You can hire employees in Malaysia without the need for an entity.
Typically, to hire employees in Malaysia, your business must have an entity, which involves establishing a local office, registering an address as a subsidiary, and opening an account with a local bank. Managing regional benefits, payroll, tax, and HR laws throughout this process can take several months.
Malaysia has separate regulations for contractors compared to full-time employees, making it crucial to avoid misclassification to avoid potential penalties. ATA streamlines the process of hiring employees in Malaysia, ensuring speed, simplicity, and compliance. Additionally, our platform automates tasks such as tax document collection, payroll, benefits, and more.
Our quickstart guide to hiring in Malaysia
Navigate the tabs below to learn everything you need to know about hiring an employee in Malaysia
- Minimum Wage Requirements
- Malaysia’s minimum wage for workers was last raised from RM1,100 to RM1,200 in February 2020.
- Individual Income Tax
- The range of individual income tax varies from 0% to 30% and is calculated using progressive rates.
|Type of leave||Time period|
|Annual leave/Earned Leave||8 days|
|Sick Leave||14 days|
|Maternity Leave||12 weeks|
Malaysia has a pro-employee system in place where employers must provide a valid reason for terminating an employment contract and issue a notice. Following this, employees will have the chance to challenge the decision, provide an explanation, or accept the termination.
During the probationary period in Malaysia, employees are entitled to a notice period of up to 30 days. However, after completing the probationary period, employees are entitled to a notice period of up to 3 months.
Employers may be required to pay standard severance, long service pay, compensation pay, and/or separation pay depending on the reasons for terminating an employee’s employment.
In Malaysia, employees are automatically enrolled in the social security system which includes retirement funds and Provident Fund, to be used for any purpose. Employers and employees each make a monthly contribution to their individual accounts, and contributions depend on the employee’s salary with a maximum ceiling. Additionally, employers must contribute to the Employment Injury Insurance Scheme (EIIS) and the Invalidity Pension Scheme (IPS), and all employees are entitled to a certain number of leaves. Holiday or 13th-month wages are expected after one year of employment, and Malaysia’s labor laws recently updated to include a maximum of 48 hours per week. Overtime hours and pay are regulated by the Malaysian Employment Act, the employment contract, and collective agreements.
After the client signs the SOW, the onboarding process typically requires two-three business days.
- Employee contract
- Malaysian employment contracts do not have a statutory language requirement, as long as both employers and employees can understand the terms outlined in the document.
- Probation period
- The maximum probation period in Malaysia is 3 months.
Our team is here to help, send us your requests or questions and we will get back to you shortly. You can also contact us on Social Media or by phone. We are looking forward to hearing from you.