Malaysia
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Introduction
General Overview & Economic Facts
- Malaysia, a federal constitutional monarchy, is a country in Southeast Asia, which occupies parts of the Malay Peninsula and the island of Borneo
- Malaysia spans an area of 329 847 km² (127 355 mi²) and has a population of approximately 32.37 million
- Malaysia’s natural resources and expanding science, commerce, tourism and medical tourism have grown the economy significantly
- Malaysia has a newly industrialised market economy. Its economy ranks 38th by nominal GDP (2021) and 30th by PPP (2021)
- It ranks 62nd on the Human Development Index (HDI)
Why Employ In Malaysia?
- The main exports from Malaysia are electrical and electronic products, chemicals and petroleum
- 16.63% of the population is between the ages of 15 and 24 years, with 40.86% of the population being between the ages of 25 and 54. Malaysia has a fairly youthful population, making it a favourable country to employ young, energetic employees
Overview of the Labour Law
- The Employment Act 1955 is the primary source of employment law in Malaysia. It provides for the basic terms and working conditions for employees. Additional sources of employment law include the Industrial Relation Act, the Holidays Act, the Employees Provident Fund Act and the Employees Social Security Act
- Malaysia’s employment law provides strong protection for employees
Fun Country Facts
- Chinese Malays are known for visiting graveyards in the hope of receiving lucky lottery numbers from them
- The famous shoe designer Jimmy Choo is Malaysian
- Many buildings have a floor 3A instead of a fourth floor because the sound of four sounds like the Chinese word for death
Why Use Playroll Services For Malaysia?
- Employing in Malaysia requires companies to have their own legal entity in the country as well as managing payroll, employee benefits, taxes and legal compliance. This can get quite complicated, especially with the complexity of employment laws in Malaysia
- With Playroll’s Employer of Record services, your team will be employed by our established legal entities in each country
- We will take care of payroll, employee benefits, taxes, legal compliance and provide ongoing employee support, so that you can focus on growing your business
Employer Contributions
These are additional costs incurred by employers over and above the employee’s monthly gross salary and/or bonus.
Social Security
Employees aged 59 and younger
± 1.75%
Employees aged 60 and older
± 1.25%
Unemployment Insurance Fund
Called Employment Insurance System (EIS) In Malaysia
Calculated on monthly earnings
Calculated on a maximum salary of MYR 4,000.00 per month
± 2.00%
Provident Fund
Called Employees’ Provident Fund (EPF) in Malaysia
Calculated on monthly basic salary and fixed allowance
Employees aged 59 and younger, earning between MYR 0.00 and MYR 5,000.00 per month
If monthly wages are less than MYR 20,000, the Third Schedule table of the Employees Provident Fund Act 1991 must be used for the exact rate of monthly contributions
Employees aged 59 and younger, earning between MYR 5,000.00 and MYR 20,000.00 per month
If monthly wages are less than MYR 20,000, the Third Schedule table of the Employees Provident Fund Act 1991 must be used for the exact rate of monthly contributions
Employees aged 59 and younger, earning more than MYR 20,000.00 per month
12.00%
Employees aged 60 and older, earning between MYR 0.00 and MYR 20,000.00 per month
If monthly wages are less than MYR 20,000, the Third Schedule table of the Employees Provident Fund Act 1991 must be used for the exact rate of monthly contributions
Employees aged 60 and older, earning more than MYR 20,000.00 per month
4.00%
Skills Development Levy
Calculated on monthly earnings
Between 0 and 4 employees
0.00%
Between 5 and 9 employees
Optional contribution
0.50%
10 or more employees
Mandatory contribution
1.00%
Employee Contributions
These are costs incurred by employees that reduce their monthly gross salary and/or bonus to determine their net “take home” pay.
