Malaysia, located in Southeast Asia, is separated by the South China Sea into two non-contiguous regions: the Peninsula Malaysia region bordering Thailand (i.e. West Malaysia) and the Malaysia Borneo region bordering Indonesia and Brunei (i.e. East Malaysia). In the last decade, as it moved up the industry value chain from an oil and gas exporter, Malaysia has emerged as an attractive regional hub for services including financial services, information, and communications technology (ICT), and logistics sectors.
*Please note that the official currency is the currency of remuneration when employed through WorkMotion in Malaysia.
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Capital :
Kuala Lumpur
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Currency :
Ringgit (MYR, RM)
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Languages spoken :
Bahasa Malay
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Population :
32.7 million (2021 est.)
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Minimum wage 2023 :
MYR 1,500 monthly
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Cost of Living index :
$$ (93 of 139 countries)
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Payroll Frequency :
Monthly
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VAT - standard rate :
6%
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GDP - real growth rate :
3% (2021 est.)
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The national holidays mentioned below are valid for the year 2024.
The approximate time for sharing the contract with an employee in Malaysia is 6 business days assuming no special requests or changes to our standard employment contract. Any such requests or changes would need to undergo internal and external review, directly leading to a time delay.
NOTE: This number is subject to change and is only an estimation of the Contract Sharing Time. The estimated Contract Sharing Time begins from the moment that WorkMotion has received all required information from both the client and the employee.
The Malaysia workweek is 40 hours, with a standard workday of eight hours. The maximum number of work hours is 45 hours in a week. Workers are entitled to one rest day for every six days worked, and cannot be compelled to work on that rest day.
Work hours should not exceed more than 45 per week. If employers request extra hours, they must pay 1.5 times the employee’s regular wages.
The minimum guidelines for overtime pay are:
There is no law governing the length of the probationary period. It depends entirely on the employment contract agreed upon between the employer and the employee. The duration period for probation is usually from a period of three to 12 months.
The length of such notice is the same for both employer and employee and is determined by a provision made in writing for such notice in the terms of the contract of service, or, in the absence of such provision in writing, and should not be less than:
| Service Period | Notice Period |
| Less than 2 years of service | Minimum 4 weeks |
| 2 years or more but less than 5 years of service | Minimum 6 weeks |
| 5 years of service or more | Minimum 8 weeks |
| Employment Duration | Annual Leave |
| Less than 2 years | 8 days |
| 2 years or more but less than 5 years | 12 days |
| Over 5 years | 16 days |
If the employee has not completed 12 months of continuous service with the same employer during the year in which their contract of service terminates, their entitlement to paid annual leave should be in direct proportion to the number of completed months of service.
Employees who are covered by the Employment Act of 1955 are known as EA Employees.
| Employment Conditions | Leave Duration Annually |
| Less than 2 years of service | 14 days |
| More than 2 years but less than 5 years of service | 18 days |
| More than 5 years of service | 22 days |
| If hospitalization is necessary, as may be certified by a registered medical practitioner or medical officer | 60 days |
Maternity leave is 98 consecutive days. Female employees are entitled to a maternity allowance. Maternity leave may commence anytime within 30 days prior to the expected birth date, but cannot be later than the day immediately following the birth.
A married male employee is entitled to paternity leave from his employer if:
A married male employee is entitled to a paid paternity leave at his ordinary rate of pay for a period of seven consecutive days in respect of each confinement. The paternity leave is restricted to five confinements irrespective of the number of spouses.
There are no other statutory provisions for paid leave in Malaysia.
Wages are not payable to or recoverable by any employee from their employer:
Social security benefits such as disability, retirement, medical payments, and survivors’ benefits are provided by the Social Security Organization and the Employees Provident Fund (EPF).
Employers are required to pay monthly contributions for each eligible employee according to the rate specified under the Employees’ Social Security Act, 1969. These contributions are divided into two types, namely:
| Employer Contributions for Malaysian Citizens and Permanent Residents (Mandatory) | ||
| Contribution Items | Category 1: Below Age 60 | Category 2: Above Age 60 |
| Employment Injury Scheme and the Invalidity Scheme |
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| Employment Insurance System* |
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| Employee Provident Fund |
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*All employees 18 to 60 years have to contribute. Employees aged 57 and above who have no prior contributions before the age of 57 are exempt. Contribution rates are capped at an assumed monthly salary of MYR 4000.
** Only for Permanent Residents and Non-Malaysians (registered as members before August 1998).
Malaysia has compulsory universal healthcare which is funded through payroll taxes and the general budget. Private health care is also available. Patients pay small fees for their medical appointments. While there is no public health insurance program for expatriates in Malaysia to join, there are some options for international citizens living in Malaysia long term.
Employers pay a 1.75% contribution for employees under 60 years of age and 1.25% for above 60 years old beneficiaries.
Employment Injury Scheme provides protection to an employee against accident or an occupational disease arising out of and in the course of their employment.
The Employment Insurance System (EIS) provides certain benefits and a re-employment placement program for insured persons in the event of loss of employment to promote active labor market policies. The EIS covers only Malaysian citizens and permanent residents.
Both the employer and employee make monthly contributions of 0.2% of the employee’s wage but are restricted to a maximum of MYR 7.90 for employer and employee, respectively.
The minimum retirement age for employees in Malaysia is 60, although employment contracts may stipulate an earlier age. In fact, retirement ages must be included in all labor contracts if an employer wants to avoid being responsible for paying severance to elderly personnel.
Contributions are as follows:
In Malaysia, pensions are covered by the Employees Provident Fund (Kumpulan Wang Simpanan Pekerja, EPF). Apart from providing a pension, contributors can withdraw money for certain reasons; for example, to cover medical expenses or to purchase a home.
Employers with 10 or more Malaysian employees have to compulsorily register with HRDF while employers with fewer employees can choose to do so. The contribution rate is 1% of the monthly wages (Total wages or basic salaries+fixed allowances) of each of their Malaysian employees (0.5% for employers with five to nine employees, who choose to join). HRDF schemes are divided into two categories; HRDF Levy and Government Special Fund. HRDF Levy is a fund that is deposited by employers on a monthly basis. They can apply for schemes provided by HRDF to attend any programs recognized by HRDF.
The Government Special Fund is an allocation provided by the Government to benefit employers who apply for related schemes offered by HRDF.
The information contained in this Country Guide is provided for informational purposes only and should not be construed as legal advice on any subject matter. The contents of this Country Guide contain general information and may not reflect current legal developments or address your situation. You should not act or refrain from acting on the basis of any content included in this Country Guide without seeking the advice or representation of a licensed attorney. WorkMotion Software GmbH disclaims all liability for actions you take or fail to take based on any content included in this Country Guide.
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