Overview

Capital
Kuala Lumpur
Currency
Malaysian Ringgit (MYR)
Date Format
dd/mm/yyyy

Taxes

Employer

Employer Payroll Tax

12.00% - 13.00%
Provident Fund (employees under the age of 60)
4.0%-6.5%
Provident Fund (employees over the age of 60)
1.75%
Social Security (SOCSO)
0.20%
Employment Insurance (EIS)
1.00%
Human Resource Development Fund (over 10 employees)
Up to 15.95% Total Employment Cost
Employee

Employee Payroll Taxes

9.0%
Provident Fund (employees under the age of 60)
0.00%-5.5%
Provident Fund (employees over the age of 60)
0.50%
Social Security (SOCSO)
0.20%
Employment Insurance (EIS)
Up to 9.70% Total Employee Cost

Employee Income Tax

0.00%
Up to 5,000
1.00%
5,000 - 20,0000
3.00%
20,000 - 35,000
8.00%
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
Employer Taxes
3 HIGHEST
3 LOWEST
Brazil
China
Slovakia
Malaysia
South Africa
Georgia
Macedonia
82.39%
41.12%
37.2%
15.95%
2%
2%
0%
Employee taxes
3 HIGHEST
3 LOWEST
Romania
Macedonia
Netherlands
Malaysia
Georgia
Belarus
Ukraine
45%
28%
27.65%
9.7%
2%
1%
0%

Minimum Wage

General

1,200 MYR per month in urban areas, 1,100 MYR per month in rural areas.

Minimum wage (per month)
$4000
$2663
$2491
$271
$47
$36.80
$2.33
Geneva
Luxembourg
Australia
Malaysia
Malawi
Angola
Venezuela
3 HIGHEST
3 LOWEST

Payroll

Payroll Cycle

Salaries are usually paid monthly. Salaries must be paid within 7 days of the following month.

13th Salary

It is only common practice in the manufacturing industry to pay salaries in 13 installments.

Working Hours

General

Working hours are limited to 48 hours per week. The most common office practice is 45 hours per week (9 am-6 pm, Mon-Fri)

Overtime

The minimum guideline for overtime pay in the Employment Act is:

  • Extra hours worked on a normal working day – 150%
  • Rest days – 200%
  • Public holidays – 300%

The Employment Act only covers manual workers and non-manual workers with a monthly salary that does not exceed RM 2,000. However, these guidelines are often used as guidance in Common Law cases for other employees.

Leave

Paid Time Off
  • Up to two years of employment: 8 days per year
  • Between 2 to 5 years: 12 days per year
  • 5+ years: 16 days per year
Vacation days
Public holidays
3 HIGHEST
3 LOWEST
Brazil
Peru
Albania
Malaysia
Michigan
China
Federal
30
13
43
30
12
42
28
14
42
8
6
14
2
11
13
5
7
12
10
10
Public Holidays

There are 6 compulsory public holidays and 10 optional public holidays (employer should choose at least 5 of these but it is common for offices to close on all). State day is a compulsory public holiday and the day varies from state to state. All other holidays are national.

Sick Days
  • Up to two years of employment: 14 days per year
  • Between 2 to 5 years: 18 days per year
  • 5+ years: 22 days per year
Maternity Leave

Female employees are covered in full by the employer for a least 90 days if they have been employed in the last four months and have worked for the same employer for at least 90 days in the 9 months prior to childbirth.  

PAID MATERNITY LEAVE (DAYS)
410
365
365
90
45
30
0
Bulgaria
Serbia
Albania
Malaysia
United Arab Emirates
Tunisia
Federal
3 HIGHEST
3 LOWEST
Paternity Leave

There are no provisions in the law regarding paternity leave for the private sector, however, in the public sector, fathers are entitled to 7-14 days.

Parental Leave

No specific laws.

Termination

Termination Process

Employees can be dismissed for misconduct or poor work performance. Termination is subject to employee challenge for unfair dismissal. It is recommended that proper procedure is followed (warning, time and guidance to improve performance) in order to reduce the likelihood of an unfair dismissal claim.

Notice Period

No set amount but should be equitable between employee and employer

Severance Pay

Minimum termination benefits for employees who are fired for reasons not connected to their conduct are as follows:  

 

  • Up to two years of employment: 10 days per year
  • Between 2 to 5 years: 15 days per year
  • 5 plus years: 20 days per year  
Probation Period

Probation is optional. The common practice is to have 1-3 months probations. The Employment Act does not distinguish between employees on probation and permanent employees.

VAT

General

The standard Sales and Service Tax (VAT) is 6%.

Version History

January 1, 2021
The employee contribution to the mandatory Employees Provident Fund (EPF) rate has been reduced to 9%.

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    Questions & Answers

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    Nor R.
    Nor R.
    3 months ago

    Who is covered by the employee act or are all employees covered?

    Emily Kuhnert
    Admin
    3 months ago
    Reply to  Nor R.

    Hi Nor, thank you for your question. Not all employees are covered by the Employment Act. People who earn less than 2,000 Ringitt per month, manual laborers (regardless of income level), and foreign workers who are legally in Malaysia are covered. Hope this helps!

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