Malaysia
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Why work in
Malaysia
?
Grow your team in
Malaysia
Risks of misclassification
Employing in
Malaysia
Legal aspects of employing in
Malaysia
Working hours
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Payroll
Malaysia has established its employment regulations under the Employee Act of 1955. As mentioned previously, this guarantees that each employee is entitled to receive the salary and benefits that their employers are obligated to provide. International companies have two options to recruit and employ Malaysians in their workforce: by establishing a local company within the country or by partnering with a third-party entity responsible for hiring in the country.
Gloroots' Malaysian EOR and PEO service can assist businesses aiming to expand in Malaysia by recruiting exceptional talents on their behalf. We will ensure that your company adheres to the employment standards in this region.
Employment Contract
As per the Employment Act of 1955, any employment arrangement extending beyond one month must have a written contract detailing fundamental employment aspects including:
- Identification of involved parties
- Start date (and duration for temporary contracts)
- Workplace
- Job description and responsibilities
- Base salary along with additional compensation or benefits
- Payment terms
- Probation period
- Working hours
- Total holidays
- Notice periods and termination procedures
- Provisions for health and safety
- Employees in Malaysia can have either fixed-term or permanent employment status.
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Working Hour
The usual workday consists of eight hours, with a weekly limit of 45 hours, although a 40-hour workweek is often practiced.
Overtime
When employees work more than 45 hours, they are eligible for overtime pay. Overtime rates are governed by three sources - the Employment Act, employment agreements, and collective bargaining agreements. Primarily, the Employment Act is used as a guideline, although its application is limited to manual and non-manual employees earning less than 2,000 MYR.
Refer to the table below for overtime rates
Minimum Wage
As per the National Wage Consultative Council Act 2011, the government is required to reassess the minimum wage every two years. Following this, the national minimum wage has been raised from 1,200 MYR per month in urban regions and 1,100 MYR per month in rural areas, to 1,500 MYR starting from May 1, 2022.
This wage adjustment applies solely to private sector firms with a workforce of five or more employees.
Maternity Leave and Paternity Leave
In Malaysia, female employees in the private sector are granted a paid maternity leave of 98 consecutive days, with full payment. This leave begins 30 days before the expected due date.
Note that maternity leave benefits are applicable only for a female employee's first five surviving children.
The employee has the option to rejoin work at any time within the 98-day period, subject to her employer's agreement and certification of her fitness to work by a medical professional.
Annual leave
Sick Leave
Paid sick leave in Malaysia depends on the employment contract, years of service, and a valid medical certificate. The amount of sick leave is linked to the length of employment:
Additionally, hospitalized workers are granted 60 days of hospitalization leave each year, along with their regular sick leave entitlement.
Tax
Income Tax
Social Security contribution
Employer Payroll Contributions:
Employee Payroll Contributions:
Separation
Termination Process
In Malaysia, when a company wants to end an employee's job, they usually follow the standard rules set by labor laws. They can't just fire someone without a good reason. They have to give written notice to the government about it.
There are special rules for pregnant employees. They can only be let go if they break their work agreement, do something wrong at work, or if the company is closing down.
Notice Period
Employees have the following minimal notice periods:
Alternatively, either party can opt for a payment instead of notice.
Severance Pay
In Malaysia, severance pay is obligatory when relevant, but the sum varies depending on the duration of employment.
Probation Periods
In Malaysia, the probationary period for permanent employees typically spans from 1 to 3 months. However, it's important to note that the Employment Act stipulates that employee entitlements remain consistent regardless of whether they are in their probationary period or not.
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