Hire employees and contractors in Malaysia
Outstaffer’s guide to employing in Malaysia.
Facts & stats
Malaysia is a tourism hotspot with rich cultural diversity, and an established economic superpower among the ASEAN countries.
For over half a century, the Malaysian economy has experienced significant economic growth, driven by gains in the mining, tourism, commerce, pharmaceuticals, and manufacturing industries in particular. Kuala Lumpur is now home to a burgeoning tech sector with a strong base of digital talent and highly skilled services professionals.
This Southeast Asian nation is a prime destination for employers looking for quality team members, and many businesses establish an Asian hub in the city affectionately know as KL.
- Capital city
- Kuala Lumpur
- Currency
- Malaysian ringgit (RM, MYR)
- Official Languages
- Malay
- Population size
- 32,730,000 (est. 2020)
- Ease of doing business
- Very Easy
- Cost of living index
- 39.51 (2021)
- Payroll frequency
- Monthly
- VAT - standard rate
- 6%
- GDP - real growth rate
- 4.3 (2019)
Tech Talent in Malaysia
Malaysia is rapidly gaining recognition as a growing hub for tech talent in Southeast Asia. The country boasts a burgeoning community of skilled software developers, engineers, and IT professionals. Malaysian universities are producing graduates with strong technical expertise, and cities like Kuala Lumpur and Penang are witnessing a surge in tech startups and innovation hubs. Malaysia's strategic location, supportive government policies, and a lower cost of living compared to some neighboring countries make it an attractive destination for tech companies and entrepreneurs. Malaysian tech talent is known for its versatility, innovation, and ability to work on a global scale, contributing significantly to the country's emergence as a prominent player in the regional and global tech industry.
Grow your team in Malaysia with Outstaffer
Looking to employ workers in Malaysia? Companies hiring in Malaysia must either own a legal entity in the country or work with a global employment solutions provider, usually one that provides employer of record services.
Outstaffer can employ your team in India on your behalf through our local legal entity in the country and handle payroll, benefits, taxes, and compliance for your India team. You can also pay contractors now in India with Outstaffer.
Minimum wage
The Malaysian government reviews the national minimum wage every 2 years. In February of 2020, Malaysia’s national minimum wage was set at RM1,200 per month for urban districts and RM1,100 for rural districts. In May of 2022, the national minimum wage was increased by 25 percent to RM1,500 for businesses operating in the private sector with five employees or more.
Payroll cycle
All employee payments are made bi-monthly by Outstaffer.com on your behalf and passed through to you.
Onboarding time
We can help you get a new employee started in Malaysia fast. The minimum onboarding time we need is only 7 working days.
Our team ensures your employees are onboarded and paid as quickly as possible while keeping your business compliant with all local employment legislation. The minimum onboarding time begins after the employee submits all required information onto the Outstaffer platform. The onboarding timeline is also dependent upon registration with local authorities.
For all non-nationals of the country of employment, the Right to Work assessment (if applicable) will add three extra days to the total time to onboard. There may be extra time required if we need to follow-up on the right to work assessment.
Please note, payroll cut-off dates can impact the actual first day of employment. We have a payroll cut-off date of the 10th of the month unless otherwise specified.
Employing in Malaysia
Employment regulations in Malaysia are spelled out across several government statutes such as:
- The Employment Act of 1955
- The Industrial Relations Act of 1967
- Trade Unions Act of 1959
- Employees Provident Fund Act of 1991
- Employees’ Social Security Act of 1969
- Occupational Safety and Health Act of 1994, etc.
Put together, these regulations define the protections and rights applicable to Malaysia’s workforce of 16 million.
Employees in Malaysia enjoy protections against discrimination based on age, religion, gender expression, and race.
Common questions that could come up during the hiring process include the minimum wage, overtime rates, and guaranteed paid time off.
To employ workers in Malaysia, contact Outstaffer to learn more about your options.
Risks of misclassification
Public holidays
Jan 1
New Year's Day
Jun 7
Yang di-Pertuan Agong's birthday
Oct 19
Prophet's Birthday
Feb 12-13
Lunar New Year
Jul 20
Eid al-Adha
Nov 4
Diwali
Mar 10-11
Prophet's Ascension
Aug 9-10
Islamic New Year
Dec 25
Christmas Day
May 13-14
Eid al-Fitr
Aug 31
Independence Day
May 26
Vesak
Sep 16
Malaysia Day
Competitive benefits package in Malaysia
Outstaffer supports our clients by offering competitive benefits packages that will help you attract and retain the best talent across the globe! Our benefits specialists have done the research on norms and requirements in each local market and have crafted packages that will allow your employees to thrive, no matter what country they live in.
