Payroll and Benefits Guide Malaysia
Last updated: Mar 03, 2026
Contribution
| Employer Payroll Contributions | |
|
12.00% – 13.00%
|
Employees Provident Fund (EPF) for Malaysian employees under age 60: • 13% for wages up to RM5,000 per month • 12% for wages above RM5,000 per month. From 1 October 2025, mandatory EPF contributions of 2% employer + 2% employee will also apply to eligible non-Malaysian employees with valid employment passes, in line with EPF rules. |
|
4.00%-6.50%
|
Provident Fund (employees over the age of 60)**
|
|
1.75%
|
SOCSO contributions – according to the Employees’ Social Security Act schedules, up to the statutory monthly wage ceiling set by PERKESO. |
|
0.20%
|
EIS contributions – 0.2% employer + 0.2% employee, applied up to the statutory wage ceiling under the Employment Insurance System Act. |
|
1.00%
|
Human Resource Development Fund (over 10 employees)
|
| 18.95%-22.45% | Total Employment Cost |
| Employee Payroll Contributions | |
| 11.00% | Provident Fund (employees under the age of 60) salary below 6,000MYR is charged at 13% and salary above is charged at 12%, foreign workers are exempt.** |
|
0.00%-5.50%
|
Provident Fund (employees over the age of 60)**
|
|
0.50%
|
Social Security (SOCSO) (for workers below the age of 60 monthly salary ceiling of 6,000 MYR) |
|
0.20%
|
Employment Insurance (EIS) (monthly salary ceiling of 6,000 MYR)
|
| 11.70% – 17.20% |
Total Employee Cost* |
| Employee Income Tax | |
|
0.00%
|
Up to 5,000 MYR
|
|
1.00%
|
5,000 – 20,0000 MYR
|
|
3.00%
|
20,000 – 35,000 MYR
|
|
6.00%
|
35,000 – 50,000 MYR
|
|
11.00%
|
50,000 – 70,000 MYR
|
|
19.00%
|
70,000 – 100,000 MYR
|
|
25.00%
|
100,000 – 400,000 MYR
|
|
26.00%
|
400,000- 600,000 MYR
|
|
28.00%
|
600,000 – 2,000,000 MYR
|
| 30.00% | 2,000,000 MYR and over |
*Expat workers are subject to different contribution rates.
From 1 October 2025, mandatory EPF contributions for certain non-Malaysian citizens with valid employment passes will apply at 2% employer + 2% employee of monthly wages (including certain additional payments), in line with the latest EPF regulations.
Employer taxes
Employee taxes
Minimum Wage
General
The current national minimum wage is RM1,500 per month (with corresponding hourly rates) under the Minimum Wages Order 2022, subject to specific exceptions and any later amendments.
Employers should always check the latest Minimum Wages Order for sector- or location-specific rules instead of relying on a fixed ‘5-employee’ condition.
MINIMUM WAGE (PER MONTH)
Payroll
Payroll Cycle
The payroll cycle in Malaysia is generally monthly with payments made on the last working day.
13th Salary
There is no legal requirement for a 13th-month payment in Malaysia. Some employers choose to pay a year-end or performance bonus by company policy or contract.
Working Hours
General
Standard working hours are 8 hours per day up to a maximum of 45 hours per week, though it is common to work 40 hours per week.
Overtime
- Coverage: The overtime provisions primarily apply to employees earning RM 4,000 per month or less, and to manual workers regardless of their salary. Managers and executives earning over RM 4,000 per month are generally exempt from statutory overtime pay and maximum hour limits.
- Maximum Ordinary Hours (EA Section 60A): The maximum standard working week was reduced to 45 hours per week (effective January 1, 2023).
- Daily limit is generally 8 hours (or up to 9 hours on certain days, provided the 45-hour weekly limit is not exceeded).
- An employee cannot work for more than 5 consecutive hours without a rest break of at least 30 minutes.
- Absolute Maximum Work Time (EA Section 60A): Total working hours, including overtime, must not exceed 12 hours in any single day.
- Monthly Overtime Cap (Employment Regulations 1980): Overtime is strictly limited to a maximum of 104 hours per month for eligible employees. Overtime worked on rest days or public holidays does not count towards this 104-hour cap.
- Consent: Employees cannot be compelled to work overtime beyond the statutory limits.
