Malaysia

Malaysia, strategically located in Southeast Asia, offers a dynamic business environment with a skilled, multilingual workforce and a robust infrastructure. As a member of ASEAN, it serves as a gateway to regional markets. Understanding Malaysia's employment laws, tax obligations, and payroll practices is essential for companies aiming to establish or expand operations in the country.
Contractor Management
EOR
Payroll
Contractor of Record
Currency
Malaysian ringgit (MYR)
Payroll Frequency
Monthly
Employer Taxes
Up to 15.95%

Overview

Population
~33 million
Language
Malaysian
Capital
Kuala Lumpur
Currency
Malaysian ringgit (MYR)
Country code
MYR
Min wage
1,700 MYR/month (urban/rural)
Working hours
9 AM - 5 PM
Weekdays
Monday to Friday (some sectors operate on Saturdays)
Work hours per week
48

Payroll

Salaried Employees
Time-Based Employees
13th Salary

Not mandatory; commonly offered as a bonus

Avg employer tax

Up to 15.95%

Tax Breakdown

Employer Contributions:

Employees Provident Fund (EPF)
12%–13% of monthly salary
Social Security Organization (SOCSO)
1.75%
Employment Insurance System (EIS)
0.2%
Human Resources Development Fund (HRDF)
1% (for companies with ≥10 employees)
Total Estimated Employer Contributions
Approximately 18.95%–22.45% of gross salary

Employee Contributions:

EPF
11% of monthly salary
SOCSO
0.5%
EIS
0.2%
Total Estimated Employee Contributions
Approximately 11.7%–17.2% of gross salary

Personal Income Tax (PIT):

Progressive Rates:

0%
on income up to RM5,000
1%–30%
for higher income brackets

Tax Reliefs:

Available for
EPF contributions, life insurance, medical expenses, and more

VAT

VAT
  • 10% for sales tax and 6% for service tax
Tax Calculation for Malaysia
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Employer cost
Total monthly cost of employment
Gross monthly salary costs
Estimated taxes and contributions
Employee cost
Net monthly salary
GBP 5,137
Gross monthly salary
GBP 8,334
Estimated taxes & social security
GBP 8,334
Employer cost
Total yearly cost of employment
Gross yearly salary costs
Estimated taxes and contributions
Employee cost
Net yearly salary
GBP 5,137
Gross yearly salary
GBP 8,334
Estimated taxes & social security
GBP 8,334
Request a detailed quotation
How it works

Onboarding Process

Onboarding in Malaysia typically includes the following steps to ensure a smooth transition for new hires:

Employment Contract

Must be in writing and include job title, salary, working hours, leave entitlements, and termination conditions

Registration with Authorities

  • Register the employee with the Inland Revenue Board (LHDN) for tax purposes
  • Enroll the employee in EPF, SOCSO, and EIS

Payroll Setup

  • Ensure accurate calculation and withholding of taxes and contributions
  • Provide monthly payslips detailing earnings and deductions

Employee Documentation

Collect copies of identification, tax file number, and bank account details

Workplace Policies

Provide access to company policies, code of conduct, and employee handbook

Pre-boarding

Pre-boarding

Pre-boarding

Key Elements of an Employment Contract in Malaysia
When drafting an employment contract for employees in Malaysia, the following key elements should be included:

Personal Details

Name, contact information, and role of the employee.

Employee Leave Policies

Sick days
  • 14–22 days per year, depending on tenure
  • Hospitalization leave: Up to 60 days per year

Maternity leave
  • 98 consecutive days with full pay
  • Applicable to all female employees
Paternity leave
  • 7 consecutive days with full pay
  • Applicable to married male employees

Other Leaves:

  • Bereavement, marriage, and study leaves are provided at the employer's discretion
Annual Leave
  • Minimum of 8 days per year for employees with 1–2 years of service
  • Increases with tenure
  • Many companies offer 14–20 days as standard
9 Public holidays in Malaysia

Note: Additional state-specific holidays apply.

1st
New Year's Day
29th
Chinese New Year
30th
Chinese New Year
1st
Labor Day
12th
Wesak Day
2nd
Yang di-Pertuan Agong's Birthday
31st
National Day
16th
Malaysia Day
20th
Deepavali (except Sarawak)
25th
Christmas Day
  • 01-Jan  New  Year's Day    
  • 14-Jan  Birthday of Yang  di-Pertuan Besar    
  • 28-Jan  Thaipusam        
  • 01-Feb  Federal Territory  Day    
  • 12-Feb  Chinese Lunar New  Year's Day    
  • 13-Feb  Second day of  Chinese Lunar New Year    
  • 13-Feb  Chinese Lunar New  Year Holiday    
  • 14-Feb  Valentine's Day        
  • 04-Mar  Anniversary of the  Coronation of the Sultan of Terengganu    
  • 11-Mar  Isra and Mi'raj
  • 20-Mar  March Equinox    
  • 23-Mar  Birthday of the  Sultan of Johor        
  • 02-Apr  Good Friday    
  • 04-Apr  Easter Sunday    
  • 13-Apr  First Day of Ramadan    
  • 15-Apr  Declaration of  Malacca as Historical City    
  • 26-Apr  Birthday of the  Sultan of Terengganu    
  • 29-Apr  Nuzul Al-Quran        
  • 01-May  Labour Day    
  • 13-May  Hari Raya Puasa    
  • 14-May  Hari Raya Puasa Day  2    
  • 22-May  Pahang State Holiday    
  • 26-May  Wesak Day    
  • 30-May  Harvest Festival    
  • 31-May  Harvest Festival  observed    
  • 31-May  Second Day of  Harvest Festival        
  • 01-Jun  Gawai Dayak    
  • 02-Jun  Gawai Dayak Holiday    
  • 07-Jun  The Yang di-Pertuan  Agong's Birthday    
  • 20-Jun  Sultan of Kedah's  Birthday  
  • 21-Jun  June Solstice        
  • 07-Jul  George Town World  Heritage City Day    
  • 10-Jul  Penang Governor's  Birthday    
  • 17-Jul  Birthday of the Raja  of Perlis    
  • 19-Jul  Day of Arafat    
  • 20-Jul  Hari Raya Haji    
  • 20-Jul  Hari Raya Haji  holiday    
  • 21-Jul  Hari Raya Haji (Day  2)    
  • 22-Jul  Sarawak Independence  Day    
  • 30-Jul  Birthday of the  Sultan of Pahang        
  • 10-Aug  Muharram/New Year    
  • 24-Aug  Birthday of the  Governor of Malacca    
  • 31-Aug  Malaysia's National  Day        
  • 13-Sep  Almarhum Sultan  Iskandar Hol Day    
  • 16-Sep  Malaysia Day    
  • 23-Sep  September Equinox        
  • 02-Oct  Birthday of the  Governor of Sabah    
  • 09-Oct  Birthday of the  Governor of Sarawak    
  • 19-Oct  The Prophet  Muhammad's Birthday (Tentative Date)        
  • 04-Nov  Diwali/Deepavali    
  • 05-Nov  Birthday of the  Sultan of Perak    
  • 11-Nov  Birthday of the  Sultan of Kelantan    
  • 12-Nov  Birthday of the  Sultan of Kelantan (Day 2)        
  • 11-Dec  Birthday of the  Sultan of Selangor    
  • 21-Dec  December Solstice    
  • 24-Dec  Christmas Eve    
  • 24-Dec  Christmas Eve    
  • 25-Dec  Christmas Day    
  • 31-Dec  New Year's Eve

