Basic information
Capital: Kuala Lumpur
Time zone: GMT+8
Language: Malay
Currency code: MYR
Human Resources at a Glance
Contract Terms
The contract must be written in English. Must be in writing and signed by both parties.
The contract must include:
– Positions offered
– Duration of the contract
– Place of work
– Base salary and date of payment
– Working hours and working days
– Other benefits (if any)
– Overtime pay (if any)
– annual leave
– Termination Terms
– Sick leave and hospitalization leave
– Closed
– Probation period
– Notice Period
– Duties and Responsibilities
– Termination Terms
– Statutory deductions and income tax
Guidelines Regarding Probation Period/Trial Period
There is no legal requirement in Malaysia to give employees a probationary period before hiring. A three- to six-month probationary period is common. For non-administrative and non-managerial employees, a three-month probationary period is recommended. For employees at the executive and managerial levels, the probationary period should be six months.
Employees on probation have the same rights as confirmed employees. Therefore, the service of an employee on probation may not be terminated without cause or reason. If the Employment Act states that the employee has a probationary clause, a confirmation letter or extension letter must be issued. A probationary employee remains a probationary employee at the end of the probationary period if their service has neither been terminated nor confirmed.
Regulations and Rules Regarding Working Hours
Standard working hours are 8 hours per day, 40 hours per week. The standard work week runs from Monday to Friday.
Overtime pay is mandatory and can be included in the salary if the employee earns less than RM4,000 per month. If the employee earns more than RM4,000 per month, overtime pay is not mandatory and is agreed upon by the employer and the employee. Employees can work up to 104 hours of overtime per month.
Overtime is paid according to the following rates
Regular working day: Overtime pay is 1.5 times the hourly wage.
Rest day: If the duration does not exceed half of the normal working hours, the employee will be compensated at the half-day rate of ordinary wages. If it lasts more than half but not more than the normal working hours, they are entitled to one day’s wages of ordinary wages. If the hours exceed the normal working hours, the overtime pay is 2 times the hourly rate.
Public holidays: Work performed on these dates will be compensated at 2 times the hourly rate and 3 times the hourly rate for the first eight hours. After eight hours, overtime pay will be increased to 3 times the hourly rate.
Minimum Wage Requirements
The minimum wage is MYR1500 per month.
Payroll Cost for Employers
Employer costs account for 13% – 14% of an employee’s salary
– Employee Provident Fund (EPF):
– Wages below RM5,000 – 13% for employers and 11% for employees
– Wages above MYR 5,000 – 12% for employers and 11% for employees
– Employee Social Security (SOCSO) – Varies from MYR 23.65 to MYR 86.65 depending on the employee’s salary
– Employment Insurance System (EIS): from MYR 2.70 to MYR 9.90
– Human Resource Development Fund (HRDF) – 1.00%.
Optional costs
13 months’ salary: Employers can decide to pay Malaysian employees 13 months’ salary. This is an optional bonus that is usually equivalent to one month’s salary and is usually paid in January or December.
Termination
Grounds
Compliant dismissals include:
– Employees are voluntarily terminated
– The parties agreed to the dismissal
– The contract expires
– Unilateral dismissal by the employer based on:
– Probation period
– Objective reasons
– Disciplinary dismissal
– Performance due to unsuitability for work
Notice Period
The notice period depends on the employee’s length of service:
Less than two years: four weeks
Two to five years: six weeks
Five years or more: eight weeks
It is best to give more than two months’ notice.
Redundancy/Severance Pay Severance Compensation:
Employees who have worked for less than 2 years are entitled to 10, days’ pay per year. 1 year severance pay = 1 * 10
Employees who, have worked for 2 to less than 5 years are entitled to 15 days’ pay per year. 2 years severance pay = 2 * 15
Employees who have been employed for more than 5 years are entitled to 20 days’ wages per year. 5 years severance pay = 5 * 20
For any period of less than one year, the rate of the nearest month will be used.
Payment & leaveCompensation & Holidays
Salary Payment
Once a month
Payslip Payroll
Payslips are usually available online or in PDF form.
The information required for payroll includes, but is not limited to, the following:
Company name and address
Payroll month
Employee personal information (name, employment ID, position/designation, department, date of employment, legal membership number).
Monthly income, allowances, and deductions
Year-to-date income, deductions, and net income
Monthly employer’s statutory contributions
Year-to-date employer’s statutory contributions
Payment details (e.g. employee’s bank account information)
Annual Leave
Annual leave depends on the length of service:
Less than two years: 8 days every 12 months
More than two years but less than five years: 12 days every 12 months
More than 5 years: 16 days every 12 months
The company can provide more annual leave in accordance with the law.
Employers are only required to pay unused annual leave when an employee leaves or resigns.
Sick Leave
If hospitalization is not required, the allowable length of sick leave depends on the employee’s length of service:
Less than two years: 14 days
More than two years but less than five years: 18 days
More than five years: 22 days
Employees are required to provide a medical certificate to their employer.
Maternity & Parental Leave
All female employees are entitled to 98 consecutive days of paid maternity leave for the birth of up to five children.
Married male employees are entitled to 7 days of paid paternity leave per birth, up to a maximum of 5 times (regardless of the number of spouses). Male employees must have worked for the same company for at least 12 months before starting paternity leave. He must inform his employer of his wife’s pregnancy at least 30 days before her expected date of delivery or as soon as possible after the birth of the baby.
Tax and Social Security Information
Personal Income Tax
Resident personal income tax: Individuals will enjoy a tax rate ranging from 0% to 30%, and the amount of the personal deduction depends on whether they have actually lived in the country for more than 182 days.
| Taxable income (MYR). | Rate of tax |
| 0 – 5000 | 0% |
| 5,001 – 20,000 | 1% |
| 20,001 – 35,000 | 3% |
| 35,001 – 50,000 | 6% |
| 50,001 – 70,000 | 11% |
| 70,001 – 100,000 | 19% |
| 100,001 – 400,000 | 25% |
| 400,001 – 600,000 | 26% |
| 600,001 – 2,000,000 | 28% |
| More than 2,000,000 | 30% |
Non-resident personal income tax: Individuals will be taxed at a flat rate of 30%. This applies to those who stay in Malaysia for less than 182 days in a year.
Social security
| Social Security System | upper limit | Employer section | Employee section |
| Employment Provident Fund(EPF) – Local only | not | Salary < RM5,000: 13%; Salary > RM5,001: 12%. | 11% |
| Social Security Organization（SOSCO） | 5,000 | 1.75% | 0.50% |
| Employment Insurance System（EIS） | 5,000 | 0.20% | 0.20% |
Public Holidays 2024
| Occasion holiday | Date |
| New Year’s Day | 1.1 |
| Thaipusam | 1.25 |
| Federal Territory Day | 2.1 |
| Chinese New Year | 2.10-2.11 |
| Hari Raya Puasa | 4.10-4.11 |
| Labor Day | 5.1 |
| Vesak Day | 5.22 |
| Agong’s Birthday | 6.3 |
| Hari Raya Haji | 6.17 |
| Awal Muharram | 7.7 |
| Merdeka Day | 8.31 |
| Malaysia Day | 9.16 |
| Prophet Muhammad’s Birth | 9.16 |
| Deepavali | 10.31 |
| Christmas Day | 12.25 |
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