Guide to employing in Malaysia

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Capital City
Putrajaya, Kuala Lumpur
Malaysian Ringgit, MYR, (1 = 100 Sen)
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Navigating the intricacies of local labour laws in each location where your business wants to hire new employees can be a costly and time-consuming process. XPANDIUM is your credible Employer of record in Malaysia. We provide payroll, contractor services and solutions for clients who want to hire employees and run a fully compliant payroll without establishing a legal entity in Malaysia.

When you make use of XPANDIUM’s EOR platform in Malaysia, we will hire all aspects of onboarding, payroll management, taxes and benefits through our own local EOR entity, leaving you to focus on the vital part – optimising your workforce and unlocking your business’ full potential.


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Xpandium - Hire your employees in Malaysia

The Malaysian employment market is regulated by the Employment Act of 1955. This Act specifies the employment standards for both employers and employees and provides regulations regarding pension, retirement and leave. The aim is to ensure fair treatment of employees and prevent exploitation.

Hiring employees in Malaysia will require your business to have extensive knowledge of this legal landscape. If not implemented correctly, this can become an expensive and time-consuming practice. XPANDIUM can serve as your trusted Employer of Record Service Provider in Malaysia. Our expertise in Malaysian labour regulations will help you streamline your expansion efforts while ensuring compliance with local labour regulations.

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The following information is a basic guideline for employing staff in Malaysia and the salary calculator can easily help you to understand the basic costs.

Employment Contract

Employment relationships may be agreed on for

  • fixed term employment (temporary) or
  • indefinite duration (open-ended, permanent).

Probation period

Probation period is optional and cannot exceed 4 months.In case of fixed-term contracts, the probation period can not be more than 50% of the term of the contract.

Working hours

Full time employment is considered 8 hours per day and 40 hours per week in Malaysia. Less hours will mean part-time work.

Hours worked above 8 hours per day / 40 per week or on public holidays are considered overtime. Employer and Employee must agree on working overtime.

Overtime hours cannot exceed a total of 8 hours within a 7 days’ period and must be compensated during payroll for overtime as per local law.Parties may agree that the overtime hours over a 4-months’ time-frame schedule be an average 12 hours for every 7 calendar days.

Minimum wage

The current minimum wage is 584 EUR for full-time employment or 3.84 EUR for hourly work in Malaysia.

13th month salary

Not required.

Benefit package

In Malaysia, there are no obligatory fringe-benefits that an Employer must offer, however a custom benefit plan may be set up for your team (see more details at the Benefit section).

Payroll Cycle

Salaries are payrolled and paid on a monthly basis.

Health insurance in Malaysia

The Malay health insurance system is a solidarity-based social insurance system. This means it provides healthcare for everyone, including persons insured by employment agreement. Malaysia is covered by health care and treatment is equally available in all regions. Employees can order a European Health Insurance Card or its replacement certificate in the State Portal.

Employer taxes

33.8% total employment cost in Malaysia.


Public Holidays

When hiring and managing your workforce in Malaysia, it is important to include national public holidays in your workforce management and leave policies. This will ensure that your employees receive their entitled benefits and that your business complies with local labour regulations. XPANDIUM will help you successfully navigate these complexities and ensure your workforce is compliantly managed.

Malaysia observes a total of 12 public holidays each year. These public holidays are separate from the prescribed minimum paid leave, and employees can utilise both holidays and their annual leave. Here is a list of all the recognised national public holidays in Malaysia:




New Years Day

January 1

Independence Day

February 24

Good Friday

April 2

Friday before Easter Sunday

Easter Monday

April 4

Varies yearly

Labor / Spring Day

May 1


May 23

Victory Day

June 23


June 24

Malay Day

August 20

Malaysia Restoration of Independence

Christmas Eve

December 24

Christmas Day

December 25

2nd Day of Christmas

December 26


Popular benefits in Malaysia

Offering attractive fringe benefits can assist your business in attracting top talent in Malaysia. XPANDIUM’s EOR services in Malaysia can help you create custom employee benefits beyond regular salaries. This means that in addition to salary, employees may receive one or more of the following non-salary benefits:

Supplementary medical insurance  icon

Supplementary medical insurance (private / dental / vision)

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Supplementary Life or other special insurance

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Additional paid holidays

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Flexible work schedule

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Voluntary pension fund scheme

By using XPANDIUM as your trusted EOR service provider in Malaysia, we will help position your business as an employer of choice, attracting the best talent Malaysia has to offer.

Benefit planning process includes

Attracting top talent by offering specialised benefits in Malaysia can be a complicated process. Offering an individual benefit for one or a select group of employees needs to be planned and advised to be signed with a side agreement and the employment contract.

