Country Payroll Guide Malaysia

We deliver secure, compliant, accurate and touchless global payroll for Malaysia.

Get in touch
Malaysia image

Key Facts

Capital
Kuala Lumpur
Date format
dd/mm/yyyy
Currency
Malaysian Ringgit (MR)
VAT
the standard rate is 6%

Contributions

Employers

Provident Fund
Provident Fund - 4% to 6.5%
Employment Insurance System (EIS)
Employment Insurance System (EIS) - 0.2%
SOCSO: Social Security Protection for Injury/Invalidity
SOCSO: Social Security Protection for Injury/Invalidity - 1.75%
EPF: Retirement Scheme Contributions
EPF: Retirement Scheme Contributions - 12%
Total Employment Cost
Total Employment Cost - 15.95%

Employees

Provident Fund
Provident Fund - 9%
Employment Insurance System (EIS)
Employment Insurance System (EIS) - 0.2%
SOCSO: Social Security Protection for Injury/Invalidity
SOCSO: Social Security Protection for Injury/Invalidity - 0.5%
Total Employee Cost
Total Employee Cost - 9.7%

Minimum Wage

Minimum Wage
The minimum wage in Malaysia is 5.77 MR per hour.

Payroll

Payroll Cycle
Monthly
13th Salary

Common practise, but not required by law.

Income Tax

Employee Income Tax (1)
Up to 5000 MR - 0%
Employee Income Tax (2)
5000 - 20000 MR - 1%
Employee Income Tax (3)
20000 - 30000 MR - 3%
Employee Income Tax (4)
35000 - 50000 MR - 8%
Employee Income Tax (5)
50000 - 70000 MR - 13%
Employee Income Tax (6)
70000 - 100000 MR - 21%
Employee Income Tax (7)
100000 - 250000 MR - 24%
Employee Income Tax (8)
250000 - 400000 MR - 24.50%
Employee Income Tax (9)
400000 - 600000 MR - 25%
Employee Income Tax (10)
600000 - 1000000 MR - 26%
Employee Income Tax (11)
1000000 - 2000000 MR - 28%
Employee Income Tax (12)
2000000 and over MR - 30%

Working Hours

General Working Hours

48 hours per week.

Overtime
  • 1.5 x hourly rate of pay for normal workdays
  • 2 x hourly rate for rest days
  • 3 x hourly rate for public holidays

Leave

Paid Time Off
  • Employed less than 2 years: Not less than 8 days per year.
  • Employed between 2-5 years: Not less than 12 days per year.
  • Employed for more than 5 years: Not less than 16 days per year.
Public Holidays

6 compulsory public holidays and 10 optional public holidays.

Sick Days
  • Employed less than 2 years: 14 days per year.
  • Employed between 2-5 years: 18 days per year.
  • Employed for more than 5 years: 22 days per year.
Maternity Leave

Increase of maternity leave from 60 days to 90 days effective in 2021.

Paternity Leave

No provisions in the law, however, usually 7-14 days.

Other Leave

Where hospitalization is required, EA employees are entitled to 60 days of hospitalization leave per year, provided that the number of sick leave and hospitalization leave pear year shall not exceed 60 days in total.

Termination

Termination Process

Employee (probation or confirmed) may only be terminated for just cause or excuse which generally includes: misconduct, poor performance, or redundancy.

Notice Period
  • 4 weeks’ notice if employee has been employed less than 2 years
  • 6 weeks’ notice if employee has been employed more than 2 years but less than 5 years
  • 8 weeks’ notice if employee has been employed more than 5 years
Severance Pay

Up to two years of employment: 10 days per year Between 2 to 5 years: 15 days per year 5 plus years: 20 days per year.

Probation Period

1-3 months.

Visa

Employment Visa
  • Employment Pass (EP) – For employees who have a specific skill set (usually technical or managerial) EP Malaysia is available in Category I, II and III.
  • Temporary Employment Pass – is issued to semi-skilled or unskilled workers in certain approved sectors. (Construction, Plantation, Agriculture, etc…)
  • Professional Visit Pass (PVP) – required for all foreign talent and skilled workforce visiting Malaysia to provide consultancy, overseeing technical work, installing machinery and various other types of work whereby they will not be salaried in Malaysia.
  • A Professional Visit Pass (PVP) is a short term working pass valid up to a maximum of 12 months.