Social Security
Called Social Security Organisation (SOCSO) in Malaysia
Calculated on monthly earnings
Calculated on a maximum salary of MYR 4,000.00 per month
Employees aged 59 and younger
± 0.50%
Employees aged 60 and older
0.00%
Unemployment Insurance Fund
Called Employment Insurance System (EIS) in Malaysia
Calculated on monthly earnings
Calculated on a maximum salary of MYR 4,000.00 per month
± 0.20%
Provident Fund
Called Employees’ Provident Fund (EPF) in Malaysia
Calculated on monthly earnings
Employees aged 59 and younger, earning between MYR 0.00 and MYR 5,000.00 per month
If monthly wages are less than MYR 20,000, the Third Schedule table of the Employees Provident Fund Act 1991 must be used for the exact rate of monthly contributions
Employees aged 59 and younger, earning between MYR 5,000.00 and MYR 20,000.00 per month
If monthly wages are less than MYR 20,000, the Third Schedule table of the Employees Provident Fund Act 1991 must be used for the exact rate of monthly contributions
Employees aged 59 and younger, earning more than MYR 20,000.00 per month
9.00%
Employees aged 60 and older
0.00%
Income Tax
Income Tax is ‘Pay As You Earn’
Income bracket per annum
0 – 5,000.00
0.00%
5,001.00 – 20,000.00
1.00%
20,001.00 – 35,000.0
3.00%
35,001.00 – 50,000.00
8.00%
50,001.00 – 70,000.00
13.00%
70,001.00 – 100,000.00
21.00%
100,001.00 – 250,000.00
24.00%
250,001.00 – 400,000.00
24.50%
400,001.00 – 600,000.00
25.00%
600,001.00 – 1,000,000.00
26.00%
1,000,001.00 – 2,000,000.00
28.00%
2,000,001.00 or more
30.00%
Employment Terms
General
Minimum Wage
- MYR 1,200.00 per month and MYR 5.77 per hour
Working Hours
- Maximum of 8 hours per day and 48 hours per week
- Minimum 30-miute meal interval after 5 hours of work Minimum 45-minute meal interval if working 8 hours
- Typical working hours are 09h00 to 17h00 Monday to Friday
Overtime
-
Employees may work a maximum of 4 hours per day and 104 hours per month
Notice Period
- Employed between 0 and 2 years- 4 weeks’ notice
- Employed between 2 and 5 years- 6 weeks’ notice
- Employed for 5 or more years- 8 weeks’ notice
Severance Pay
- Employed between 0 and 2 years- 10 days’ pay for every year of employment
- Employed between 2 and 5 years- 15 days’ pay for every year of employment
- Employed for 5 or more years- 20 days’ pay for every year of employment
Probation Period
- There is no statutory probation period
- Employees can expect a probation period of between 3 and 12 months
Bonus
- There is no statutory bonus
- It is customary to pay a 13th cheque and performance bonuses in Malaysia
Public Holidays
Public holidays 2022
- January 1st – New Year’s Day
- February 1st – Chinese New Year
- February 2nd – Chinese New Year Holiday
- May 1st – Labour Day
- May 3rd – Hari Raya Aidilfitri
- May 15th – Wesak Day
- June 6th – Agong’s Birthday
- July 10th – Hari Raya Haji
- July 30th – Awal Muharram
- August 31st – Merdeka Day
- September 16th – Malaysia Day
- October 9th – Prophet Muhammad’s Birthday
- October 24th – Deepavali
- December 25th – Christmas Day
Leave
Paid Leave / Vacation Days
- Paid leave
- Paid by employer
- 8 days per year- employed between 0 and 2 years
- 12 days per year – employed between 2 and 5 years
- 16 days per year – employed for 5 or more years
Sick Leave
- Paid leave
- Paid by employer
No hospitalisation required:
- 14 days per year- employed between 0 and 2 years
- 18 days per year – employed between 2 and 5 years
- 22 days per year – employed for 5 or more years
Hospitalisation required:
- 60 days per year
Maternity Leave
- Paid leave
- Paid by employer
- 90 days
Paternity Leave
- There is no statutory obligation to provide paternity leave
- It is common to grant employees between 1 and 3 days leave per year
- Usually paid leave and paid by the employer
Bereavement Leave
- There is no statutory obligation to provide bereavement leave
- It is common to grant employees between 1 and 3 days leave per year
- Usually paid leave and paid by the employer
Study Leave
- There is no statutory obligation to provide study leave
- Any leave granted is at the discretion of the employer
- Usually paid leave and paid by the employer
Marriage Leave
- There is no statutory obligation to provide marriage leave
- It is common to grant employees between 1 and 3 days leave per year
- Usually paid leave and paid by the employer