusMonthly Wage CapAgeEmployee ContributionEmployer Contribution
Malaysian Citizen / Permanent ResidentMYR 6,00018 – 600.20%0.20%

Notes:

  • All private-sector employers must contribute monthly (excluding government employees, domestic workers, and self-employed persons).
  • Mandatory for employees aged 18 – 60; exempt for those aged ≥ 57 with no prior contribution history.
Human Resources Development Fund (HRDF)
Applicable ScopeMonthly Wage CapEmployee ContributionEmployer Contribution
≥ 10 Malaysian employees––1%
5 – 9 Malaysian employees––0.5%  (Voluntary)

Notes:

  • Effective 1 March 2021, HRDF applies to all sectors except temporary policy exemptions.
  • Private education institutions are temporarily exempt from HRDF for 1 year starting January 2026.

Minimum Wage

Effective Date: 1 August 2025

Monthly Daily Hourly
6 days/week 5 days/week 4 days/week
MYR 1,700 MYR 65.38 MYR 78.46 MYR 98.08 MYR 8.72

Public Holidays

The public holidays listed below are national public holidays observed across Malaysia. Individual states and territories may observe additional public holidays. Please refer to official government announcements for the latest updates.
  • New Year’s Day
  • Chinese New Year
  • Nuzul Al-Quran
  • Hari Raya Aidilfitri
  • Labour Day
  • Hari Raya Haji
  • Wesak Day
  • Agong’s Birthday
  • Awal Muharram
  • Prophet Muhammad’s Birthday
  • Merdeka Day
  • Malaysia Day
  • Deepavali
  • Christmas Day

Notes

  • If a public holiday falls on a rest day or coincides with another public holiday, it must be replaced with the next working day. Where it falls during approved sick leave, annual leave, or temporary incapacity, an alternative paid holiday must be granted.
  • Employers are required to designate 6 public holidays annually (in addition to the 5 mandatory gazetted holidays) before the start of each calendar year. These may be substituted by mutual agreement. For holidays under the Holidays Act 1951, alternative paid days may be arranged.
  • Additional state or Federal Territory public holidays may apply. Employers must comply with locally gazetted requirements on leave entitlements and pay.

Overtime Compensation

Payment Basis Actual Hours Public Holidays
Daily / Hourly / Similar Rate of Pay 0 – 0.5 × Normal hours 200%
0.5 – 1 × Normal hours
> Normal hours 300%
Monthly / Weekly Rate 0 – 0.5 × Normal hours 200%
0.5 – 1 × Normal hours
> Normal hours 300%
Piece Rate ≤ Normal hours 200%
> Normal hours 300%

Overtime Exemption

Employees who are absent without valid reason or prior employer approval immediately before or after a public or substitute holiday are not entitled to public holiday pay.

Working Hours

Normal Working Hours

Category Daily Weekly
General Work 8 hours 45 hours
If a working day is less than 8 hours as agreed, other working days may exceed 8 hours, provided they do not exceed 9 hours
Shift Work May exceed 8 hours May exceed 45 hours
Average 45 hours per week over a 3-week period

Work Break

  • 30 minutes for every 5 consecutive working hours.
  • 45 minutes in total for 8 consecutive working hours.

Weekly Rest

  • General work: 1 day.
  • Shift work: At least 30 consecutive hours.

Overtime Limits

  • Maximum 12 hours per day (including regular working hours).
  • Maximum 104 hours per month (total overtime).

Overtime Compensation

Payment Basis Actual Hours Working Day Rest Day
Daily / Hourly / Similar Rate of Pay 0 – 0.5 × Normal Hours 100% 100%
0.5 – 1 × Normal Hours 200%
> Normal Hours 150% 200%
Monthly / Weekly Rate 0 – 0.5 × Normal Hours 100% 50%
0.5 – 1 × Normal Hours 100%
> Normal Hours 150% 200%
Piece Rate ≤ Normal Hours 100% 200%
> Normal Hours 150%

Exemptions from Overtime Compensation

  • Employers may apply in writing for a relaxation of working hour limits. Such relaxation takes effect upon approval by the competent authority and may be revoked. If dissatisfied, employers may appeal to the Minister within 30 days, whose decision shall be final.
  • This applies to employees whose roles involve long periods of inactivity or require them to be on call.

Leave

Annual Leave

  • Employer Type: Single employer

  • Eligibility & Duration:

    • Less than 2 years of service: 8 days
    • 2 – 5 years of service: 12 days
    • More than 5 years of service: 16 days
    • Employees who are absent without approval or valid reason for 10% or more of their total annual working hours are not entitled to annual leave.
  • Allowance: Paid at full salary by the employer
  • Encashment: Unused annual leave must be fully compensated upon termination

Sick Leave

  • Eligibility: Must be certified by a registered medical practitioner or dentist, with notice to the employer within 48 hours

  • Duration:

    • Outpatient sick leave:

      • Less than 2 years: 14 days
      • 2 – 5 years: 18 days
      • More than 5 years: 22 days
    • Hospitalisation leave: Up to 60 days (including cases where hospitalisation is certified as necessary, even if not admitted)
  • Allowance: Paid at full salary by the employer

Maternity Leave

  • Eligibility:

    • Employed by the same employer for at least 90 days within the 9 months preceding childbirth; and
    • Employed at any time within the 4 months preceding childbirth
  • Duration: Minimum of 98 consecutive days
  • Allowance: Paid at full salary or at the rate prescribed by the Minister, whichever is higher; payable by the employer
  • Exemption: Not applicable if the employee has 5 or more surviving children

Other Leave Types

  • Eligibility:

    • Married male employee
    • At least 12 consecutive months of service with the same employer prior to the commencement of leave
    • Must notify the employer at least 30 days before childbirth or as soon as reasonably practicable thereafter
  • Duration 7 consecutive days per childbirth, up to a maximum of 5 occasions
  • Allowance: Paid at full salary by the employer

Termination and Compensation

Termination Notice

Termination Scenario Notice Period* / Payment in Lieu of Notice Notice Form
Either party terminates at any time Contract prevails; if none, as follows: Written (mandatory)
Service Period Minimum Notice Period
<2 years 4 weeks
2–5 years 6 weeks
≥5 years 8 weeks
Termination mainly due to: business closure, relocation, redundancy, refusal to accept transfer (unless contractually required), or a change in ownership Not shorter than above (even if contracted)

*Note: The date of notice is included in the notice period.

Compensation

  • Eligibility:

    • Employed under a continuous contract for at least 12 months; and
    • Employment is terminated by the employer; or
    • Retrenched, where the employer fails to provide at least 12 normal working days within 4 consecutive weeks and no wages are paid during that period.

  • Minimum Entitlement:

    • Less than 2 years of service: 10 days’ wages per year of service
    • 2 – 5 years of service: 15 days’ wages per year of service
    • More than 5 years of service: 20 days’ wages per year of service

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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