PEO/Employer Of record in Malaysia

Hire staff in Malaysia while we manage all employment and HR operations. No local company needed! 

PEO/Employer of record in malaysia - Hire Employees compliantly

We are a Professional Employer Organization (PEO) that provides Employer of Record services in Malaysia, also known as “employment solutions” or “PEO solutions”.

Many companies opt to outsource their employment to minimize costs and legal risk when expanding their business operations in Malaysia.

We can help foreign companies navigate through Malaysian employment laws and requirements, saving you time so you can focus on core business activities.

While all employment, HR, administrative and legal matters are outsourced to us, you are able to have a physical presence in Malaysia without the need to set-up a legal entity.

Entity Not Required

Foreign clients do not need to register a legal entity in Malaysia when using PEO services.

100% compliant

We strictly follow official compliance guidelines to ensure a safe legal environment for all clients.

Fast Market Entry

We will help you to hire and onboard employees within one week.

Complete PEO package for efficient and compliant employment

On-board staff in Malaysia without any risks

Employment and payroll regulations in Malaysia

Table of Contents

Employment contracts

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.

Working Hours And Overtime

Important for companies that want to hire employees in Malaysia are the working hours. The Employment Act sets strict definitions for working time.  This includes the following high-level regulations:

  • 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.

Annual Leave

The amount of leave mandated by the Employment Act depends on the employee’s length of service.

The minimum level is set as follows:

Length of serviceAnnual Leave
Less than two years8 days
Between two and five years12 days
Over five years

16 days

Sick Leave

All full-time and part-time employees (working up to 30% of standard hours) are entitled to paid sick leave under the Employment Act. The minimum level is set as follows:

Length of serviceAnnual Leave
Less than two years14 days
Between two and five years18 days
Over five years22 days

Maternity Leave

Paid maternity leave is offered for up to 90 days.

Public Holidays

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).

Probationary Period

There is no requirement under employment law to offer a separately defined probation period, and indeed the Employment Act makes no reference to probation in Malaysia.

Employee Dismissal And Termination

To end an employee contract, one month’s notice must usually be given (although more can be specified in the contract). There must also just a cause for the dismissal. As long as the dismissal is justified, no additional compensation or severance pay needs to be offered.

Social security

The main statutory payments that must be made for all employees are:

  • Employees Provident Fund (EPF)
  • Social Security Organization (SOCSO)
  • Human Resources Development Fund (HRDF) for some sectors only

These deductions apply to all employees, regardless of whether they are covered under the Employment Act or not.

Personal Income Tax (PIT)

Income Tax legislation is set out in the Income Tax Act 1967, and the government sets the rates each year. Rates are set on a progressive scale depending on salary, where rates are income within each band.

The progressive PIT rates for 2020 are as follows:

Income Band (RM)Tax rate (%)
0 to 5,0000
5,001 to 20,0001
20,001 to 35,0003
35,001 to 50,0008
50,001 to 70,00014
70,001 to 100,00021
100,001 to 250,00024
250,001 to 400,00024.5
400,001 to 600,00025
600,001 to 1,000,00026
1,000,000 to 2,000,00028
2,000,001 and over

30

Minimum Wage

The requirements for a national minimum wage are set in the Employment Act and the current applicable rates in the published Minimum Wages Orders.

The latest rates changes took place in February 2020 (under the Minimum Wages Order 2020) and set a minimum wage as follows:

AreaMonthly minimum wageMinimum hourly wage
The main 56 city and municipal council areas of Malaysia (defined in the Employment Act)RM 1,200RM5.77
ElsewhereRM1,100RM5.29
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