Mandatory Overtime Pay Rates (EA Section 60A, 60D)
Overtime compensation rates are mandatory minimums and are calculated based on the employee’s Hourly Rate of Pay (HRP). The rates vary significantly depending on the day the work is performed.
| Day/Condition | Work Performed | Minimum Compensation Rate (Statutory) | Total Pay Rate |
| Normal Working Day | Work exceeding the ordinary daily/weekly hours. | 1.5 times the HRP. | 150% |
| Rest Day (Work during normal hours) | Work during the employee’s normal working hours. | 1 day’s pay (for over half day) or 0.5 day’s pay (for half day or less). | Varies |
| Rest Day (Overtime beyond normal hours) | Work exceeding the employee’s normal working hours on the rest day. | 2 times the HRP. | 200% |
| Public Holiday (Work during normal hours) | Work during the normal working hours of the day. | 2 times the Ordinary Rate of Pay (ORP) or $\mathbf{2 \times}$ daily wage. | 200% |
| Public Holiday (Overtime beyond normal hours) | Work exceeding the employee’s normal working hours on the public holiday. | 3 times the HRP. | 300% |
Leave
Annual Leave (vacation)
Paid leave in Malaysia is dependent upon the number of years of employment:
- Within the first two years of employment = 8 days of paid leave per year
- From the second to the fifth year of service = 12 days of paid leave per year
- Above 5 years of employment = 16 days paid leave per year
Annual leave is accrued from the period of January to December.
PTO carryover
In Malaysia, statutory annual leave does not automatically carry over by law.
Note:
- For EOS, Employees can carry unused leave forward by using it later (up to 12 months after it was earned). Employers must allow this by law — otherwise, the unused leave could be forfeited after the 12-month period.
- For Go Global, PTO carryover is allowed
- For Tiger Consulting, no Carry forward
Public Holidays
Employees are entitled to 11 paid public holidays per year, determined by the state of the worker.
When a public holiday falls on a rest day or non-working day, the next working day is usually given as a day off in lieu.
| Date | Day | Holiday | Notes |
|---|---|---|---|
| 1 January 2026 | Thursday | New Year’s Day | |
| 17 February 2026 | Tuesday | Chinese New Year Day 1 | Standard holiday |
| 18 February 2026 | Wednesday | Chinese New Year Day 2 | Standard holiday |
| 19 February 2026 | Thursday | Chinese New Year Day 3 | Standard holiday |
| 21 March 2026 | Saturday | Hari Raya Puasa (Eid al-Fitr) | |
| 22 March 2026 | Sunday | Hari Raya Puasa (Day 2) | |
| 1 May 2026 | Friday | Labour Day | Standard holiday |
| 27 May 2026 | Wednesday | Hari Raya Qurban (Eid al-Adha) | |
| 31 May 2026 | Sunday | Wesak Day | Standard holiday |
| 1 June 2026 | Monday | The Yang di-Pertuan Agong’s Birthday | Standard holiday |
| 17 June 2026 | Wednesday | Awal Muharram (Islamic New Year) | |
| 25 August 2026 | Tuesday | Prophet Muhammad’s Birthday | |
| 31 August 2026 | Monday | National Day (Merdeka) | Standard holiday |
| 16 September 2026 | Wednesday | Malaysia Day | Standard holiday |
| 8 November 2026 | Sunday | Deepavali (Diwali) | |
| 25 December 2026 | Friday | Christmas Day | Standard holiday |
Sick Days
The amount of paid sick leave entitlement is based on the number of years of service:
- If an employee has less than two years of service, they are entitled to 14 days of sick leave per year
- An employee with two to five years of service will be entitled to 18 days of sick leave per year
- Employees with more than five years of service are entitled to up to 22 days of sick leave per year
Workers who are admitted to the hospital are entitled to hospitalization leave of 60 days per year inclusive of ordinary sick leave.
A medical certificate must be provided by a registered medical practitioner.
Maternity Leave
In Malaysia, the statutory maternity paid leave period for employees in the private sector is 98 consecutive days.
The maternity leave period cannot start earlier than 30 days before the due date. All maternity leave in Malaysia is only applicable to a female employee’s first five surviving children.
The female worker can resume work anytime during the 98 days, with consent from her employer & certified fit to resume work by a medical practitioner.
The maternity leave period is usually paid by the employer at an amount equivalent to the employee’s ordinary rate of pay for the full 98-day leave period. Eligibility for payment is based on the worker:
- Having been employed for at least 90 days within the 9 months preceding confinement or
- Having been employed at any time during the 4 months immediately before confinement.
- Having fewer than 5 (surviving) children.
Paternity Leave
In Malaysia, married fathers in the private sector, with 12 months of service, are entitled to 7 consecutive days of leave per birth, paid in full.
Employers must be informed 30 days ahead of the expected due date.
Parental Leave
There is no statutory parental leave in Malaysia.
Other Leave
Beyond the statutory annual leave, sick leave, public holidays, maternity and paternity leave already described, there are no additional nationwide statutory leave types such as parental leave. Any extra leave (e.g. study leave, additional family leave) is at the employer’s discretion or may arise under collective agreements.
