Easily Hire, Manage, and Pay Your Employees in Malaysia
RecruitGo's Employer of Record service in Malaysia enables employers to hire top Malaysian talent quickly and compliantly — without the cost and delay of setting up a local entity. You focus on growth; we handle EPF, SOCSO, and Employment Act compliance.
Why Foreign Companies Hire in Malaysia
Malaysia is one of Southeast Asia's most developed economies, with strong infrastructure, a highly educated multilingual workforce, and a strategic location between Singapore and the broader ASEAN market. The country offers a unique combination of English proficiency, competitive salary costs, established legal frameworks, and a mature BPO and shared services sector.
For foreign companies, Malaysia offers salary costs 50-65% lower than Singapore or Australia, a workforce fluent in English, Malay, Mandarin, and Tamil, a stable regulatory environment, and strong IP protection. The government actively attracts foreign investment through tax incentives and digital economy initiatives (Malaysia Digital).
How RecruitGo Helps You Hire in Malaysia
Whether you need to hire your first employee without a local entity, run payroll for an existing Malaysian team, manage employee benefits, or sponsor foreign worker permits, RecruitGo has a specific service for each stage.
Employer of Record (EOR)
Hire employees in Malaysia without incorporating a Sdn Bhd. RecruitGo is the legal employer, handling contracts, EPF/SOCSO/EIS registration, PCB tax withholding, and Employment Act compliance.
Payroll Service
Already have a Sdn Bhd? We process monthly payroll in MYR, calculate PCB withholding, remit all statutory contributions, and handle annual EA Form filing with LHDN.
Employee Benefits
Design and administer benefit packages that meet Malaysian statutory requirements and compete for top talent.
Visa and Work Permits
Hiring foreign nationals in Malaysia requires an Employment Pass from the Immigration Department. We manage the full process.
Malaysia Employment Snapshot
A quick-reference table covering the essentials of hiring employees in Malaysia.
| Currency | Malaysian Ringgit (MYR / RM) |
| Minimum wage (2025) | RM 1,700/month (~USD 380). Applies to employers with 5+ employees |
| Standard working hours | 45 hours/week (reduced from 48 in 2023). Max 8 hours/day |
| Overtime | 1.5x normal, 2x rest days, 3x public holidays. Capped at 104 hrs/month |
| Probation period | 3 to 6 months typical. All statutory rights apply during probation |
| Contract types | Indefinite (most common), fixed-term, part-time. Written contract required for 1+ month |
| Annual leave | 8 days (under 2 yrs), 12 days (2-5 yrs), 16 days (5+ yrs) |
| Sick leave | 14 days (under 2 yrs), 18 days (2-5 yrs), 22 days (5+ yrs). +60 days if hospitalized |
| Maternity leave | 98 consecutive days fully paid (2023 amendment). Max 5 confinements |
| Paternity leave | 7 consecutive days fully paid (introduced Jan 2023) |
| EPF (retirement) | Employer: 13% (salary RM5K or below) / 12% (above). Employee: 11% |
| SOCSO | Employer: ~1.75%. Employee: 0.5%. Wage ceiling: RM6,000/month |
| EIS | Employer: 0.2%. Employee: 0.2%. Wage ceiling: RM6,000/month |
| Income tax (PCB) | Progressive: 0% (up to RM5K) to 30% (above RM2M). Monthly withholding |
| Retrenchment pay | 10 days/yr (under 2 yrs), 15 days (2-5 yrs), 20 days (5+ yrs) |
| Public holidays | 11 mandatory + state holidays (varies by state) |
| Language | Contracts in English or Bahasa Malaysia. English widely used |
How to Hire Employees in Malaysia as a Foreign Company
Foreign companies have three main options for hiring in Malaysia.
| EOR (RecruitGo) | Sdn Bhd (Own Entity) | Contractor | |
|---|---|---|---|
| Time to first hire | 3 to 5 business days | 4 to 8 weeks (SSM) | Immediate |
| Setup cost | None | RM 3K-15K+ plus capital | None |
| Compliance | RecruitGo | You | Contractor's responsibility |
| EPF/SOCSO/EIS | Handled by RecruitGo | Your responsibility | Not applicable |
| PCB tax withholding | Handled by RecruitGo | Your responsibility | Contractor files own taxes |
| Ideal for | 1-15 employees, market testing | 15+, permanent operations | True project work |
Foreign ownership is straightforward: Malaysia allows 100% foreign ownership for most business activities. A Sdn Bhd can be incorporated in 2-4 weeks through SSM. However, the ongoing compliance burden (EPF, SOCSO, EIS, HRDF, PCB, annual audit, company secretary, tax filing) makes EOR more practical for small teams. Compare EOR vs entity in detail
Contractor misclassification: Malaysian courts examine the substance of the working relationship, not the contract label. If the worker is economically dependent on you and integrated into your operations, the relationship is employment — triggering backdated EPF, SOCSO, EIS, separation pay, and penalties from LHDN.
