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Malaysia has EPF (13% employer), SOCSO, EIS, and PCB monthly withholding. The 2023 Employment Act extension broadened protections to all employees. 98 days' paid maternity leave. Rippling EOR handles KWSP, PERKESO, and LHDN compliance.
Malaysia is a Southeast Asian upper-middle-income economy and regional SSC/BPO hub. Kuala Lumpur and Penang are the primary markets for international employers. Malaysia offers a large English-speaking workforce at competitive salaries relative to Singapore. EOR is popular with technology, financial services, and professional services companies accessing Malaysia's talent pool. The 2023 Employment Act extension broadened statutory protections to all employees regardless of salary.
Setting up a Malaysian Sdn. Bhd. requires SSM registration, EPF/SOCSO/EIS registration, and LHDN employer registration. EOR is recommended for 1–10 employees or where PCB withholding calculation complexity (including annual EA form) is a barrier. Malaysia's 2023 Employment Act extension increased the complexity of employment compliance for all employers regardless of employee salary.
EPF employee: 11% of wages (reduced to 9% optionally). SOCSO employee: ~0.5%. EIS employee: 0.4%. PCB (income tax withholding): progressive 0–30%. Total employee deductions approximately 12–13% of gross (excluding income tax).
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EPF employer: 13% (salary ≤5,000 MYR) or 12% (above 5,000 MYR). SOCSO: ~1.75%. EIS: 0.4%. HRDF levy: 1% (10+ employees, most sectors). Total employer on-cost approximately 15–16% of gross salary. All contributions remitted to KWSP/PERKESO by the 15th of the following month.
PCB (Potongan Cukai Bulanan — monthly tax withholding): progressive 0–30%. Employer withholds monthly and remits to LHDN by the 15th. Annual EA form issued to employees by March 1. Employer's E form submitted to LHDN by March 31.
Annual leave: 8 days (<2 years), 12 days (2–5 years), 16 days (5+ years). Sick leave: 14 days (<2 years), 18 days (2–5 years), 22 days (5+ years); 60 days if hospitalization. Maternity: 98 days paid. Public holidays: 11 national + state-specific holidays.
Notice: per contract (minimum 4 weeks for employees covered by Employment Act). Retrenchment benefits: 10–20 days' wages per year of service (by tenure). SOCSO retrenchment notification required. Rippling EOR manages terminations compliantly.
Work permit (Employment Pass, Professional Visit Pass) required for foreign nationals. Employment Pass: minimum salary MYR 5,000/month. Processing time: 4–8 weeks. Rippling EOR supports work permit applications through its Malaysian entity.
Statutory: EPF (employer 12–13%), SOCSO, EIS, 8–16 days annual leave (by tenure), 98 days maternity paid, sick leave, 11 national + state public holidays.
Market-standard: Group medical insurance (near-universal), dental, optical, annual bonus (1–2 months typical), transport allowance. KL and Penang tech sector increasingly competitive with Singapore for talent.
Rippling EOR Malaysia operates through a local Malaysian entity. Key Malaysia-specific handling: EPF/SOCSO/EIS monthly contributions, PCB income tax withholding and LHDN remittance, EA form annual issuance, 2023 Employment Act compliance for all employees, maternity leave administration, and retrenchment benefit calculations.
EPF applies to Malaysian citizens and permanent residents — employer contributes 13% (salary ≤5,000 MYR) or 12% (above). Foreign employees may opt in voluntarily (employer contribution then 12% regardless). SOCSO and EIS: SOCSO covers Malaysian citizens and PRs for employment injury/invalidity; EIS covers the same group for unemployment insurance. Rippling EOR manages EPF/SOCSO/EIS enrollment and monthly contributions.
Malaysia's Employment Act was extended to all employees (regardless of salary) from January 2023. Previously only employees earning below MYR 2,000/month were covered by the Act's minimum standards for overtime, leave, and retrenchment benefits. Now all employees — including high-salary professionals — are entitled to minimum leave, overtime pay (if applicable), and retrenchment benefits. This significantly increased compliance obligations for employers.
Malaysia requires 98 days of paid maternity leave (increased from 60 days in 2023). The employer pays full salary throughout; there is no SOCSO reimbursement for maternity. Paternity leave: 7 days (government sector; private sector encouraged but not mandatory). Rippling EOR manages maternity leave administration.
Retrenchment benefits (termination due to redundancy): 10 days' wages per year of service (years 1–2), 15 days (2–5 years), 20 days (5+ years). Notice: as per contract (minimum 4 weeks under Employment Act for employees earning MYR 5,000 or less — now this applies to all employees post-2023). Rippling EOR manages terminations and retrenchment benefit calculations.
