Malaysia
Employer of Record & PEO in Malaysia
Hire & manage teams remotely in Malaysia without a local entity. We handle HR compliance, payroll & taxes so you can focus on your business.
Native Language
Malaysian
Employee Protection
Medium
Payroll Frequency
Monthly
Capital city
Kuala Lumpur
Termination
Hard
Internet
Medium
Currency
Ringgit (MYR)
Immigration
Easy
English Speaking
<50%
Population
32.73 Million
Employment Cost
Low
Cost of Living
Low
How NNRoad Employment & PEO Services Work?
NNRoad provides professional employment organization (PEO) & employer of record (EOR) services for companies looking to hire and manage teams in Malaysia. Registering a legal entity in Malaysia as a means for employment is an outdated practice that takes both time (months) and money (thousands of USD). NNRoad’s employer of record and PEO services enables companies to hire and manage employees in Malaysia in full accordance with local labor laws in under a week.
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 in Malaysia. Employment and full liability are outsourced to NNRoad.
➊ You interviews & select the candidates you want to hire in Malaysia.
➋ NNRoad arranges a local labor contract with your new employee.
➌ NNRoad arranges a service contract between your organization & NNRoad.
➍ NNRoad organizes, manages & processes payroll in Malaysia in full compliance with local employment laws.
➎ You maintain a normal working relationship and manage your team in Malaysia while NNRoad manages payroll & HR liabilities.
- Recruiting process outsourcing – including but not limited to resume screening, shortlisting candidates, background check, coordination for interviews, and assistance for salary negotiation
- Hiring of and termination of employees/local labor contracts (contract administration)
- On-boarding and off-boarding employees following local law practice
- Complete payroll solution and statutory benefit administration
- Employee management – employee handbook, employee record retaining, time keeping, bonus and allowance management, expense and claims, and leave employee database management, and contingent workforce management
- Mandatory social security insurance (social security organization or SOCSO), employee provided fund (EPE), and employment insurance (EIS) compliance according to the local laws
- Advisory of on Malaysian Labor Act and Law, Industrial Relations (IR), and Employee Relations (ER) dispute
- Work VISA application assistance, if needed
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.
➊ You interviews & select the candidates you want to hire in Malaysia.
➋ NNRoad organizes, manages and processes payroll for your local employees in full compliance with local employment laws.
➌ You maintain a normal working relationship and manage your team in Malaysia while NNRoad manages payroll & HR compliance.
- Registering the necessary company and personnel information for payroll calculation in the payroll software and system
- Monthly Payroll Processing
Year-End Adjustment and Annual Declaration
Advantages of NNRoad's Malaysia Employment Services
- With EOR/PEO solutions you can manage client meetings, sales, quality control, marketing, R&D and customer support without a local company in Malaysia.
- Pay as you go
- Dedicated account manager – One point of contact for multiple locations
- Employment & termination processing
- Complete payroll solution and statutory benefit according to local laws
- With EOR/PEO solutions you can hire staff while waiting for the registration of your company in Malaysia.
- NNRoad only works with professional locally licensed partners
- GDPR compliant
- NNRoad manages employee record timekeeping, bonus and allowance, expenses claims and personal leaves according to local law.
- NNRoad provides foreigner VISA application services, if needed
Employment Compliance in Malaysia
Taxes & Payroll in Malaysia
Employee Income Taxes:
Individual income tax rates in Malaysia are based on progressive tax brackets. Incomes at or bellow 5000 MYR per year are not taxed.
Individual income taxes in Malaysia are levied on a person’s tax base, which includes their worldwide income. This means that any income earned overseas is also subject to individual income taxes in Malaysia. 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 Malaysian income.