Key Employment Rules in Malaysia
Statutory contributions (EPF, SOCSO, EIS)
EPF (retirement): employer 13% for salary RM5,000 or below, 12% for above. Employee 11%. Foreign workers: 2% + 2% from Oct 2025. SOCSO covers workplace injury (employer ~1.75%, employee 0.5%, wage ceiling RM6,000). EIS provides retrenchment support (0.2% each, ceiling RM6,000). HRDF training levy: 1% for employers with 10+ Malaysian employees.
Working hours (2023 amendment)
Max working hours reduced from 48 to 45 hours/week effective Jan 2023. Max 8 hours/day. Overtime capped at 104 hours/month: 1.5x normal, 2x rest days, 3x public holidays. The 2023 amendments also introduced flexible working arrangement requests.
Leave entitlements
Annual leave: 8 days (under 2 yrs), 12 days (2-5 yrs), 16 days (5+ yrs). Sick leave: 14/18/22 days + 60 if hospitalized. Maternity: 98 consecutive days fully paid (increased from 60 in 2023). Paternity: 7 days (new in 2023). 11 mandatory paid public holidays plus state holidays.
Termination and retrenchment
Termination must be for just cause. Employees with 12+ months can file unfair dismissal with the Industrial Court. Retrenchment requires LIFO, 30 days notice to Labour Office, and statutory termination benefits: 10 days/yr (under 2 yrs), 15 days (2-5 yrs), 20 days (5+ yrs).
Foreign worker requirements
Foreign professionals need an Employment Pass from Immigration: Cat I (RM10K+ salary, up to 5 yrs), Cat II (RM5K-9.9K, up to 2 yrs), Cat III (RM3K-4.9K, up to 12 months). Malaysia Digital companies get MDEC endorsement for faster processing. Takes 2-6 weeks.
What It Costs to Employ Someone in Malaysia
Total employer cost is typically 115-120% of gross salary, making it one of the most competitive markets in the region.
| Component | Monthly (RM) | Rate |
|---|---|---|
| Gross salary | 5,000 | — |
| EPF (employer) | 650 | 13% (salary RM5K or below) |
| SOCSO (employer) | ~88 | ~1.75% (ceiling RM6K) |
| EIS (employer) | 10 | 0.2% (ceiling RM6K) |
| HRDF (if applicable) | 50 | 1% (10+ employees) |
| Total employer cost | ~5,798 | ~116% of gross |
EPF employer rate is 13% for employees earning RM5,000/month or below, 12% for above. SOCSO and EIS capped at RM6,000. HRDF applies to 10+ Malaysian employees. EOR service fee not included.
Common Questions
What companies ask most about hiring in Malaysia.
Yes, through an Employer of Record (EOR). The EOR is a locally registered Sdn Bhd that legally employs workers on your behalf. You manage the day-to-day work. The EOR handles contracts, EPF/SOCSO/EIS registration, PCB tax withholding, and all Employment Act compliance. This lets you hire in 3-5 days without incorporating a Sdn Bhd.
EPF: 13% for salary RM5,000 or below, 12% for above (employee 11%). Foreign workers: 2% + 2% from Oct 2025. SOCSO: ~1.75% employer + 0.5% employee, capped at RM6,000. EIS: 0.2% each, same ceiling. HRDF: 1% for 10+ Malaysian employees.
Working hours reduced from 48 to 45/week, maternity leave increased from 60 to 98 days, paternity leave introduced at 7 days, flexible working arrangements formalized, Employment Act coverage expanded to all employees regardless of salary, and discrimination protections strengthened.
No. Unlike the Philippines or Indonesia, Malaysia does not have a mandatory 13th month salary. However, many companies pay annual bonuses (1-3 months), and it is a market expectation in competitive sectors like tech and finance.
Termination must be for just cause. Employees with 12+ months can file unfair dismissal with the Industrial Court. Retrenchment requires LIFO, 30 days notice to Labour Office, and statutory benefits (10-20 days per year of service).
Foreign professionals need an Employment Pass: Cat I (RM10K+, up to 5 yrs), Cat II (RM5K-9.9K, up to 2 yrs), Cat III (RM3K-4.9K, up to 12 months). Malaysia Digital companies get MDEC endorsement for faster processing. Takes 2-6 weeks.
Typically 3-5 business days — including contract drafting, EPF/SOCSO/EIS registration, PCB setup, and onboarding. Setting up your own Sdn Bhd takes 4-8 weeks.