Our benefits packages in Malaysia are tailored to fulfil the local needs of your employees. Typically, our packages contain some or all of the following benefits:
Private health insurance
Supplemental dental insurance
Supplementary vision insurance
Supplemental maternity insurance
Supplemental screening & vaccine insurance
Additional paid holidays
Flexible work schedule
Employee engagement funds
Taxes in Malaysia
Learn how employment taxes and statutory fees affect your payroll and your employees’ paychecks in Malaysia.
Employer taxes
- 12 - 13%: Provident Fund (for employees up to the age of 60)
- 4 - 6.5%: Provident Fund (for employees over the age of 60)
- 1.75%: Social Security (SOCSO)
- 0.20%: Employment Insurance (EIS)
- 1%: Human Resource Development Fund (for over 10 employees)
Employee taxes
- 9%: Provident Fund (employees up to the age of 60)
- 0.00 - 5.5%: Provident Fund (employees over the age of 60)
- 0.5%: Social Security (SOCSO)
- 0.20%: Employment Insurance (EIS)
Personal income tax rates (all in MYR - Malaysian Ringgit)
- 0%: Up to 5,000
- 1%: 5,000 –20,000
- 3%: 20,000 – 35,000
- 8%: 35,000 - 50,000
- 13.00%: 50,000 - 70,000
- 21.00%: 70,000 - 100,000
- 24.00%: 100,000 - 250,000
- 24.50%: 250,000 - 400,000
- 25.00%: 400,000 - 600,000
- 26.00%: 600,000 - 1,000,000
- 28.00%: 1,000,000 - 2,000,000
- 30.00%: 2,000,000 and over
Types of leave
Paid Time Off
Employees are entitled to paid time off in proportion to their tenure working with an employer’s organization.
- Up to two years of employment: 8 days off per year
- 2 - 5 years: 12 days off per year
- 5+ years: 16 days off per year
Public Holidays
There are six obligatory public holidays and 10 optional public holidays, and employers are expected to observe at least half of the latter.
Sick Leave
Employees accrue sick leave according to their tenure with an employer, and paidsick leave can last up to 22 days annually.
- Up to two years of employment: 14 days per year
- 2 - 5 years: 18 days per year
- 5+ years: 22 days per year
Employees are entitled to a maximum of 60 paid sick days if they are hospitalized, inclusive of the standard sick leave entitlement mentioned above.
Maternity Leave
Female employees are entitled to 60 days of paid maternity leave, although employers can opt to extend the length of the maternity leave with no additional pay (i.e., for the extra 30 days).
Paternity Leave
There’s no statutory paternity leave for private employees under Malaysian law, but government employees get anywhere from 7-14 days of paternity leave.
Bereavement Leave
1 - 3 days consecutive working days off as compassionate leave in the event of the death of an immediate family member.
Adoption Leave
Adoptive parents are entitled to 15 days of leave, from the day their child is handed over to their legal custody.
Employment termination
Termination process
Employee contracts can be terminated if a just cause is established, such as dishonesty, negligence, fraud, or any other work-related offenses and employees reserve the right to dispute their dismissal as unfair.
Notice period
There is no stipulated notice period required under Malaysian employment law.
Severance pay
Employees who’re dismissed unfairly (i.e., for reasons not related to their performance or conduct) are entitled to severance packages equivalent to their tenure working with an employer.
- Up to two years of employment: 10 days pay for each year of service
- 2 - 5 years: 15 days pay for each year of service
- 5+ years: 20 days pay for each year of service
Get started with Outstaffer in three easy steps
01. Book a call or sign up
Book a call with one of our Solutions Managers or create your free account. It’s quick, easy, and you’ll be ready to get started in minutes.
02. Add your people
From new hires to your existing team, onboard them seamlessly with our simple-to-use self-serve platform
03. Dedicated onboarding
Our dedicated team is here to guide you every step of the way ensuring you’re confident, supported, and set up for success.