Tax Brackets
0%: 0 – 5,000 MYR
1%: 5,000 – 20,000 MYR
3%: 20,000 – 35,000 MYR
8%: 35,000 – 50,000 MYR
14%: 50,000 – 70,000 MYR
21%: 70,000 – 100,000 MYR
24%: 100,000 – 250,000 MYR
24.5%: 250,000 – 400,000 MYR
25%: 400,000 – 600,000 MYR
26%: 600,000 – 1,000,000 MYR
28%: 1,000,000 – 2,000,000 MYR
30%: >2,000,000 MYR
Sample Calculation
Yearly income = 70,000 MYR
14% * 20,000 = 2800
8% * 15,000 = 1200
3% * 15,000 = 450
1% * 15,000 = 150
2800+1200+450+50 = 4500
Yearly income tax = 4500 MYR
Employer Costs in Malaysia
In Malaysia, contributions to the Social Security Organization (SOCSO) are mandatory for all employers. The employer cost for each employee is RM21 per month. In addition, the employer must also contribute RM5 per month to the Employees’ Provident Fund (EPF).
As an employer, you are also required to contribute to the Employees’ Provident Fund (EPF). The EPF is a retirement savings fund for Malaysian citizens. The employer’s monthly contribution is based on a percentage of the employee’s salary, and is currently set at 12%. For example, if your employee earns a salary of RM1,000 per month, you would be required to contribute RM120 to their EPF account.
Employer Contributions:
Employers must pay contributions based on the salary of their employees:
12% – 13% – Provident Fund for employees under 60 years old
4% – 6.5% – Provident Fund for employees over 60 years old
1.25% – 1.75% – Social Security
0.2% – Employment Insurance
1% – HR Development Fund for companies with over 10 employees
Employee Contributions:
9% – Provident Fund for employees under 60 years old
0% – 5.5% – Provident Fund for employees over 60 years old
Working Hours in Malaysia
Working Hours per Week
The work week in Malaysia does cannot exceed 48 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 Malaysia Employment Act (EA) may freely negotiate hours.
Benefits & Insurance in Malaysia
Provident 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 Malaysia 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.
In Malaysia, 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. For those earning more than RM5,000 per month,
Social Security
Employees in Malaysia benefit from a social security where the employer contributes 1.25% to 1.75% of the employee’s salary.
Malaysia’s 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 Malaysian citizens and permanent residents who are employed in the formal sector.
There are two main types of social security benefits in Malaysia:
– 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.
Termination Laws in Malaysia
Severance
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. As long as the dismissal is justified, no additional compensation or severance pay needs to be offered.
Malaysia’s 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.
Public Holidays in Malaysia
Public Holidays in Malaysia
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).
- 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
Paid Leave in Malaysia
Employees under the Malaysia 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 Malaysia Employment Act (EA) can negotiate paid leave with their employer.
Employment Contract in Malaysia
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 Malaysian employment law to offer a separately defined probation period.
Types of Leaves in Malaysia
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 Malaysia Employment Act (EA) can negotiate paid leave with their employer.
Maternity Leave
Employees in Malaysia are entitled to 90 days maternity leave where 60 days are paid and 30 days are unpaid.
Immigration Laws in Malaysia
Foreign workers can be granted a work visa in Malaysia by having the employer apply for a Malaysia work permit on their behalf. There are different types of Malaysia work permits based on profession, employee profile and duration of business matters in Malaysia.
Malaysia is a country that is increasingly becoming a popular destination for foreign workers. This is due to the many benefits that Malaysia offers, such as a lower cost of living and good working conditions. Foreign employees working in Malaysia will need to obtain a work visa.
There are two types of work visas available in Malaysia: the Professional Visit Pass and the Employment Pass. The Professional Visit Pass is for foreigners who wish to work in Malaysia on a short-term basis, while the Employment Pass is for those who want to work in Malaysia on a long-term basis.
To apply for a work visa, foreigners will need to submit various documents, such as passport, CV, and proof of employment. Once the application is approved, a work visa will be approved, which will allow the employee to stay and work in Malaysia for a certain period of time.
Employment Pass
To receive an employment pass. the foreign employee must have proper documented qualifications for the job in question as well as relevant work experience. Foreign employees receiving the employment pass must make at least 3000 MYR per month.
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