Malaysia is a growing economy in Asia and has moved from a focus on agriculture and mining to service and manufacturing. If you are expanding to Malaysia, or would like to simplify operations, there are several payroll and labor factors to consider.

Payroll tax payments and filings can vary based on the employee and the organization. Some of the payroll filings include:

  • Employees’ Provident Fund (EPF)
  • Social Security Organization (SOCSO)
  • Employee Insurance Scheme (EIS)
  • Zakat Tax (for Muslim employees only)
  • National Higher Education Fund Corporation (PTPTN)
  • Income tax payments (CP39 and CP38)
  • Submission of CP22, CP22A, CP21 (when employees start or leave employment)
  • SOCS form 8A

Here are some of the labor considerations in Malaysia:

  • The minimum wage is MYR 1,200 per month for municipal and city council, MYR 1,100 for workers outside of municipal or city council
  • For employees earning over MYR 2,000 per month, employment contracts must indicate working hours and overtime
  • The Employment Act 1955 protects employees earning below MYR 2,000 per month and domestic and manual laborers regardless of their wages
  • Employment contracts should be in writing, but oral contracts are accepted
  • Payroll tax is withheld and submitted using a pay-as-you-earn system
  • Foreign workers must obtain a work permit (valid up to 5 years) and meet minimum age requirements by industry
    • 14 days every year if the employee has been employed for less than two years
    • 18 days every year if the employee has been employed for two years or more but less than five years
    • 22 days every year if the employee has been employed for five years or moreIn accordance with the labor laws in Malaysia, employees must be examined by a medical practitioner to confirm illness, paid for by the employer
    • Once the exam is completed and illness confirmed, the amount of sick leave days allowed are:If an illness requires hospitalization, a total number of 60 days will be provided for each employee

Blue Marble simplifies payroll and labor compliance in Malaysia. Our easy-to-use payroll technology with customized monthly reporting gives you real-time access to your payroll across all countries and currencies. We have a US-based service team and in-country experts in Malaysia to help when questions come up. Get your payroll and compliance under control in Malaysia – click here to learn more