As your preferred EOR provider in Malaysia, XPANDIUM can assist you in designing and implementing benefits programmes for single or groups of employees. This process will include:

  • Determining the annual amount you want to offer employees – this amount can be divided into 12 instalments and integrated into the regular payroll.

  • Select the specific benefit items your company would like to offer its employees – this may include voluntary benefits such as medical insurance, additional paid time off and flexible work schedules.

  • Creating internal policies which will outline the details of the benefits plan. These policies must be formally and thoroughly communicated to relevant employees and integrated with the monthly payroll.

  • Ensuring employees have accurately completed benefit statements – specifying preferred benefits and respective amounts.


Types of Leaves

Paid leave

Employees are entitled to 28 days.

Public holidays

There are 12 public holidays in Malaysia.

Sick leave

An employee is entitled to 182 sick-leave days yearly while enrolled in the national social security system.

Payment is 70% of the employee’s average salary, which is paid by the Employer from the 4th day of sickness but from the 9th day the payment is taken over by the State.

Pregnancy and maternity leave

Expecting women can have a total of 20 weeks / 140 days.

Maternity leave may include and start 70 days prior to giving birth. State health insurance covers maternity leave with 100% payment.

Parents receive a one-time 320 EUR allowance for child birth and in case of triplets the payment is 1,000 EUR per child.

Paternity / paternal leave

The father is entitled to 10 working days off for paternity leave which can be granted within 2 months of the expected child’s birth date. After the birth, fathers are entitled to 2 months of paternity leave with the payment of 100% average salary payment, however it is capped at 3 times of the minimum wage amount.

Other / Child Adoption leave

Employees are entitled to a special leave if adopting a child under the age of 10.

Other / Child care leave

Any parent may take paid leaves for taking care of a child.

Leave varies based on the age of child:

  • 3 days - up to 2 children under the age of 14
  • 6 days - 3+ children under the age of 14

Payment for days taken is calculated based on the minimum wage.


Employment termination

Employers have the below options to terminate an employment contract in Malaysia:

Termination under probation period

Termination by the Employer is immediately effective with a special 15 days’ written notice to the Employee.

Resignation by Employee

Employees may freely terminate their employment contract with a written notice of minimum 14 days to 1-month notice.

Termination by Employer with notice

An employment agreement may be terminated by the Employer by notice with below period of notices.

If employment period is

  • up to 1 year period: 15 calendar days
  • from 1 to 5 years of employment: 30 calendar days
  • from 5 to 10 years of employment: 60 calendar days
  • 10+ years of employment: 90 calendar days

Termination of fixed term contract

If termination is due to Employer’s redundancy, the employee is entitled to the salary that they would have received from the date of termination to the expiry date of the contract.

Termination by mutual consent

The termination by mutual consent allows the Employer and Employee to agree freely in a written agreement with each other on the conditions of termination.

Expiry of employment contract

When the employment contract expires then such employment is automatically terminated.

Severance pay

Employee is entitled to severance pay if the Employer terminates the contract due to redundancy. The severance pay is the average salary calculated based on the latest 6 months salary.

Employees are entitled to receive higher amounts of severance pay depending on the length of employment with the Employer:

  • From 5-10 years of employment: +1 month salary
  • over 10 years of employment: +1 month salary

How EOR works in Malaysia

XPANDIUM’s comprehensive employer of record services in Malaysia will provide you with a strategic solution for hiring employees across borders. Our expertise provides uncomplicated and efficient options for recruitment, integrating new employees, managing payroll, and handling staff benefits.

XPANDIUM will ensure your workforce is compliantly employed within the guidelines of the local labour laws. Understanding these intricate regulations is essential to avoid potential legal pitfalls and penalties.

We recognise that each business has its requirements, so our solutions are customised to meet your specific needs. When you select XPANDIUM, you're opting for an effective and compliant way to grow your workforce in Malaysia.

Take the complexity out of hiring employees in Malaysia, and contact XPANDIUM for a tailored solution.


Payments to employees in Malaysia

As part of XPANDIUM’s payroll services in Malaysia, we simplify your business’s payroll process.  Here is how we compliantly process your employee payroll in Malaysia:

  • Gather essential employee information – We will collect and process all employee information needed to ensure an effective pay run.
  • Compliance with local tax law - XPANDIUM will ensure your company complies with employee tax regulations. This includes staying current with income tax regulations so that your payroll processes meet all the requirements.
  • Payroll Classification -  We will ensure your employees are correctly classified as part-time or full-time to determine tax contributions accurately.
  • Providing official documentation - We will provide your employees with official documentation indicating their gross income and details about tax deductions, benefits received and other contributions made.
  • Timely salary payments - We will ensure that your employees receive prompt and accurate salary payments.

Partner with XPANDIUM and experience the benefits of our expert payroll services in Malaysia.