Termination Process

Permissible Grounds

  • Misconduct
  • Redundancy
  • Poor performance
  • Mutual agreement

Notice Period

  • 4 weeks for employees with less than 2 years of service
  • 6 weeks for 2–5 years of service
  • 8 weeks for more than 5 years of service

Severance Pay

  • 10 days' wages per year of service for 1–2 years
  • 15 days' wages per year for 2–5 years
  • 20 days' wages per year for over 5 years

Probation Period

  • Typically 3–6 months
  • Shorter notice periods apply during probation

Personal Details

Name, contact information, and role of the employee.

_'s Booming Remote Workforce

Challenges of Remote Hiring in _

Simplifying Remote Hiring in _ with RemotePass 

Grow Your Team in Malaysia
with RemotePass

From onboarding and payroll to offboarding and visa support, RemotePass simplifies it all so you can focus on growing your team.

Building and expanding a global workforce is seamless with RemotePass. Our platform simplifies the complexities of hiring, payroll, and compliance across over 150 countries, including Malaysia.

With RemotePass, you can quickly onboard international employees, manage payroll, ensure legal compliance, and provide competitive benefits—all from one place. Focus on growing your business while we handle the HR and legal intricacies.

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Hiring in Malaysia | Payroll, Tax & Employment Guide

Malaysia offers a skilled, multilingual workforce with strong expertise in electronics, manufacturing, and emerging tech. With cost-effective hiring compared to developed Asian markets, Malaysia is attractive for sustainable growth in the region. 

RemotePass makes hiring in Malaysia simple. We handle compliance, contracts, and payroll. You focus on building your business.

Key Takeaways for Hiring in Malaysia

  • Wages must be paid no later than the seventh day after the last day of any wage period
  • From October 2025, expatriates must contribute to the Employees Provident Fund (EPF)
  • Employees get 14-22 days of paid sick leave annually (non-hospitalization), plus up to 60 days if hospitalization is needed
  • Severance pay applies when employment ends due to business closure or redundancy, not resignation

Quick Facts For Hiring In Malaysia

Continent
Asia
Capital
Kuala Lumpur
Currency
Malaysian Ringgit (MYR, RM)
Language
Bahasa Malaysia (Malay)
Payroll Cycle
Monthly
Pay Date
Legally, wages shall be paid not later than the seventh day after the last day of any wage period.

Malaysia Employment Contract Overview

Contract Type
Fixed-term / Open-ended
Local Language Required?
No
Bilingual?
No
Probation Period
Common probation period: three to six months
Minimum Paid Time Off
Less tahm two years of service: eight days of leave
Two to five years of service: 12 days of leave
Five+ years of service: 16 days of leave
Public Holidays
Under Malaysian law, employees are entitled to 12 or 13 paid public holidays annually, depending on the state in which they're employed.
Notice Period
Four weeks for employees with less than two years of service
Six weeks for employees with two to five years of service
Eight weeks for employees with five or more years of service

What Do You Need To Include In A Malaysian Employment Contract?

Make sure your contracts include all of these to comply with Malaysian labor law:

Employee Information

  • Full name
  • ID number
  • Role / Job title
  • Start date
  • Contract duration
  • Working hours
  • Probation and notice conditions
  • Termination provisions
  • Address details
  • Compensation details
  • Leave entitlements
  • End date (if applicable)

How Does Payroll and Taxation Work in Malaysia?

Malaysia's payroll system includes contributions to EPF (provident fund), SOCSO (social security), EIS (employment insurance), and HRDF (training fund). Understanding the different requirements for local employees versus expatriates helps you budget accurately.

Payroll Setup

Salary currency

Malaysian Ringgit (MYR, RM)

Minimum Wage

RM 1,700 per month

Hours per Week

45 hours per week / eight hours per day

Payroll Frequency

Monthly

Weekdays

Monday through Friday

Mandatory Bonuses

Not required

Gross Salary Structure

Gross salary doesn't follow a standardized structure in Malaysia.

What Payroll Taxes Do Employers Pay in Malaysia?

Employer cost % (estimate):


Employer Cost %

Contributions Breakdown

Employees Provident Fund (EPF / KWSP):

Monthly wage ≤ RM5,000 = 13%, Monthly wage > RM5,000 = 12%. Expatriates aren't required to contribute to EPF yet, but you may voluntarily contribute. Starting from October 2025, expatriates are also required to contribute.

Social Security Organization (SOCSO / PERKESO):

1.75%. Expatriates are excluded from SOCSO coverage unless employed on a local contract. You may opt-in expatriates under SOCSO voluntarily or via separate private insurance.

Employment Insurance System (EIS):

0.2% for local employees. Not applicable for expats.

Human Resource Development Fund (HRDF):

1% for local employees. Not applicable for expats.

What Payroll Taxes Do Employees Pay in Malaysia?

Individual Income Tax

For residents staying 60-182 days, income tax rates vary progressively from zero up to 30% based on their earnings. Non-residents staying 60-182 days are taxed at a flat rate of 30%. Those who stay for 182 days or more in a calendar year are taxed at progressive rates and qualify for tax reliefs and deductions.

Social Contributions


Employees Provident Fund (EPF / KWSP):

Local employees: 11%, Expatriates: 2% (Starting from October 2025, expatriates are also required to contribute.)

Social Security Organization (SOCSO / PERKESO):

Locals and Expatriates: 0.5%

Employment Insurance System (EIS):

Local employees: 0.2%, Expatriates: Not applicable

Income Tax Rates

Based on monthly taxable income (after allowances):

Chargeable Income (RM) Tax Rate
0 – 5,000

0%

5,001 – 20,000

1%

20,001 – 35,000

6%

35,001 – 50,000

11%

50,001 – 70,000

19%

70,001 – 100,000

25%

100,001 – 400,000

26%

400,001 – 600,000

28%

600,001 – 2,000,000

30%

Exceeding 2,000,000

30%

Hiring cost calculator 

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Employer cost
Total monthly cost of employment
Gross monthly salary costs
Estimated taxes and contributions
Employee cost
Net monthly salary
GBP 5,137
Gross monthly salary
GBP 8,334
Estimated taxes & social security
GBP 8,334
Employer cost
Total yearly cost of employment
Gross yearly salary costs
Estimated taxes and contributions
Employee cost
Net yearly salary
GBP 5,137
Gross yearly salary
GBP 8,334
Estimated taxes & social security
GBP 8,334
Request a detailed quotation

Employee Benefits and Mobility in Malaysia

Employment of expats is supported in Malaysia.

