Free guide · Southeast Asia

Malaysia Payroll & Employment Guide

This guide is for companies establishing an entity in Malaysia, hiring through a local employer or managing Malaysia payroll within a cross-border workforce. It describes general private-sector rules as of October 22, 2026. Malaysia does not have one national labour statute. The Employment Act 1955 applies in Peninsular Malaysia and Labuan, the Labour Ordinance Cap. 67 applies in Sabah, and the Labour Ordinance Cap. 76 applies in Sarawak. Income tax, EPF, SOCSO, EIS and HRD Corp obligations are federal.

7
pages: 9
chapters: 2.510
words: MYR
currency

Download the Guide Turkish Guide

At a glance

At a Glance

RM1,700
2026 statutory monthly minimum wage: 45h
Maximum standard working week: 98 days
Statutory maternity leave: 15th
General monthly payroll contribution deadline

What's in the guide

9 chapters, 7 pages

The opening summary of each chapter is below. Full text, tables and rates are in the PDF.

Setting Up and Doing Business

Setting Up and Doing Business.

The structure most commonly used by foreign investors is the private limited company, or Sendirian Berhad, Sdn Bhd. The Companies Act 2016 does not set a general foreign ownership ratio or statutory minimum capital. Sector licences and expatriate sponsorship may impose additional requirements.

Working Conditions and Leave

Working Conditions and Leave.

The standard week is 45 hours under all three regional regimes. The Peninsula and Labuan generally use 8 hours a day, a 10-hour spread and a 12-hour absolute daily limit. A 30-minute break is required after 5 hours.

Tax and Social Security

Tax and Social Security.

The principal tax residence threshold is at least 182 days in a calendar year. Nonresident employment income is generally taxed at 30%. Employment below 60 days may qualify for a conditional exemption.

Payroll Operations

Payroll Operations.

A wage period may not exceed one month. Base wages are paid within 7 days after the wage period ends. Overtime, rest-day and public-holiday pay may be paid by the end of the following wage period.

Hiring and Termination

Hiring and Termination.

A specified-term or piecework contract lasting more than one month must be in writing and include a termination clause. The e-CP22 notification for a new employee is filed through MyTax within 30 days after employment begins. SOCSO and EIS registration is also generally completed within 30 days.

Compensation and Benefits

Compensation and Benefits.

There is no general statutory annual salary increase or 13th-month salary in the private sector. A bonus and benefit may arise from the employment contract, company policy or collective agreement. A regular and unconditional payment may be treated as wages for tax or contribution purposes.

Visas and Work Permits

Visas and Work Permits.

Employment Pass thresholds changed on June 1, 2026. Only basic monthly salary taxable in Malaysia counts.

Practical Notes and Points to Watch

Practical Notes and Points to Watch.

The most common payroll mistake is to assume federal contributions also make labour law uniform. The Employment Act 1955 Act 265, Sabah Cap. 67 and Sarawak Cap. 76 apply as separate regimes.

Incentives and Employer Support Schemes

Incentives and Employer Support Schemes.

As of 2026, Malaysia has no general EPF, SOCSO, EIS or HRD Corp contribution discount available to every employer. There is also no live general cash hiring incentive or employer-paid short-time work subsidy. Support is concentrated in training, targeted tax deductions and employee-side programmes.

This guide is for general information only; it is not legal advice or a complete statement of the law. The content reflects the legislation in force when it was prepared, and legislation changes. Always take country-specific professional advice on a concrete case.

With Datassist

Running payroll and employment operations in Malaysia

Three regional labour regimes, federal tax and contribution deadlines, employee-category rules and 2026 expatriate thresholds must work within one payroll control plan. Datassist helps international employers manage Malaysia payroll and employment processes from one centre.

Our Global Payroll Service Other Country Guides

Other countries