Hire in Malaysia

Malaysia PEO &

Employer of Record

Hire & manage teams remotely in Malaysia without a local entity. We handle HR compliance, payroll & taxes so you can focus on your business.

Business Language

Malay

Salary Currency

Ringgit (MYR)

Capital city

Kuala Lumpur

Time zone

UTC +8

EOR in Malaysia

from $300/ month

Hire Employees in Malaysia

NNRoad provides professional employment organization (PEO) & employer of record (EOR) services in Malaysia to ensure that your business complies with local labor laws and regulations. We process monthly payroll and act as the Employer of Record, taking on all local employer liabilities.

Fast Hiring

Start working with your remote employees in a week.

Foreigner Visas

NNRoad assists with overseas foreign hires visa needs.

Platform

Access your payroll reports on our portal.

Employer of Record in Malaysia

Employer of Record (EOR) services are for companies who do not have a legal entity in Malaysia, but who want to hire localy. Employment and full liability are outsourced to NNRoad.

1. Candidate Selection

Select the candidates you want to hire in Malaysia.

2. Employee Onboarding

We sign a local labor contract with your employees based in Malaysia.

3. Compliance & Payroll

We manage monthly payroll, mandatory benefits & all HR compliance in Malaysia.

EOR service includes:

Hiring and termination of employees/local labor contracts (contract administration – engagement, extension termination and conversion to permanent hire).

All mandatory employer (and employee) contributions filed and paid for your EOR employees.

Payroll recording, reporting and administration.

Distribution of salaries to employees through direct deposit into their bank accounts.

Calculation, reporting, filing and processing of EOR employee’s individual income tax due.

Collecting and processing your employee’s invoices for business related expenses.

Guiding and organizing your expat employee’s work visa application too guarantee their successful onboarding.

Standalone Payroll & PEO in Malaysia

Professional Employment Organization (PEO) services are for companies who have a legal entity in Malaysia, and want to outsource their payroll. Employment liabilities are shared between your organization and NNRoad.
PEO in malaysia

Employee Income Taxes:

Individual income tax rates in Malaysia are based on progressive tax brackets.

Incomes at or below MYR 5000 per year are not taxed. Individual income taxes are levied on a person’s tax base, which includes their worldwide income, meaning any income earned overseas is also subject to individual income taxes. There are a few exceptions to this rule, such as if the individual is working in a country with a double taxation agreement with Malaysia. However, for the most part, individuals will need to pay taxes on their overseas income in addition to any taxes due on their income.

Tax Brackets:

Sample Calculation

0%: 0 – 5,000 MYR
1%: 5,001 – 20,000 MYR
3%: 20,001 – 35,000 MYR
6%: 35,001 – 50,000 MYR
11%: 50,001 – 70,000 MYR
19%: 70,001 – 100,000 MYR
25%: 100,001 – 400,000 MYR
26%: 400,001 – 600,000 MYR
28%: 600,001 – 2,000,000 MYR
30%: over 2,000,000 MYR
Yearly income = 70,000 MYR
11% * 20,000 = 2200
6% * 15,000 = 900
3% * 15,000 = 450
1% * 15,000 = 150
2200+900+450+50 = 3600

Yearly income tax = 3600 MYR

In Malaysia, contributions to the Social Security Organization (SOCSO) are mandatory for both the employers and the employees. How much an employer will pay in SOCSO depends on two factors: 1) whether the employee is aged below or above 60 y/o, and 2) the monthly salary. The range can go from MYR 0.3 up to MYR 86.65, for a salary up to MYR 5000. Over this amount, regardless of income, SOCSO will stay equivalent to the upper limit. Expats will have the same rates as Over 60 local employees.

Employees only pay SOCSO if they’re younger than 60.

Another contribution paid by both parties goes to the Employees’ Provident Fund (EPF). Same as for SOCSO, the EPF rates differ based the age (under/over 60 y/o), status of the employee (Local, Permanent Resident, Expat) and monthly salary. Employers can pay from 4-13% to the EPF for Locals and Permanent Residents, while for Expat employees, the rate is fixed at 5% if their salary is below MYR 5000 per month.

Lastly, contributions to the Employment Insurance System (EIS) are paid for all employees younger than 60 years old. For both employers and employees, the EIS rate is around 2% based on salary brakets, capped at MYR 5000 per month.

Employer Contribution

Employers must pay contributions based on the salary of their employees:

12% – 13% – EPF for employees under 60 years old
4% – 6.5% – EPF for employees over 60 years old
2% – EIS for employees under 60 years old
1% – HR Development Fund for companies with over 10 employees

Employee Contribution

9% – EPF for employees under 60 years old
0% – 5.5% – EPF for employees over 60 years old
2% – EIS for employees under 60 years old

Pension Fund

Employees in Malaysia benefit from a pension fund where both the employer and employee deposit a monthly percentage of the employee’s salary.

The provident fund is a retirement savings scheme that is mandatory for all employees. The employer contributes a percentage of the employee’s salary to the fund, and the employee can also make voluntary contributions. The fund can be used to purchase a property, pay for medical expenses, or provide an income in retirement.

Both the employee and employer are required to contribute to the Employees Provident Fund (EPF). Employers are required to contribute 13% of their employees’ salaries into their EPF account, while employees can choose to contribute between 11% and 18%. This contribution is compulsory for all employees earning a monthly salary of RM5,000 or less.

Healthcare Insurance

Employees benefit from a social security where the employer contributes 1.25% to 1.75% of the employee’s salary.

The social security system is administered by the Social Security Organization (Socso). Employers are required to contribute a percentage of their employees’ salaries to Socso, which provides financial assistance to workers in case of illness, injury, or unemployment. Employees are also required to contribute a small portion of their salaries to the system. Socso benefits are available to all citizens and permanent residents who are employed in the formal sector.