PAID MATERNITY LEAVE (DAYS)
Termination
Termination Process
Malaysia’s labor laws require fair reasons and due process for termination under the Employment Act 1955 and related regulations. Dismissals must be justified by misconduct, poor performance, redundancy, or contract expiry, and employees are entitled to four to eight weeks’ notice or pay in lieu. Those with at least one year of service receive 10–20 days’ wages per year as severance unless dismissed for misconduct. Employers must follow fair procedures and notify labor authorities in redundancy cases. The Industrial Court can order reinstatement or compensation, making compliance and documentation vital.
| Salary payment interval / date | Final payment on termination | Bank account/payment method requirement |
|---|---|---|
| Wages must be paid not later than the 7th day after the last day of the wage period (for monthly-paid employees this means by 7th of the following month). | For termination-related benefits: under the Employment (Termination and Lay-Off Benefits) Regulations 1980, termination benefits must be paid no later than 7 days from termination date. | Wages must be paid in money (legal tender) and may be paid by bank transfer if agreed. |
Notice Period
Employees are entitled to the following minimum notice periods:
- 4 weeks’ notice if the employee has been employed for less than 2 years on the date on which the notice is given
- 6 weeks’ notice if the employee has been so employed for 2 years or more, but less than 5 years on such date
- 8 weeks’ notice if the employee has been so employed for 5 years or more on such date
Alternatively, a payment in lieu of notice can be made by either party.
Severance Pay
In Malaysia, severance pay is mandatory if applicable, but the amount differs based on the length of service.
- 10 days of severance pay at the regular salary pay rate for every year of service completed for employees within the first two years of employment
- For employees who have completed between two and five years, the payment is calculated at 15 days per year of service
- For an employee with five or more years of service, the entitlement is 20 days per year of service
Probation Period
The probation period in Malaysia for permanent employees is generally between 1 and 3 months. Although, the Employment Act confirms that there is no difference applicable to entitlements to employees whether they are within their probation period or not.
Immigration
The employer must sponsor the visa and must be an accredited company that may hire foreign employees. The employee must be a certified foreign expert in the field they will be working. Malaysia also has a reported critical occupations list (COL), highlighting job types where there is a skills shortage within the country that supports work permits/visa applications.
In Malaysia, there are three work permit/visa types: an employment pass, a professional visit pass, and a temporary employment pass. Each type of pass has its criteria for acceptance with several stipulations that the employee must meet to qualify.
Prior approval of the director-general is needed before employing foreign employees.
The employer must notify director general within 30 days if/when foreign employee is terminated.
VAT
General
Malaysia currently operates a Sales and Service Tax (SST) system rather than VAT:
• Sales Tax – generally 5% or 10% on specified taxable goods;
• Service Tax – generally 8% on many taxable services (with some remaining at 6%), according to the latest Service Tax Orders.
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Questions & Answers
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Payroll and Benefits Guide
in Malaysia
What’s covered in this guide:
- Employer/employee contributions
- Minimum wage
- Working hours
- Visa requirements
And more...
Public Holidays Calendar
| Date | Day | Holiday | Notes |
|---|---|---|---|
| 1 January 2026 | Thursday | New Year’s Day | |
| 17 February 2026 | Tuesday | Chinese New Year Day 1 | Standard holiday |
| 18 February 2026 | Wednesday | Chinese New Year Day 2 | Standard holiday |
| 19 February 2026 | Thursday | Chinese New Year Day 3 | Standard holiday |
| 21 March 2026 | Saturday | Hari Raya Puasa (Eid al-Fitr) | |
| 22 March 2026 | Sunday | Hari Raya Puasa (Day 2) | |
| 1 May 2026 | Friday | Labour Day | Standard holiday |
| 27 May 2026 | Wednesday | Hari Raya Qurban (Eid al-Adha) | |
| 31 May 2026 | Sunday | Wesak Day | Standard holiday |
| 1 June 2026 | Monday | The Yang di-Pertuan Agong’s Birthday | Standard holiday |
| 17 June 2026 | Wednesday | Awal Muharram (Islamic New Year) | |
| 25 August 2026 | Tuesday | Prophet Muhammad’s Birthday | |
| 31 August 2026 | Monday | National Day (Merdeka) | Standard holiday |
| 16 September 2026 | Wednesday | Malaysia Day | Standard holiday |
| 8 November 2026 | Sunday | Deepavali (Diwali) | |
| 25 December 2026 | Friday | Christmas Day | Standard holiday |
Who is covered by the employee act or are all employees covered?
Hi Nor, thank you for your question. Not all employees are covered by the Employment Act. People who earn less than 2,000 Ringitt per month, manual laborers (regardless of income level), and foreign workers who are legally in Malaysia are covered. Hope this helps!
If employee pays Social security fund in home country then, is there a need to pay Social Security contribution in host country?
Please be advised that the Social Security contribution is mandatory in the country where is the employment contract made. As a result, even if the employees are paying social security in their home country, they are still liable to pay social security contributions in the host country as well.