Benefits Provider Funded Through Notes
Health Insurance Government

Payroll Contributions

Social security benefits in Malaysia cover medical coverage.

Pension / Social Security Government

Payroll Contributions

Social security benefits in Malaysia, which include retirement, disability, survivor benefits, and medical coverage, are offered through the Employees Provident Fund (EPF) and the Social Security Organization (SOCSO). Both you and the majority of employees—including part-time, temporary, and probationary workers—are required to participate in these programs.

Leave And Holiday Entitlement In Malaysia

Annual leave

Employees receive paid annual leave based on their length of continuous service with their current employer as follows:

  • Less than two years: eight days of leave

  • Between two and five years: 12 days of leave

  • Five years or more: 16 days of leave per year

Employees who have worked for less than 12 months with you are entitled to a pro-rated amount of the full annual leave, calculated based on the months they've served. Leave can be accumulated but only carried forward into the following 12-month period after it has been earned. Additionally, employees may choose to receive payment instead of taking their leave.

Public holidays

Malaysian law mandates 12 or 13 paid public holidays annually, with the exact number depending on the state. These include:

  • Chinese New Year

  • Birthday of the Prophet Muhammad

  • Wesak Day

  • Hari Raya Puasa (two days)

  • Hari Raya Haji (two days in Kedah, Kelantan, Perlis, and Terengganu; one day in other states)

  • Deepavali

  • National Day (August 31)

  • Birthday of Yang di-Pertuan Agong (June 1)

  • Labor Day (May 1)

  • Malaysia Day (September 16)

  • Christmas Day (December 25)

In addition to these, individual states may declare additional paid holidays.

Sick Leave

When hospitalization isn't required, employees are entitled to paid sick leave per calendar year as follows:

  • 14 days for those employed less than two years

  • 18 days for employees with two to five years of service

  • 40 days per year with 15 to 30 years of contributions

  • 22 days for those with five or more years of employment

If hospitalization is needed, employees can receive up to 60 days of paid sick leave annually. This 60-day hospitalized sick leave is granted in addition to the regular non-hospitalization sick leave entitlement.

A medical certificate from a licensed practitioner is required to validate the illness.

Maternity Leave

Female employees are entitled to 98 consecutive days of paid maternity leave. Leave may begin up to 30 days before the expected date of confinement or, if not taken earlier, will start on the day following childbirth. If a doctor certifies that the employee can't continue working, maternity leave may commence earlier than the 30-day window.

These rights also apply in cases of stillbirth after 22 weeks of pregnancy. To qualify for paid leave, the employee must have worked at least 90 days in the nine months before confinement and been employed at some time in the four months immediately before confinement.

Employees must give you 60 days' notice of the expected confinement and intended start date of leave. Notice may be oral or written, given to a supervisor or authorized person. If leave starts without notice, payment of the maternity allowance may be suspended until proper notice is provided.

Paternity Leave

Male employees are entitled to seven days of paid paternity leave upon the birth of a child, provided they meet the following conditions:

  • They're legally married to the mother of the child

  • They've been continuously employed by the same employer for at least 12 months prior to the start of the leave

  • They inform you of the pregnancy at least 30 days before the expected delivery date, or as soon as reasonably possible after the child is born

Other Types of Leave

No other statutory leave. You may grant leave at your own discretion.

Termination and Offboarding in Malaysia

Type Possible?
Termination for Cause (poor performance, misconduct, etc.) Yes
Termination without Cause Yes
Mutual Termination Agreement (MTA) Yes
Redundancy Not possible under the EOR setup

Employee Resignations

Employee
Resignations

 Termination with Cause

Termination
with Cause

Termination without Cause

Termination
without Cause

Mutual Termination Agreement

Mutual Termination
Agreement

 Fixed Term Contract

Fixed Term
Contract

Malaysia Employee Resignation

Notice period

The standard notice periods for resignation are based on length of service:

  • Four weeks of notice for less than two years of service

  • Six weeks of notice for between two and five years of service

  • Eight weeks of notice for five or more years of service

Employees have the right to end their employment without prior notice if they or their dependents face an immediate threat from violence or illness—provided they were unaware such risks were part of their job when they accepted the position.

Payment in lieu of notice or notice waiver

Employees may choose to resign immediately by compensating you with an amount equal to the wages that would have been earned during the applicable notice period.

End-of-Service Benefits

Severance/Gratuity

Under the Employment (Termination and Lay-Off Benefits) Regulations 1980, employees are entitled to severance (termination) payments only if their employment ends due to reasons like business closure—not due to resignation.

Other Benefits

  • Unused Annual Leave Encashment

  • Unpaid Salary, Allowances, Overtime

  • Unused Public Holiday Entitlement

Employer Termination With Cause in Malaysia

Acceptable grounds

The Employment Act doesn't provide a specific definition of misconduct beyond describing it as "misconduct inconsistent with the fulfillment of the express or implied conditions" of the employee's service.

Notice

In cases involving misconduct, you have the right to dismiss an employee without notice, impose a demotion, suspend the employee without pay for a period of up to two weeks, or apply a lesser disciplinary measure. However, such actions may only be taken after conducting a proper "due inquiry" to ensure fairness.

While investigating the alleged misconduct, you may suspend the employee for up to two weeks with at least half of their regular pay. If the inquiry concludes that the employee didn't commit any misconduct, you're required to compensate the employee for any withheld wages.

End-of-Service Benefits

Severance

Severance pay isn't applicable in dismissals due to employee misconduct.

Employer Termination Without Cause in Malaysia

Notice period

In the absence of a specified notice period in the employment contract, the default notice requirements are determined by the employee's length of service:

  • Four weeks for those employed for less than two years

  • Six weeks for those with two to five years of service

  • Eight weeks for employees who have worked five years or more

Payment in lieu of notice or notice waiver

Instead of giving the required notice, you may choose to compensate the employee with an amount equal to the wages that would have been earned during the notice period.

End-of-Service Benefits

Severance

As per the Employment (Termination and Lay-Off Benefits) Regulations 1980, severance pay is as follows:

  • At least one year but less than two years of service: 10 days' wages per year of service

  • From two to five years of service: 15 days' wages per year of service

  • Five or more years of service: 20 days' wages per year of service

For partial years of service, severance pay is calculated on a pro-rata basis.

Other Benefits

  • Unpaid salary up to the termination date

  • Encashment of unused annual leave

  • Outstanding overtime, bonuses, commissions (if contractually owed)

  • Payment for any public holidays not taken if applicable

Mutual Termination Agreements in Malaysia

MTAs are voluntary agreements signed by both parties to terminate an employment contract by mutual consent.