There are two main types of social security benefits:

  • Health benefits: This includes coverage for hospitalization, surgery, and certain outpatient treatments.
  • Employment injury benefits: This provides financial assistance to workers who are injured while working, and covers medical expenses as well as a portion of lost wages.

    Employment Insurance

    Employees in Malaysia benefit from an employment insurance where the employer contributes 0.2% of the employee’s salary.

    Malaysia’s employment insurance system is designed to provide financial assistance to workers who have lost their jobs due to no fault of their own. The system is funded by contributions from employers and employees, and provides benefits for a maximum of 60 days. Job seekers are also able to receive assistance in terms of job placement and training.

  • Working Hours Per Week

    The work week in Malaysia does cannot exceed 45 hours per week. Work should not exceed an average of 8 hours per day or 48 hours per week. A maximum of 12 hours per day can be worked. Employees must get a 30-minute rest period after 5 hours of consecutive work or 45 minutes after 8 hours.

    Employees in organizations with less than 10 employees and who are not under the Employment Act (EA) may freely negotiate hours.

    Severance

    As long as the dismissal is justified, no additional compensation or severance pay needs to be offered. Severance laws are governed by the Employment Act 1955. Under the Act, an employee can be terminated for a number of reasons, including:

  • misconduct
  • unsatisfactory work performance
  • breach of contract
  • redundancy
  • retirement

    When an employee is terminated, they are entitled to receive certain payments, including:

  • notice pay (if applicable)
  • outstanding wages and salaries
  • annual leave entitlement
  • unused sick leave entitlement

    Malaysia also has a number of additional laws that protect employees from unfair dismissal, such as the Industrial Relations Act 1967 and the Trade Unions Act 1959. These laws provide employees with certain rights, including the right to file a complaint with the Industrial Court if they believe they have been unfairly dismissed.

    Notice Period

    To end an employee contract, a one month’s notice must be given (although more can be specified in the contract). There must also be a just cause for the dismissal.

  • Employment Contract

    Employment in Malaysia is governed by the Employment Act 1955. The Employment Act sets out minimum standards for employment contracts – the legal minimum conditions and rights that should apply. It is common practice to still base contracts of employees that don’t qualify on the Employment Act. But employers have the discretion to alter employment terms.

    Probation Period

    There is no requirement under employment law to offer a separately defined probation period.

    Annual Leave

    Employees under the Employment Act (EA) are entitled to a number of paid annual leave days per year based on how long they have worked with the employer.

    Employed for less than 2 years: 8 days per year
    Employed for 2 to 5 years: 12 days per year
    Employed for more than 5 years: 16 days per year

    Employees not under the Employment Act (EA) can negotiate paid leave with their employer.

    Sick Leave

    Employees in Malaysia are entitled to:

    14 days sick leave for employees with less than 2 years service
    18 days sick leave for employees with 2 to 5 years of service
    22 days for employees with over 5 years service
    60 days in case of a medical emergency.

    Employees not under the Employment Act (EA) can negotiate paid leave with their employer.

    Maternity Leave

    Employee are entitled to 90 days maternity leave where 60 days are paid and 30 days are unpaid.

    Employees are entitled to 11 paid public holiday days off per year. 5 of these are mandatory for all employers, and the other 6 can be chosen by the company (but must be consistent for all company employees).

    Malaysia is home to a wide variety of cultural celebrations, including festivals and holidays. Holidays are celebrated with enthusiasm throughout the country and many people take time off work or school to celebrate them. The most popular holidays include Hari Raya Aidilfitri, Chinese New Year, Deepavali, Christmas Day, and Wesak Day.

    Hari Raya Aidilfitri marks the end of Ramadan and is one of the most widely celebrated religious holidays in Malaysia. It is traditionally celebrated for three days by Muslims. During this holiday, family members come together to give thanks for Allah’s blessings and exchange well-wishes for the future.

    Chinese New Year is also a very popular holiday in. This is a time for families to come together, share meals, and exchange gifts. People also celebrate the New Year with visits to temples for prayers and blessings.

    Deepavali is one of the most important holidays celebrated by Hindus. On this day, people visit their family members and friends, light small oil lamps as a symbol of inner light overcoming darkness, chant mantras from ancient scriptures at temples, and offer prayers to gods asking for health, happiness, peace and prosperity.

    Christmas Day is another significant holiday observed in Malaysia. On this day Christians gather at churches for special services and sing Christmas carols throughout the streets of the country. It is also traditional to give presents and sing songs about the birth of Jesus.

    Finally, Wesak Day is celebrated in Malaysia as a day of enlightenment and liberation from suffering. It marks the birth, enlightenment, and death (Parinirvana) of Gautama Buddha. On this day Buddhists visit temples for prayers and meditation, exchange gifts with family members and friends, light candles or lamps in remembrance of the teachings of Lord Buddha, and celebrate with processions throughout Malaysia’s cities.

    These are some of the most popular holidays celebrated in Malaysia. Holidays offer an opportunity to come together to celebrate different cultures and beliefs while strengthening relationships within families and communities. Celebrating these holidays is an important part of Malaysian culture that has been passed down through generations

    Public Holidays

  • New Year’s Day
  • Lunar New Year
  • Prophet’s Ascension
  • Labour Day
  • Eid al-Fitr
  • Vesak
  • Yang di-Pertuan Agong’s birthday
  • Eid al-Adha
  • Islamic New Year
  • Independence Day
  • Malaysia Day
  • Prophet’s Birthday
  • Diwali
  • Christmas Day
  • HIRE IN MALAYSIA
    Scroll to Top