Overview

Capital
Kuala Lumpur
Currency
Ringgit
Date Format
dd-mm-yyyy

calendar icon Public holidays calendar

Taxes

Employer
12.00% - 13.00% - EPF (Retirement Benefits)
1.75% - Socso - Disability Benefits
0.05% - 7.90% - EIS (Employment Insurance)
Employee
11.00% - 5.50% - EPF (Retirement Benefits)
0.50% - Socso - Disability Benefits
0.00% - Up to 5,000
1.00% - 5,000 - 20,0000
3.00% - 20,000 - 35,000
8.00% - 35,000 - 50,000
14.00% - 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% - Over 1,000,000

Minimum Wage

General

Minimum wage in Malaysia is RM1100 per month, and will increase to RM1,200 starting January 2020. 

Working Hours

General

Fulltime employment is considered 48 hours weekly and 8 hours daily.

Overtime

Maximum overtime hours monthly is 104. 

  • Extra hours worked on a normal working day - 150%
  • Rest day on which employees work regular hours -
    1. When employees work half of the working day, they receive half of their hourly pay rate.
    2. When they work the whole day but no more than 8 hours, they receive one day full wages. 
  • Rest day on which employees work overtime - 200%
  • Public holidays on which employees work normal working hours - Two days wages paid at ordinary rate 
  • Public holidays on which employees work overtime - 300%

VAT

General

The VAT is 6% standard rate.

Payment

Payroll Frequency

Salaries are paid monthly for work between the first and last day of the month. Paydays are decided between the employee and employer, but are typically at the end of the month.

Mandatory Benefits

Pension Fund

The Employees’ Provident Fund (EPF) is a compulsory retirement savings comprised of contributions made by: 

  • Employer – Income less than RM5,000 – 12% 

                                 Income more than RM5,000 – 13% 

  • Employee – 11% 

It is not compulsory to non-permanent residents, but they may choose to contribute to the EPF.

Social Security

The Social Security Organization (SOCSO) covers the Employment Injury Insurance (EIIS) and the Invalidity Pension Scheme (IPS) with contributions made by employees and employers depending on their wages.  

Employers and employees contribute to the EIIS and IPS on a monthly basis and are determined by the employee’s income. Maximum employer contribution is MYR60.05 and MYR19.75 for the employee. 

Unemployment Insurance

The Employment Insurance System (EIS) was implemented nationwide by the Social Security Organization (SOCSO). The EIS consists of two components: financial assistance and employment services, both designed to help unemployed employees. The system enables discharged employees to claim a percentage of the insured salary for a period of between 3 and 6 months. All employees from 18 to 60 years old must contribute to the Employment Insurance System scheme. The law also covers for people’s job hunting and training programs.  

  • Employers - .2% of monthly salary 
  • Employees - .2% for monthly payroll 

Payroll

Payroll Frequency

Salary in Malaysia is usually paid once a month. The employer cannot be late for more than 7 days with the payment of salaries. Salaries are paid in cash, cheque, or credit to the employee’s bank account.

Pay Date

Accountant General’s Department of Malaysia determines a payment schedule for monthly salary for a year ahead. There is one salary date for all states.  

Termination

Termination Process

Employers have the right to dismiss employees who exhibit behaviour incompatible with continued employment or who fulfil their tasks badly. They are also entitled to discharge employees for reasons related to their business, either because of its retrenchment or closure.  

Advance Notice

Notice period should be written in contract, but if it isn’t, the notice should be: 

  • Less than 2 years’ service – 4 weeks’ notice 
  • 2 – 5 years’ service – 6 weeks’ notice 
  • More than 5 years – 8 weeks’ notice 
Severance Pay

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

  • The employees are paid 10 days’ wages for every year of employment if they have been employed for less than two years. 
  • They are given 15 days’ wages for every year of employment if they have worked for 2 years or more but less than 5. 
  • They are paid 20 days’ wages for every year of employment if they have been employed for 5 years or more. 
  • If employees have worked less than a year, they are paid pro rata calculated to the nearest month.  

Employers who dismiss non-EA employees are not required to pay them any benefits. Yet it is customary to give them one-month payment in compensation.