Notice

Notice period

Four weeks for those employed for less than two years

  • Six weeks for those with two to five years of service

  • Eight weeks for employees who have worked five years or more

Waiver of notice

Instead of giving the required notice, you may choose to compensate the employee with an amount equal to the wages that would have been earned during the notice period.

End-of-Service Benefits

Severance

As per the Employment (Termination and Lay-Off Benefits) Regulations 1980, severance pay is as follows:

  • At least one year but less than two years of service: 10 days' wages per year of service

  • From two to five years of service: 15 days' wages per year of service

  • Five or more years of service: 20 days' wages per year of service

For partial years of service, severance pay is calculated on a pro-rata basis.

Other Benefits

  • Unpaid salary up to the termination date

  • Encashment of unused annual leave

  • Outstanding overtime, bonuses, commissions (if contractually owed)

  • Payment for any public holidays not taken if applicable

Offboarding Process for the End of Fixed-term Contracts in Malaysia

If the Fixed-Term Contract Ends Normally

Notice

The contract expires on the agreed end date without renewal.

End-of-Service Benefits

Severance/Gratuity

No statutory requirement for severance pay unless contract or company policy states otherwise.

Other Benefits

You must provide:

  • Final salary payment including unpaid wages, pro-rated bonuses, overtime, and allowances
  • Payment for unused annual leave accrued during the contract period
  • Notice (if required by contract): Some contracts specify notice before non-renewal; otherwise, contract expiry is automatic
  • Return of company property and completion of exit formalities
  • Settlement of statutory contributions (EPF, SOCSO) up to the last working day
  • Certificate of Service or Employment Reference Letter if requested

If the Employer Terminates Early

Early termination before the contract expiry date is generally only lawful with cause or if the contract includes a termination clause.

Notice

You must provide written notice as per contract or Employment Act minimum.

End-of-Service Benefits

If you terminate early without cause or without lawful grounds, the employee is generally entitled to:

  • Notice pay or payment in lieu of notice, based on the contract or Employment Act
  • Severance/termination benefits under the Employment (Termination and Lay-Off Benefits) Regulations 1980, calculated based on length of service
  • Final salary, including unpaid wages, allowances, overtime, bonuses
  • Unused annual leave encashment
  • Settlement of statutory contributions (EPF, SOCSO) up to termination date

Final Payment Timing & Immigration and Visa Compliance in Vietnam

Final Payment Deadline

You're usually required to settle all final payments immediately or within a short time after termination or contract expiration. Common timelines include:

  • By the end of the next working day or
  • Within seven to 14 days after termination

Penalty

You may face fines, legal action, or be required to pay interest on delayed payments.

Visa and Immigration Compliance

You must notify the Malaysian Immigration Department immediately upon termination of a foreign employee. Notification must usually be done within seven days of termination.

You're responsible for canceling the Employment Pass (EP) or any related visa once the employment ends.

You're generally required to bear the cost of repatriating the foreign employee to their home country if stipulated by local labor laws or the employment contract.

For Employment Pass holders, you must update the MYXpats Centre about the employment status change.

You must file the CP21 form with the Inland Revenue Board of Malaysia (LHDN) at least 30 days before the employee leaves the company or the country. This allows for tax clearance before departure.

Non-compliance may lead to fines, blacklisting, or revocation of your privileges for hiring foreign workers in the future.

Key Elements of an Employment Contract in Malaysia
When drafting an employment contract for employees in Malaysia, the following key elements should be included:

Personal Details

Name, contact information, and role of the employee.

_'s Booming Remote Workforce

Challenges of Remote Hiring in _

Simplifying Remote Hiring in _ with RemotePass 

Hire in Malaysia Without Compliance Worries

From onboarding and payroll to offboarding and visa support, RemotePass simplifies it all so you can focus on growing your team.

Building and expanding a global workforce is seamless with RemotePass. Our platform simplifies the complexities of hiring, payroll, and compliance across over 150 countries, including Malaysia.

With RemotePass, you can quickly onboard international employees, manage payroll, ensure legal compliance, and provide competitive benefits—all from one place. Focus on growing your business while we handle the HR and legal intricacies.

FAQs About Hiring in Vietnam

Got Questions? Find Answers Here

When must wages be paid?

Legally, wages must be paid no later than the seventh day after the last day of any wage period. This ensures employees receive timely payment.

What changes in October 2025 for expatriates?

Starting from October 2025, expatriates are required to contribute to the Employees Provident Fund (EPF). Currently, expatriate contributions are voluntary, but this becomes mandatory from October 2025.

Is the 13th-month salary mandatory in Vietnam?

No, it's not legally required. However, it's widely practiced and commonly paid before Lunar New Year. If you offer it, document it clearly in employment contracts or company policies.

How much sick leave do employees get?

For non-hospitalization: 14 days (less than two years service), 18 days (two to five years), or 22 days (five+ years) annually. If hospitalization is needed, employees get an additional 60 days of paid sick leave per year. A medical certificate from a licensed practitioner is required.

When is severance pay required?

Severance pay applies when employment ends due to business closure or redundancy, not resignation. The amount depends on length of service: 10 days' wages per year (one to less than two years), 15 days' wages per year (two to five years), or 20 days' wages per year (five+ years). It's calculated pro-rata for partial years.

How much maternity leave do female employees get?

Female employees get 98 consecutive days of paid maternity leave. Leave may begin up to 30 days before the expected date of confinement. To qualify, the employee must have worked at least 90 days in the nine months before confinement and been employed at some time in the four months immediately before confinement.

What's the notice period for resignation?

Four weeks for less than two years service, six weeks for two to five years, or eight weeks for five+ years. Employees may resign immediately by compensating you with an amount equal to the wages that would have been earned during the notice period.

What immigration notifications are required when terminating a foreign employee?

You must notify the Malaysian Immigration Department within seven days of termination, cancel the Employment Pass, update the MYXpats Centre, and file the CP21 form with LHDN at least 30 days before the employee leaves the company or country. Non-compliance can result in fines or blacklisting.

