☑️ The Basics

Currency: Malaysian ringgit (Rate)

Public Holidays: 16 national public holidays, and additional state holidays (see here)

Employer Taxes: Up to 15.95% of gross salary

Official Language: Malay

Payroll frequency: Monthly

Three things to know about employing in Malaysia

1. The number of paid holidays and sick leave available to employees depends on their length of service.
2. There is no paternity leave in Malaysia but some employers can choose to offer this.
3. Probation periods are optional, but commonly range from one to three months. There is no legal difference between an employee on probation and a permanent employee.

Employment in Malaysia

Notice Period

Notice period depends on the length of service in the case of both dismissals and resignations:

• Less than two years of service: four weeks notice
• Two to five years of service: six weeks notice
• More than five years of service: eight weeks notice.

Employers can also choose to pay a dismissed employee standard wages in lieu of the notice period.

Termination & Severance

Employees can be dismissed for causes such as misconduct or poor performance. Employees dismissed for reasons not connected to their conduct are entitled to severance pay that depends on their length of service:

• Up to two years of employment: 10 days's wages for each year of service
• Between 2 to 5 years: 15 days' wages for each year of service
• More than years: 20 days' wages for each year of service

Probationary period

Probation is optional, but commonly ranges from one to three months. There is no legal difference between an employee on probation and a permanent employee.

Minimum Wage

RM1,200 per month in urban areas, RM1,100 per month in rural areas.

IP protection and non-compete agreements

Non-compete agreements are legally void in Malaysia.

Working Hours

Maximum of 45 working hours per week. Effective September 1, 2022, employees can submit written applications that can cover changes in working hours, working days and also the place of work, as an introduction to the Flexible Working Arrangements (FWA) as part of the Employment (Amendment) Act 2022.

Overtime

Any overtime hours worked over the standard work hours are paid at the rate of 150% of regular wages. They are paid at 200% and 300% on rest days and public holidays, respectively.

Paid Holidays

Paid vacation entitlement depends on the length of service:

• Up to two years of employment: Eight days per year
• Between two and five years: 12 days per year
• Over five years: 16 days per year

Sick pay and time off

Sick leave entitlement depends on the length of service:

• Up to two years of employment: 14 days per year
• Between two and five years: 18 days per year
• Over five years: 22 days per year

Parental leave

Employees are entitled to at least 98 days of fully paid maternity leave if they have been employed in the last four months and have worked for the same employer for at least 90 days in the nine months prior to childbirth. The leave period can begin one month before the expected delivery date.

Employers are now required to seven (7) consecutive days of paternity leave based on the Employment (Amendment) Act 2022 starting September 1, 2022.

Taxes in Malaysia

<aside> 💡 You can get a detailed breakdown of the employer contributions for any gross salary by using our Oyster Platform Quote Generator.

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Employees

Social Security (up to 11.70%)

Income tax

• Up to 5,000: Nil
• 5,000 - 20,0000: 1%
• 20,000 - 35,000: 3%
• 35,000 - 50,000: 8%
• 50,000 - 70,000: 14%
• 70,000 - 100,000: 21%
• 100,000 - 250,000: 24%
• 250,000 - 400,000: 24.5%
• 400,000 - 600,000: 25%
• 600,000 - 1,000,000: 26%
• 1,000,000 - 2,000,000: 28%
• 2,000,000 and over: 30%

Employers

Total social contributions (up to 15.95%)

• Provident Fund (employees under the age of 60): 12-13%
• Provident Fund (employees over the age of 60): 4-6.5%
• Social Security (SOCSO): 1.75%
• Employment Insurance (EIS): 0.2%
• Human Resource Development Fund (over 10 employees): 1%

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