How to hire and pay employees in Malaysia
Looking to hire remote workers to join your team? No matter where in the world your employees work, Oyster makes it easy for you to hire, pay, and take care of employees hassle and worry-free.
Sign Up for a Free AccountBefore hiring
Before hiring employees in Malaysia, there are a few important things you’ll need to know. Firstly, in Malaysia, employees pay between 0% and 30% in taxes depending on their income bracket. They also pay social security contributions up to 11.70%.
It’s also important for employers to know that employees in Malaysia can be dismissed for causes such as misconduct or poor performance. Employees dismissed for reasons not connected to their conduct are entitled to severance pay that depends on their length of service.
We know this might sound overwhelming—but it doesn’t have to be. A solution like Oyster eliminates the barriers for you. With Oyster, you can automate compliance across 180+ countries, easily managing HR and payroll—all in one, easy-to-use platform.
Get an overview of what you need to know when hiring in Malaysia below.
At a glance
CURRENCY
MYR
OFFICIAL LANGUAGE
MALAY
PAYROLL FREQUENCY
MONTHLY
EMPLOYER TAXES
UP TO 15.95%
13th / 14th SALARY
N/A
Good to know
- The number of paid holidays and sick leave available to employees depends on their length of service.
- There is no paternity leave in Malaysia but some employers can choose to offer this. Mothers in Malaysia are entitled to at least 60 days of fully paid maternity leave if they have been employed in the last four months, and have worked for the same employer for at least 90 days in the nine months prior to childbirth. The leave period can begin one month before the expected delivery date.
- Probation periods are optional, but commonly range from one to three months. There is no legal difference between an employee on probation and a permanent employee.
Labor laws in
Malaysia
Working hours and overtime
Employees in Malaysia work eight hours daily, 40 hours weekly.
Any overtime work is paid at the rate of 150% of the standard hourly salary. Overtime work cannot exceed:
- Eight hours per seven consecutive days
- 12 hours per seven consecutive days if the employee expresses their consent in writing
Minimum wage
Employment contracts
Probation is optional, but commonly ranges from one to three months. There is no legal difference between an employee on probation and a permanent employee.
IP protection and non-compete agreements
Non-compete agreements are legally void in Malaysia.
Calculate costs to hire internationally
Benefits and leave in
Malaysia
Vacation time
Paid vacation entitlement in Malaysia depends on the length of service. The breakdown is as follows:
- Up to two years of employment: Eight days per year
- Between two and five years: 12 days per year
- Over five years: 16 days per year
Sick leave
In Malaysia, sick leave entitlement depends on the length of service. The breakdown is as follows:
- Up to two years of employment: 14 days per year
- Between two and five years: 18 days per year
- Over five years: 22 days per year
Maternity and paternity leave
Parental leave
Employees in Malaysia are entitled to at least 60 days of fully paid maternity leave if they have been employed in the last four months, and have worked for the same employer for at least 90 days in the nine months prior to childbirth. The leave period can begin one month before the expected delivery date.
Employers are not required to offer paternity leave.
Holidays
View a list of recognized public holidays in Malaysia here.
Employer tax
Employer social contributions in Malaysia are up to 15.95% of an employee’s salary. This includes contributions for:
- Provident Fund (Employees under the age of 60): 12-13%
- Provident Fund (Employees over the age of 60): 4-6.5%
- Social Security (SOCSO): 1.75%
- Employment Insurance (EIS): 0.2%
- Human Resource Development Fund (Companies with over 10 employees): 1%
Individual tax
In Malaysia, employees pay between 0% and 30% in taxes depending on their income bracket. They also pay social security contributions up to 11.70%.
Termination in
Malaysia
Employees in Malaysia can be dismissed for causes such as misconduct or poor performance. Employees dismissed for reasons not connected to their conduct are entitled to severance pay that depends on their length of service:
- Up to two years of employment: 10 days’ wages for each year of service
- Between 2 to 5 years: 15 days' wages for each year of service
- More than years: 20 days' wages for each year of service
Notice periods in Malaysia depend on the length of service in the case of both dismissals and resignations. The breakdown is as follows:
- Less than two years of service: Four weeks notice
- Two to five years of service: Six weeks notice
- More than five years of service: Eight weeks notice
Employers can also choose to pay a dismissed employee standard wages in lieu of the notice period.
Start hiring employees in
Malaysia
Setting up a business entity everywhere you want to hire a new employee isn’t scalable—it takes too long and the legal fees are high. At the same time, understanding and adhering to the local labor laws and employee expectations can be complex and time consuming. And it’s hard to find reliable information on up-to-date employment information for all the countries where you’re considering hiring. Not to mention tracking down invoices and managing employee contracts over email and spreadsheets—that gets messy fast.
We can’t afford to take risks when it comes to compliance—we need to make sure we follow the local guidelines, especially when it comes to taxes and legalities.
With Oyster, you can manage HR and payroll, and automate compliance across 180+ countries—all in one, easy-to-use platform.
Disclaimer: The information provided in this resource is for general educational purposes only and shall not be construed as legal advice. While Oyster strives to provide current and accurate information, Oyster makes no warranties or representations as to the correctness of the content provided and accepts no liability or responsibility for any errors or omissions in the content provided. By using this resource you acknowledge and agree that you do so at your own risk. The content of this resource is subject to change without notice.
Explore other Country Guides
Guide: How to get started with hiring global talent
Hiring globally remote talent is easier than ever — learn how to get started.
Access Guide