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Malaysia

Malaysia, strategically located in Southeast Asia, offers a dynamic business environment with a skilled, multilingual workforce and a robust infrastructure. As a member of ASEAN, it serves as a gateway to regional markets. Understanding Malaysia's employment laws, tax obligations, and payroll practices is essential for companies aiming to establish or expand operations in the country.
Contractor Management
EOR
Payroll
Contractor of Record
العملة
Malaysian ringgit (MYR)
تردد الرواتب
Monthly
ضرائب أصحاب العمل
Up to 15.95%

نظرة عامة

التركيبة السكانية
~33 million
اللغة
Malaysian
العاصمة
Kuala Lumpur
العملة
Malaysian ringgit (MYR)
رمز الاتصال الدولي
MYR
الحد الأدنى للأجور
1,700 MYR/month (urban/rural)
ساعات العمل
9 AM - 5 PM
أيام الأسبوع
Monday to Friday (some sectors operate on Saturdays)
ساعات العمل اسبوعيا
48

الرواتب

الموظفون برواتب ثابتة
الموظفون بنظام الأجر الزمني
13th Salary

Not mandatory; commonly offered as a bonus

متوسط ​​ضريبة صاحب العمل

Up to 15.95%

تحصيل الضرائب

Employer Contributions:

Employees Provident Fund (EPF)
12%–13% of monthly salary
Social Security Organization (SOCSO)
1.75%
Employment Insurance System (EIS)
0.2%
Human Resources Development Fund (HRDF)
1% (for companies with ≥10 employees)
Total Estimated Employer Contributions
Approximately 18.95%–22.45% of gross salary

Employee Contributions:

EPF
11% of monthly salary
SOCSO
0.5%
EIS
0.2%
Total Estimated Employee Contributions
Approximately 11.7%–17.2% of gross salary

Personal Income Tax (PIT):

Progressive Rates:

0%
on income up to RM5,000
1%–30%
for higher income brackets

Tax Reliefs:

Available for
EPF contributions, life insurance, medical expenses, and more

ضريبة القيمة المضافة

ضريبة القيمة المضافة
  • 10% for sales tax and 6% for service tax
حساب الضريبة في Malaysia
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تكلفة صاحب العمل
إجمالي تكلفة التوظيف الشهرية
إجمالي تكاليف الراتب الشهري
الضرائب والمساهمات المقدرة
تكلفة الموظف
صافي الراتب الشهري

GBP 5,137
الراتب الشهري الإجمالي
GBP 8,334
الضرائب المقدرة والضمان الاجتماعي
GBP 8,334
تكلفة صاحب العمل
إجمالي تكلفة التوظيف السنوية
إجمالي تكاليف الرواتب السنوية
الضرائب والمساهمات المقدرة
تكلفة الموظف
صافي الراتب السنوي

GBP 5,137
الراتب السنوي الإجمالي
GBP 8,334
الضرائب المقدرة والضمان الاجتماعي
GBP 8,334
اطلب عرض أسعار تفصيلي
كيف تعمل الخدمة

عملية الانضمام

تشمل عملية التوظيف في Malaysia عادة الخطوات التالية لضمان انتقال سلس للموظفين الجدد:

Employment Contract

Must be in writing and include job title, salary, working hours, leave entitlements, and termination conditions

Registration with Authorities

  • Register the employee with the Inland Revenue Board (LHDN) for tax purposes
  • Enroll the employee in EPF, SOCSO, and EIS

Payroll Setup

  • Ensure accurate calculation and withholding of taxes and contributions
  • Provide monthly payslips detailing earnings and deductions

Employee Documentation

Collect copies of identification, tax file number, and bank account details

Workplace Policies

Provide access to company policies, code of conduct, and employee handbook

Pre-boarding

Pre-boarding

Pre-boarding

العناصر الأساسية في عقد العمل في Malaysia
عند إعداد عقد عمل للموظفين في Malaysia يجب تضمين العناصر الأساسية التالية:

Personal Details

Name, contact information, and role of the employee.

سياسات إجازات الموظفين

الإجازات المرضية
  • 14–22 days per year, depending on tenure
  • Hospitalization leave: Up to 60 days per year

إجازة الأمومة
  • 98 consecutive days with full pay
  • Applicable to all female employees
إجازة الأبوة
  • 7 consecutive days with full pay
  • Applicable to married male employees

Other Leaves:

  • Bereavement, marriage, and study leaves are provided at the employer's discretion
الإجازة السنوية
  • Minimum of 8 days per year for employees with 1–2 years of service
  • Increases with tenure
  • Many companies offer 14–20 days as standard
9 عطلات رسمية في Malaysia

Note: Additional state-specific holidays apply.

1st
New Year's Day
29th
Chinese New Year
30th
Chinese New Year
1st
Labor Day
12th
Wesak Day
2nd
Yang di-Pertuan Agong's Birthday
31st
National Day
16th
Malaysia Day
20th
Deepavali (except Sarawak)
25th
Christmas Day
  • 01-Jan  New  Year's Day    
  • 14-Jan  Birthday of Yang  di-Pertuan Besar    
  • 28-Jan  Thaipusam        
  • 01-Feb  Federal Territory  Day    
  • 12-Feb  Chinese Lunar New  Year's Day    
  • 13-Feb  Second day of  Chinese Lunar New Year    
  • 13-Feb  Chinese Lunar New  Year Holiday    
  • 14-Feb  Valentine's Day        
  • 04-Mar  Anniversary of the  Coronation of the Sultan of Terengganu    
  • 11-Mar  Isra and Mi'raj
  • 20-Mar  March Equinox    
  • 23-Mar  Birthday of the  Sultan of Johor        
  • 02-Apr  Good Friday    
  • 04-Apr  Easter Sunday    
  • 13-Apr  First Day of Ramadan    
  • 15-Apr  Declaration of  Malacca as Historical City    
  • 26-Apr  Birthday of the  Sultan of Terengganu    
  • 29-Apr  Nuzul Al-Quran        
  • 01-May  Labour Day    
  • 13-May  Hari Raya Puasa    
  • 14-May  Hari Raya Puasa Day  2    
  • 22-May  Pahang State Holiday    
  • 26-May  Wesak Day    
  • 30-May  Harvest Festival    
  • 31-May  Harvest Festival  observed    
  • 31-May  Second Day of  Harvest Festival        
  • 01-Jun  Gawai Dayak    
  • 02-Jun  Gawai Dayak Holiday    
  • 07-Jun  The Yang di-Pertuan  Agong's Birthday    
  • 20-Jun  Sultan of Kedah's  Birthday  
  • 21-Jun  June Solstice        
  • 07-Jul  George Town World  Heritage City Day    
  • 10-Jul  Penang Governor's  Birthday    
  • 17-Jul  Birthday of the Raja  of Perlis    
  • 19-Jul  Day of Arafat    
  • 20-Jul  Hari Raya Haji    
  • 20-Jul  Hari Raya Haji  holiday    
  • 21-Jul  Hari Raya Haji (Day  2)    
  • 22-Jul  Sarawak Independence  Day    
  • 30-Jul  Birthday of the  Sultan of Pahang        
  • 10-Aug  Muharram/New Year    
  • 24-Aug  Birthday of the  Governor of Malacca    
  • 31-Aug  Malaysia's National  Day        
  • 13-Sep  Almarhum Sultan  Iskandar Hol Day    
  • 16-Sep  Malaysia Day    
  • 23-Sep  September Equinox        
  • 02-Oct  Birthday of the  Governor of Sabah    
  • 09-Oct  Birthday of the  Governor of Sarawak    
  • 19-Oct  The Prophet  Muhammad's Birthday (Tentative Date)        
  • 04-Nov  Diwali/Deepavali    
  • 05-Nov  Birthday of the  Sultan of Perak    
  • 11-Nov  Birthday of the  Sultan of Kelantan    
  • 12-Nov  Birthday of the  Sultan of Kelantan (Day 2)        
  • 11-Dec  Birthday of the  Sultan of Selangor    
  • 21-Dec  December Solstice    
  • 24-Dec  Christmas Eve    
  • 24-Dec  Christmas Eve    
  • 25-Dec  Christmas Day    
  • 31-Dec  New Year's Eve

