Hiring guide in Malaysia

What should I know about hiring in Malaysia?

Expanding your remote team in Malaysia can be beneficial for several reasons – from the highly skilled talent pool to very cost-effective business operations. However, before starting with the hiring process, it’s essential to understand the country’s labour laws and regulations.

Malaysia has comprehensive rules regarding aspects such as minimum wage, taxes and contributions, employment contracts, and employment termination policies. Except for being compliant with laws, employers must also be aware of Malaysia’s multicultural society and unique business practices.

Why is Malaysia a good choice for finding remote employees?

Malaysia is the home of a lot of skilled and talented individuals who can contribute to your team’s success. Featuring a well-developed education system, employers can find talent with a solid educational background and relevant skills for their operations.

Malaysia also offers competitive labour costs compared to many Western countries. Employers are able to hire highly skilled professionals without compromising on quality, all while saving on employee expenses. 

Finally, the Malaysian government is actively promoting the growth of remote work and the digital economy. With initiatives such as the Malaysia Digital Economy Blueprint and the Malaysia Digital Hub programme, employers can create effective remote teams while expanding in the country.

How can Native Teams help you hire in Malaysia?

Native Teams can help you navigate complex administrative and compliance tasks during your global expansion in Malaysia. 

With our Employer of record solutions, employers can simplify global payroll, optimise taxes, and manage HR administration within a single platform. Our dedicated teams of legal and tax professionals are at your service to ensure a smooth global expansion without any hassles.

Hire your first Malaysian employee with Native Teams.

Legal requirements for hiring in Malaysia

Minimum wage

Contributions & taxes

Employer tax

The total employer payroll contributions in Malaysia can vary from approximately 14% to 23%, depending on the employee’s age and income level. 

Corporate tax

The standard corporate tax in Malaysia is 24%.

Employee tax

The total employee payroll contributions can also vary from approximately 6% to 12%, depending on the employee’s age and income level.

Income tax

Employees who are residents of Malaysia are subject to progressive income tax rates, as follows:

• Up to MYR 5,000 – 0%
• MYR 5,000 to MYR 20,000 – 1%
• MYR 20,000 to MYR 35,000 – 3%
• MYR 35,000 to MYR 50,000 – 6%
• MYR 50,000 to MYR 70,000 – 11%
• MYR 70,000 to MYR 100,000 – 19%
• MYR 100,000 to MYR 400,000 – 25%
• MYR 400,000 to MYR 600,000 – 26%
• MYR 600,000 to MYR 2,000,000 – 28%
• Over MYR 2,000,000 – 30%

To calculate the salary and taxes in the Malaysia please click here.

Payroll cycle

The payroll cycle in Malaysia is monthly.

Is there a 13th salary in the Malaysia?

There are no statutory requirements to pay a 13th salary in Malaysia, but it is customary for employers to provide it at the end of the year.

Labor rules

Probation period rules

Even though there are no statutory probation period requirements, the general probation period in Malaysia can last from 3 to 6 months.

Notice period 

The notice period in Malaysia can be different, depending on the years of service of the individual:

• 4 weeks of notice period for employees with less than 2 years of service.
• 6 weeks of notice period for employees with 2 to 5 years of service.
• 8 weeks of notice period for employees with more than 5 years of service.

Severance period

The severance pay in Malaysia also depends on the years of service of the individual:

• 10 days of severance pay for employees with less than 2 years of service.
• 15 days of severance pay for employees with 2 to 5 years of service.
• 20 days of severance pay for employees with more than 5 years of service.

Working hours

The standard workweek in Malaysia is 40 hours, 5 days per week.

Leave and benefits

Public holidays

There are 5 compulsory public holidays and 6 elective public holidays in Malaysia. Compulsory holidays are:

1. Labour Day
2. Agong’s Birthday
3. Independence Day
4. Malaysia Day
5. State Ruler’s Birthday

Sick leave

Employees’ entitlements to sick leave depend on the years of service, as follows:

• 14 days of sick leave for employees with less than 2 years of service.
• 18 days of sick leave for employees with 2 to 5 years of service.
• 22 days of sick leave for employees with more than 5 years of service.

Maternity leave & paternity leave

Female employees in Malaysia are entitled to 98 days of paid maternity leave, while male employees are entitled to 7 days of paid paternity leave.

Other leave

There are no other statutory paid leave entitlements in Malaysia.

What are the minimum vacation days?

Paid leave entitlements in Malaysia depend on the employee’s service years, as follows:

• 8 days of paid leave per year for employees with less than 2 years of service.
• 12 days of paid leave per year for employees with 2 to 5 years of service.
• 16 days of paid leave per year for employees with more than 5 years of service.

Insurance

Health security & private insurance

Payroll taxes and the general budget are used to fund Malaysia mandatory universal healthcare system. 

*Native Teams can support you in finding the best private insurance in the country. Contact us and we will send a comparison of insurance packages and prices.*

Visa

Relocation and work permits

Native Teams will act as your Employer of Record and apply for your work permit in the country. You will be able to upload all the needed documents in our app. Native Teams will support you by giving you regular updates on the progress until you get your work and residence permit.

How long is the visa/work permit process?

Usually, it takes 2 to 4 weeks to get a work permit, depending on the authorities and provided documents.

Which documents do you need?

To apply for a visa/work permit in the Malaysia, upload the documents from our onboarding list (relocation to log in/pricing).