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Employer of Record Malaysia
Hire staff and expand your business in Malaysia with our fully-managed EOR Service
How we can help
Unrivalled Employer of Record Service in Malaysia designed to expand your business seamlessly
Agility EOR delivers services for business’s looking for an Employer of Record in Malaysia. We help clients hire new employees or transfer existing employees into a fully-managed EOR service.
We appreciate that each situation and business is different. That is why our personal approach to Employer of Record Services in Malaysia takes care of all HR, payroll, recruitment and compliance head aches, and allows you to do what you love best – driving your business forward.
Employer of Record in Malaysia
A Brief Guide to Malaysia
Lush landscapes, rich cultural heritage, and a fusion of tradition and modernity, that’s Malaysia for you. This Southeast Asian nation boasts one of the most dynamic economies, with a diverse workforce that fuels its emerging status as a global hub for trade and technology.
Category | Information |
Location | Southeast Asia |
Capital City | Kuala Lumpur |
Official Languages | Malay |
Area | 330,803 square kilometers |
Population | Approx. 33 million |
Currency | Malaysian Ringgit (MYR) |
Major Cities | Kuala Lumpur, George Town, Ipoh, Johor Bahru |
GDP | Approx. $933 billion (2022) |
Major Industries | Electronics, petroleum, palm oil, tourism, automotive |
Business Culture
Business Culture in Malaysia
Business in Malaysia holds a healthy balance of formal protocols and friendly, relationship-focused interactions. The concept of ‘face’, or maintaining personal honor and avoiding shame, is deeply rooted. Consequently, open criticism, direct confrontation, and high-pressure tactics are often avoided. Establishing relationships, networking, and nurturing trust are valued above the mere transactional aspect of business. Punctuality is appreciated, though flexibility in schedules is also practiced.
Negotiations are typically cautious and methodical. A relaxed approach to decision-making is common, often involving various levels of management. Keep in mind the multi-ethnic composition of Malaysia, which translates into diverse business customs influenced by Malay, Chinese, and Indian cultures.
Payroll and Taxes
Payroll and Taxes in Malaysia
Although not legally required, it is customary for employees in Malaysia to receive a 13th month salary payment. The exact amount and timing will depend on the employment contract.
Employee Taxation
In Malaysia, income tax rates are progressive, with higher income levels subject to higher tax rates.
Taxable Income (MYR) | Tax Rate |
Up to 5,000 | 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% |
2,000,001 and above | 30% |
Employer Taxation
Employers in Malaysia are also responsible for various employer costs, which may include:
Fund Type | Contribution |
Employee’s Provident Fund (EPF) | 4% – 13% (varies depending on an employee’s age, salary and residency status) |
Employment Injury Scheme (EIS) and Invalidity Scheme (IS) | Varies depending on scheme coverage and employee wage. From 30 cents minimum, up to a max of RM86.65 |
Employment Insurance System (EIS) | 0.2% (Max MYR 9.90) |
Human Resource Development Levy (10 or more employees) | 1% |
Pension and Healthcare
Malaysia Pensions
Malaysia’s pension scheme, the Employees Provident Fund (EPF), is a government-administered program designed to provide a secure retirement for workers. The EPF requires contributions from both employers and employees. Employees typically contribute 11% of their monthly wages, while employers contribute a minimum of 12%. The fund offers the flexibility to be withdrawn for certain purposes before retirement, such as for housing and education.
A supplementary voluntary scheme, the Private Retirement Scheme (PRS), is also available, administered by private financial providers, providing individuals with an additional means to enhance their retirement savings.
Healthcare in Malaysia
Healthcare in Malaysia is a mix of public and private providers. The public healthcare system, funded through general taxation, provides affordable services to citizens and permanent residents. It’s administered by the Ministry of Health, offering comprehensive services ranging from preventive care to specialist treatments. However, long wait times and overcrowded facilities are common challenges in public hospitals and clinics.
On the other hand, the private healthcare sector is preferred for its modern facilities, shorter waiting times, and personalized care. Most expats and higher-income groups opt for private health insurance to access these services. International-standard private hospitals are commonly found in major cities.
Malaysia’s healthcare system, overall, offers commendable standards of care, with some private hospitals ranking among the world’s best. Its medical tourism sector is thriving due to the high-quality care at competitive prices. The country is particularly known for cardiology and cosmetic surgery. Access to healthcare is fairly easy, especially in urban areas, though remote regions may face limitations.
Employment Law
Employment Law in Malaysia
Relevant Legislation: The principal laws governing employment in Malaysia are the Employment Act 1955, the Industrial Relations Act 1967, and the Employees Provident Fund Act 1991. These laws outline the rights, responsibilities, and protections for both employees and employers.