عملية إنهاء العقود

Permissible Grounds

  • Misconduct
  • Redundancy
  • Poor performance
  • Mutual agreement

Notice Period

  • 4 weeks for employees with less than 2 years of service
  • 6 weeks for 2–5 years of service
  • 8 weeks for more than 5 years of service

Severance Pay

  • 10 days' wages per year of service for 1–2 years
  • 15 days' wages per year for 2–5 years
  • 20 days' wages per year for over 5 years

Probation Period

  • Typically 3–6 months
  • Shorter notice periods apply during probation

Personal Details

Name, contact information, and role of the employee.

نمو سوق العمل عن بُعد _  

تحديات التوظيف عن بُعد في  _

تبسيط التوظيف عن بُعد في _ مع ريموت باس

نمِّ فريقك في Malaysia
مع ريموت باس

From onboarding and payroll to offboarding and visa support, RemotePass simplifies it all so you can focus on growing your team.

يصبح بناء فريق عالمي وتوسيعه مهمة سهلة مع ريموت باس. منصتنا تبسّط تعقيدات التوظيف والرواتب والامتثال القانوني في أكثر من 150 دولة، بما في ذلك Malaysia.

مع ريموت باس، يمكنك ضم الموظفين الدوليين بسرعة، وإدارة الرواتب، وضمان الامتثال القانوني، وتقديم مزايا تنافسية — كل ذلك من مكان واحد. ركّز على تنمية أعمالك، ودع المهام الإدارية والقانونية علينا.

تجربة مجانية لمدة 7 أيام

لا حاجة لبطاقة ائتمان

يمكنك الإلغاء في أي وقت

Hiring in Malaysia | Payroll, Tax & Employment Guide

Malaysia offers a skilled, multilingual workforce with strong expertise in electronics, manufacturing, and emerging tech. With cost-effective hiring compared to developed Asian markets, Malaysia is attractive for sustainable growth in the region. 

RemotePass makes hiring in Malaysia simple. We handle compliance, contracts, and payroll. You focus on building your business.

Key Takeaways for Hiring in Malaysia

  • Wages must be paid no later than the seventh day after the last day of any wage period
  • From October 2025, expatriates must contribute to the Employees Provident Fund (EPF)
  • Employees get 14-22 days of paid sick leave annually (non-hospitalization), plus up to 60 days if hospitalization is needed
  • Severance pay applies when employment ends due to business closure or redundancy, not resignation

Quick Facts For Hiring In Malaysia

Continent
Asia
Capital
Kuala Lumpur
Currency
Malaysian Ringgit (MYR, RM)
Language
Bahasa Malaysia (Malay)
Payroll Cycle
Monthly
Pay Date
Legally, wages shall be paid not later than the seventh day after the last day of any wage period.

Malaysia Employment Contract Overview

Contract Type
Fixed-term / Open-ended
Local Language Required?
No
Bilingual?
No
Probation Period
Common probation period: three to six months
Minimum Paid Time Off
Less tahm two years of service: eight days of leave
Two to five years of service: 12 days of leave
Five+ years of service: 16 days of leave
Public Holidays
Under Malaysian law, employees are entitled to 12 or 13 paid public holidays annually, depending on the state in which they're employed.
Notice Period
Four weeks for employees with less than two years of service
Six weeks for employees with two to five years of service
Eight weeks for employees with five or more years of service

What Do You Need To Include In A Malaysian Employment Contract?

Make sure your contracts include all of these to comply with Malaysian labor law:

Employee Information

  • Full name
  • ID number
  • Role / Job title
  • Start date
  • Contract duration
  • Working hours
  • Probation and notice conditions
  • Termination provisions
  • Address details
  • Compensation details
  • Leave entitlements
  • End date (if applicable)

How Does Payroll and Taxation Work in Malaysia?

Malaysia's payroll system includes contributions to EPF (provident fund), SOCSO (social security), EIS (employment insurance), and HRDF (training fund). Understanding the different requirements for local employees versus expatriates helps you budget accurately.

Payroll Setup

Salary currency

Malaysian Ringgit (MYR, RM)

Minimum Wage

RM 1,700 per month

Hours per Week

45 hours per week / eight hours per day

Payroll Frequency

Monthly

Weekdays

Monday through Friday

Mandatory Bonuses

Not required

Gross Salary Structure

Gross salary doesn't follow a standardized structure in Malaysia.

What Payroll Taxes Do Employers Pay in Malaysia?

Employer cost % (estimate):


Employer Cost %

Contributions Breakdown

Employees Provident Fund (EPF / KWSP):

Monthly wage ≤ RM5,000 = 13%, Monthly wage > RM5,000 = 12%. Expatriates aren't required to contribute to EPF yet, but you may voluntarily contribute. Starting from October 2025, expatriates are also required to contribute.

Social Security Organization (SOCSO / PERKESO):

1.75%. Expatriates are excluded from SOCSO coverage unless employed on a local contract. You may opt-in expatriates under SOCSO voluntarily or via separate private insurance.

Employment Insurance System (EIS):

0.2% for local employees. Not applicable for expats.

Human Resource Development Fund (HRDF):

1% for local employees. Not applicable for expats.

What Payroll Taxes Do Employees Pay in Malaysia?

Individual Income Tax

For residents staying 60-182 days, income tax rates vary progressively from zero up to 30% based on their earnings. Non-residents staying 60-182 days are taxed at a flat rate of 30%. Those who stay for 182 days or more in a calendar year are taxed at progressive rates and qualify for tax reliefs and deductions.

Social Contributions


Employees Provident Fund (EPF / KWSP):

Local employees: 11%, Expatriates: 2% (Starting from October 2025, expatriates are also required to contribute.)

Social Security Organization (SOCSO / PERKESO):

Locals and Expatriates: 0.5%

Employment Insurance System (EIS):

Local employees: 0.2%, Expatriates: Not applicable

Income Tax Rates

Based on monthly taxable income (after allowances):

Chargeable Income (RM) Tax Rate
0 – 5,000

0%

5,001 – 20,000

1%

20,001 – 35,000

6%

35,001 – 50,000

11%

50,001 – 70,000

19%

70,001 – 100,000

25%

100,001 – 400,000

26%

400,001 – 600,000

28%

600,001 – 2,000,000

30%

Exceeding 2,000,000

30%

حاسبة تكلفة التوظيف

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تكلفة صاحب العمل
إجمالي تكلفة التوظيف الشهرية
إجمالي تكاليف الراتب الشهري
الضرائب والمساهمات المقدرة
تكلفة الموظف
صافي الراتب الشهري

GBP 5,137
الراتب الشهري الإجمالي
GBP 8,334
الضرائب المقدرة والضمان الاجتماعي
GBP 8,334
تكلفة صاحب العمل
إجمالي تكلفة التوظيف السنوية
إجمالي تكاليف الرواتب السنوية
الضرائب والمساهمات المقدرة
تكلفة الموظف
صافي الراتب السنوي

GBP 5,137
الراتب السنوي الإجمالي
GBP 8,334
الضرائب المقدرة والضمان الاجتماعي
GBP 8,334
اطلب عرض أسعار تفصيلي

Employee Benefits and Mobility in Malaysia

Employment of expats is supported in Malaysia.

Benefits Provider Funded Through Notes
Health Insurance Government

Payroll Contributions

Social security benefits in Malaysia cover medical coverage.

Pension / Social Security Government

Payroll Contributions

Social security benefits in Malaysia, which include retirement, disability, survivor benefits, and medical coverage, are offered through the Employees Provident Fund (EPF) and the Social Security Organization (SOCSO). Both you and the majority of employees—including part-time, temporary, and probationary workers—are required to participate in these programs.

Leave And Holiday Entitlement In Malaysia

Annual leave

Employees receive paid annual leave based on their length of continuous service with their current employer as follows:

  • Less than two years: eight days of leave

  • Between two and five years: 12 days of leave

  • Five years or more: 16 days of leave per year

Employees who have worked for less than 12 months with you are entitled to a pro-rated amount of the full annual leave, calculated based on the months they've served. Leave can be accumulated but only carried forward into the following 12-month period after it has been earned. Additionally, employees may choose to receive payment instead of taking their leave.

Public holidays

Malaysian law mandates 12 or 13 paid public holidays annually, with the exact number depending on the state. These include:

  • Chinese New Year

  • Birthday of the Prophet Muhammad

  • Wesak Day

  • Hari Raya Puasa (two days)

  • Hari Raya Haji (two days in Kedah, Kelantan, Perlis, and Terengganu; one day in other states)

  • Deepavali

  • National Day (August 31)

  • Birthday of Yang di-Pertuan Agong (June 1)

  • Labor Day (May 1)

  • Malaysia Day (September 16)

  • Christmas Day (December 25)

In addition to these, individual states may declare additional paid holidays.

Sick Leave

When hospitalization isn't required, employees are entitled to paid sick leave per calendar year as follows:

  • 14 days for those employed less than two years

  • 18 days for employees with two to five years of service

  • 40 days per year with 15 to 30 years of contributions

  • 22 days for those with five or more years of employment

If hospitalization is needed, employees can receive up to 60 days of paid sick leave annually. This 60-day hospitalized sick leave is granted in addition to the regular non-hospitalization sick leave entitlement.

A medical certificate from a licensed practitioner is required to validate the illness.

Maternity Leave

Female employees are entitled to 98 consecutive days of paid maternity leave. Leave may begin up to 30 days before the expected date of confinement or, if not taken earlier, will start on the day following childbirth. If a doctor certifies that the employee can't continue working, maternity leave may commence earlier than the 30-day window.

These rights also apply in cases of stillbirth after 22 weeks of pregnancy. To qualify for paid leave, the employee must have worked at least 90 days in the nine months before confinement and been employed at some time in the four months immediately before confinement.

Employees must give you 60 days' notice of the expected confinement and intended start date of leave. Notice may be oral or written, given to a supervisor or authorized person. If leave starts without notice, payment of the maternity allowance may be suspended until proper notice is provided.

Paternity Leave

Male employees are entitled to seven days of paid paternity leave upon the birth of a child, provided they meet the following conditions:

  • They're legally married to the mother of the child

  • They've been continuously employed by the same employer for at least 12 months prior to the start of the leave

  • They inform you of the pregnancy at least 30 days before the expected delivery date, or as soon as reasonably possible after the child is born

Other Types of Leave

No other statutory leave. You may grant leave at your own discretion.

Termination and Offboarding in Malaysia

Type Possible?
Termination for Cause (poor performance, misconduct, etc.) Yes
Termination without Cause Yes
Mutual Termination Agreement (MTA) Yes
Redundancy Not possible under the EOR setup

Employee Resignations

Employee
Resignations

 Termination with Cause

Termination
with Cause

Termination without Cause

Termination
without Cause

Mutual Termination Agreement

Mutual Termination
Agreement

 Fixed Term Contract

Fixed Term
Contract

Malaysia Employee Resignation

Notice period

The standard notice periods for resignation are based on length of service:

  • Four weeks of notice for less than two years of service

  • Six weeks of notice for between two and five years of service

  • Eight weeks of notice for five or more years of service

Employees have the right to end their employment without prior notice if they or their dependents face an immediate threat from violence or illness—provided they were unaware such risks were part of their job when they accepted the position.

Payment in lieu of notice or notice waiver

Employees may choose to resign immediately by compensating you with an amount equal to the wages that would have been earned during the applicable notice period.

End-of-Service Benefits

Severance/Gratuity

Under the Employment (Termination and Lay-Off Benefits) Regulations 1980, employees are entitled to severance (termination) payments only if their employment ends due to reasons like business closure—not due to resignation.

Other Benefits

  • Unused Annual Leave Encashment

  • Unpaid Salary, Allowances, Overtime

  • Unused Public Holiday Entitlement

Employer Termination With Cause in Malaysia

Acceptable grounds

The Employment Act doesn't provide a specific definition of misconduct beyond describing it as "misconduct inconsistent with the fulfillment of the express or implied conditions" of the employee's service.

Notice

In cases involving misconduct, you have the right to dismiss an employee without notice, impose a demotion, suspend the employee without pay for a period of up to two weeks, or apply a lesser disciplinary measure. However, such actions may only be taken after conducting a proper "due inquiry" to ensure fairness.

While investigating the alleged misconduct, you may suspend the employee for up to two weeks with at least half of their regular pay. If the inquiry concludes that the employee didn't commit any misconduct, you're required to compensate the employee for any withheld wages.

End-of-Service Benefits

Severance

Severance pay isn't applicable in dismissals due to employee misconduct.

Employer Termination Without Cause in Malaysia

Notice period

In the absence of a specified notice period in the employment contract, the default notice requirements are determined by the employee's length of service:

  • Four weeks for those employed for less than two years

  • Six weeks for those with two to five years of service

  • Eight weeks for employees who have worked five years or more

Payment in lieu of notice or notice waiver

Instead of giving the required notice, you may choose to compensate the employee with an amount equal to the wages that would have been earned during the notice period.