Employment Contracts: Employment contracts in Malaysia can be either for a fixed term or an indefinite period. They must be in writing, clearly stating the terms and conditions of employment, including job responsibilities, compensation, and terms of termination.
Working Hours: The standard working week in Malaysia is considered to be 48 hours, typically divided over six days. Daily work should not exceed eight hours.
Leave: Employees are entitled to annual leave, sick leave, and public holidays. Annual leave entitlement varies with the length of service, starting at eight days (for less than two years of service) and going up to 16 days (for more than five years of service).
Overtime: Overtime work is any work in excess of the standard working hours. The legal limit is a maximum of 104 hours of overtime per month. Overtime is typically compensated at a rate of 1.5 times the regular hourly rate.
Termination: Employment can be terminated for various reasons including misconduct, poor performance, redundancy, or retirement. Both parties have the right to terminate the employment contract provided the terms stipulated in the contract are adhered to.
Notice: Notice of termination is required from both parties. The notice period usually depends on the terms of the employment contract, but typically ranges from one day to one month.
Severance Pay: If an employee is terminated without cause or laid off, they may be entitled to severance pay. The amount typically depends on the length of service, ranging from 10 days’ wages (for less than two years of service) to 20 days’ wages (for more than five years of service) for each year of employment.
IMMIGRATION
Work Permits in Malaysia
Immigration matters in Malaysia are governed by the Immigration Department of Malaysia, a part of the Ministry of Home Affairs. This body administers the country’s immigration policy, regulates the entry and exit of individuals, and handles matters such as visas, passports, and permits.
The immigration system in Malaysia is geared towards attracting foreign professionals and investors who can contribute to the economy, while also ensuring security and societal harmony. Understanding the types of visas and permits available is essential to ensure compliance with immigration rules.
Here’s a deeper dive into some of the most common types of work visas available:
- Employment Pass (EP): The EP is designed for foreign professionals who have secured a job in Malaysia, typically in managerial, executive, or specialist roles. The applicant needs to have a valid employment contract with a Malaysian company and meet specific salary and educational criteria. This pass is valid for up to five years, depending on the length of the employment contract, and is renewable.
- Professional Visit Pass: This pass caters to foreign nationals who are required to carry out specific professional tasks in Malaysia, such as conducting training or installing equipment, for a limited period of time. The individual remains employed by the foreign company during this period. The Professional Visit Pass is generally valid for up to 12 months.
- Temporary Employment Pass: For lower-skilled or unskilled jobs, the Temporary Employment Pass is available. Applicants must have a job offer from a Malaysian company, and the pass is typically valid for up to two years.
- Residence Pass-Talent (RP-T): This pass is offered to highly skilled foreign professionals to enable them to continue living and working in Malaysia for a longer duration. It offers greater flexibility than the EP, such as the ability to switch between employers without the need for a new pass.
It’s worth noting that all work-related passes require sponsorship from the employing company in Malaysia. The employing company typically handles the application process.
The immigration system also includes various other categories of visas and permits, such as student visas, social visit visas, and various investment and business-related schemes designed to attract foreign investment and entrepreneurship.
While the process can be bureaucratic and time-consuming, Malaysia has also been implementing improvements and modernizations, such as online application systems and streamlined processing, to make it easier for foreign nationals to navigate the system.
Public Holidays
Malaysia Public Holidays
Holiday | Date |
New Year’s Day | January 1 |
Thaipusam | Varies (January/February) |
Federal Territory Day | February 1 |
Chinese New Year | Varies (January/February) |
Labour Day | May 1 |
Hari Raya Aidilfitri | Varies (May/June) |
National Day | August 31 |
Malaysia Day | September 16 |
Deepavali | Varies (October/November) |
Islamic New Year | Varies |
Prophet Muhammad’s Birthday | Varies |
Christmas Day | December 25 |
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The Benefits
Malaysia Employer of Record Benefits
When you choose Agility EOR to expand in Malaysia, we guarantee an Employer of Record Service tailored to the needs of your business
Compliance
We are on top of regulatory changes in Malaysia so you can relax.
Cost reduction
Allow our economies of scale to work in your favour.
High Service Levels
You and your employees have a dedicated account manager.
Fixed Cost Pricing
We will agree our professional fees up front based on your needs - no nasty surprises!
Consolidated Invoicing & Payments
Make one monthly payment to cover all your tax, social and wages costs from one to one thousand employees.
Fast delivery
You can have 'boots on the ground' within days on our infrastructure.
Reduced Risk
All wage taxes are remitted in full to the Malaysian authorities by professionals ensuring liabilities are met, giving you peace of mind.
Supply Chain Transparency
We only pay employees through local full employed solutions meaning Malaysia payroll tax is paid on all funds.
Save Time and Money
Our expertise is at your disposal. The need for you to have internal HR, Payroll and admin staff is eliminated.