End-of-Service Benefits

Severance

As per the Employment (Termination and Lay-Off Benefits) Regulations 1980, severance pay is as follows:

  • At least one year but less than two years of service: 10 days' wages per year of service

  • From two to five years of service: 15 days' wages per year of service

  • Five or more years of service: 20 days' wages per year of service

For partial years of service, severance pay is calculated on a pro-rata basis.

Other Benefits

  • Unpaid salary up to the termination date

  • Encashment of unused annual leave

  • Outstanding overtime, bonuses, commissions (if contractually owed)

  • Payment for any public holidays not taken if applicable

Mutual Termination Agreements in Malaysia

MTAs are voluntary agreements signed by both parties to terminate an employment contract by mutual consent.

Notice

Notice period

Four weeks for those employed for less than two years

  • Six weeks for those with two to five years of service

  • Eight weeks for employees who have worked five years or more

Waiver of notice

Instead of giving the required notice, you may choose to compensate the employee with an amount equal to the wages that would have been earned during the notice period.

End-of-Service Benefits

Severance

As per the Employment (Termination and Lay-Off Benefits) Regulations 1980, severance pay is as follows:

  • At least one year but less than two years of service: 10 days' wages per year of service

  • From two to five years of service: 15 days' wages per year of service

  • Five or more years of service: 20 days' wages per year of service

For partial years of service, severance pay is calculated on a pro-rata basis.

Other Benefits

  • Unpaid salary up to the termination date

  • Encashment of unused annual leave

  • Outstanding overtime, bonuses, commissions (if contractually owed)

  • Payment for any public holidays not taken if applicable

Offboarding Process for the End of Fixed-term Contracts in Malaysia

If the Fixed-Term Contract Ends Normally

Notice

The contract expires on the agreed end date without renewal.

End-of-Service Benefits

Severance/Gratuity

No statutory requirement for severance pay unless contract or company policy states otherwise.

Other Benefits

You must provide:

  • Final salary payment including unpaid wages, pro-rated bonuses, overtime, and allowances
  • Payment for unused annual leave accrued during the contract period
  • Notice (if required by contract): Some contracts specify notice before non-renewal; otherwise, contract expiry is automatic
  • Return of company property and completion of exit formalities
  • Settlement of statutory contributions (EPF, SOCSO) up to the last working day
  • Certificate of Service or Employment Reference Letter if requested

If the Employer Terminates Early

Early termination before the contract expiry date is generally only lawful with cause or if the contract includes a termination clause.

Notice

You must provide written notice as per contract or Employment Act minimum.

End-of-Service Benefits

If you terminate early without cause or without lawful grounds, the employee is generally entitled to:

  • Notice pay or payment in lieu of notice, based on the contract or Employment Act
  • Severance/termination benefits under the Employment (Termination and Lay-Off Benefits) Regulations 1980, calculated based on length of service
  • Final salary, including unpaid wages, allowances, overtime, bonuses
  • Unused annual leave encashment
  • Settlement of statutory contributions (EPF, SOCSO) up to termination date

Final Payment Timing & Immigration and Visa Compliance in Vietnam

Final Payment Deadline

You're usually required to settle all final payments immediately or within a short time after termination or contract expiration. Common timelines include:

  • By the end of the next working day or
  • Within seven to 14 days after termination

Penalty

You may face fines, legal action, or be required to pay interest on delayed payments.

Visa and Immigration Compliance

You must notify the Malaysian Immigration Department immediately upon termination of a foreign employee. Notification must usually be done within seven days of termination.

You're responsible for canceling the Employment Pass (EP) or any related visa once the employment ends.

You're generally required to bear the cost of repatriating the foreign employee to their home country if stipulated by local labor laws or the employment contract.

For Employment Pass holders, you must update the MYXpats Centre about the employment status change.

You must file the CP21 form with the Inland Revenue Board of Malaysia (LHDN) at least 30 days before the employee leaves the company or the country. This allows for tax clearance before departure.

Non-compliance may lead to fines, blacklisting, or revocation of your privileges for hiring foreign workers in the future.

Key Elements of an Employment Contract in Malaysia
When drafting an employment contract for employees in Malaysia, the following key elements should be included:

Personal Details

Name, contact information, and role of the employee.

_'s Booming Remote Workforce

Challenges of Remote Hiring in _

Simplifying Remote Hiring in _ with RemotePass 

Hire in Malaysia Without Compliance Worries

From onboarding and payroll to offboarding and visa support, RemotePass simplifies it all so you can focus on growing your team.

Building and expanding a global workforce is seamless with RemotePass. Our platform simplifies the complexities of hiring, payroll, and compliance across over 150 countries, including Malaysia.

With RemotePass, you can quickly onboard international employees, manage payroll, ensure legal compliance, and provide competitive benefits—all from one place. Focus on growing your business while we handle the HR and legal intricacies.

FAQs About Hiring in Vietnam

Got Questions? Find Answers Here

When must wages be paid?

Legally, wages must be paid no later than the seventh day after the last day of any wage period. This ensures employees receive timely payment.

What changes in October 2025 for expatriates?

Starting from October 2025, expatriates are required to contribute to the Employees Provident Fund (EPF). Currently, expatriate contributions are voluntary, but this becomes mandatory from October 2025.

Is the 13th-month salary mandatory in Vietnam?

No, it's not legally required. However, it's widely practiced and commonly paid before Lunar New Year. If you offer it, document it clearly in employment contracts or company policies.

How much sick leave do employees get?

For non-hospitalization: 14 days (less than two years service), 18 days (two to five years), or 22 days (five+ years) annually. If hospitalization is needed, employees get an additional 60 days of paid sick leave per year. A medical certificate from a licensed practitioner is required.

When is severance pay required?

Severance pay applies when employment ends due to business closure or redundancy, not resignation. The amount depends on length of service: 10 days' wages per year (one to less than two years), 15 days' wages per year (two to five years), or 20 days' wages per year (five+ years). It's calculated pro-rata for partial years.

How much maternity leave do female employees get?

Female employees get 98 consecutive days of paid maternity leave. Leave may begin up to 30 days before the expected date of confinement. To qualify, the employee must have worked at least 90 days in the nine months before confinement and been employed at some time in the four months immediately before confinement.

What's the notice period for resignation?

Four weeks for less than two years service, six weeks for two to five years, or eight weeks for five+ years. Employees may resign immediately by compensating you with an amount equal to the wages that would have been earned during the notice period.

What immigration notifications are required when terminating a foreign employee?

You must notify the Malaysian Immigration Department within seven days of termination, cancel the Employment Pass, update the MYXpats Centre, and file the CP21 form with LHDN at least 30 days before the employee leaves the company or country. Non-compliance can result in fines or blacklisting.

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