Payroll Information

Employers in Malaysia must ensure that they comply with all relevant employment laws and regulations, and that they provide their employees with fair and equitable terms and conditions of employment.

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Payroll Cycle

The payroll cycle in Malaysia varies from company to company, but it is typically monthly. Employees are paid on the last day of the month, or on a date that is specified in their employment contract. Some companies may choose to pay their employees bi-weekly or weekly, but this is less common.

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Employment Law

The main employment law in Malaysia is the Employment Act 1955, which sets out the minimum terms and conditions of employment for most employees in the country. The Act covers issues such as working hours, overtime pay, leave entitlements, and termination of employment. Employers are required to comply with the provisions of the Act, and failure to do so can result in penalties and fines.

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Employment Contract

Employment contracts in Malaysia are typically written agreements that set out the terms and conditions of employment between an employer and an employee. The contract should include details such as the job title, salary, working hours, leave entitlements, and termination provisions. The contract must comply with the provisions of the Employment Act 1955 and other relevant laws and regulations.

In addition to the Employment Act 1955, there are other laws and regulations that employers in Malaysia must comply with. For example, employers must contribute to the Employees Provident Fund (EPF) and the Social Security Organization (SOCSO) on behalf of their employees. Employers are also required to deduct income tax from their employees' salaries and pay it to the Inland Revenue Board (IRB) on a monthly basis.

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Probation Period / Trial Period

In Malaysia, the probation period is usually 3 months. During this time, employers can assess an employee's performance and suitability for the role. If an employee's performance is satisfactory, the employer may confirm them as a permanent employee at the end of the probation period.

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Working Hours

The standard working hours in Malaysia are 8 hours per day and 48 hours per week. However, some industries and occupations may have different working hours. Employees are entitled to 1 rest day per week, and overtime pay for work beyond the normal working hours.

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Overtime

Employees who work beyond the normal working hours are entitled to overtime pay, which is typically 1.5 times their normal hourly rate. Employees who work on a rest day or public holiday are entitled to higher rates of overtime pay.

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Bonus

Bonuses are not required by law in Malaysia, but they are common in many industries. Employers may choose to provide bonuses to employees based on performance, company profits, or other factors. Bonuses are typically paid once or twice per year.

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Termination

In Malaysia, an employment contract can be terminated by either the employer or the employee. Employers must provide notice of termination or payment in lieu of notice, unless the termination is for misconduct or poor performance.

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Notice Period

The notice period depends on the length of service of the employee, and ranges from 4 weeks for employees with less than 2 years of service to 8 weeks for employees with more than 10 years of service.

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Redundancy / Severance Pay

Employers may need to make employees redundant if there is a business downturn or restructuring. In such cases, employers are required to provide notice or payment in lieu of notice, as well as redundancy pay. The amount of redundancy pay depends on the length of service of the employee and is typically calculated based on a formula set out in the Employment (Termination and Layoff Benefits) Regulations 1980.

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Maternity Leave

Female employees in Malaysia are entitled to 14 weeks of paid maternity leave if they have been employed for at least 90 days before their expected date of delivery. The leave can be taken anytime between 4 weeks before the expected delivery date and 14 weeks after the delivery date. During the maternity leave period, the employee is entitled to full pay.

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Paternity Leave

Male employees in Malaysia are entitled to 3 days of paid paternity leave if they have been employed for at least 90 days before the birth of their child. The leave can be taken within 60 days of the birth of the child.

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Parental Leave

In addition to maternity and paternity leave, employees in Malaysia are entitled to up to 14 days of unpaid parental leave per year to care for their children who are below the age of 18 years.

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Vacation and Annual Leave

Employees in Malaysia are entitled to a minimum of 10 days of paid annual leave per year if they have been employed for at least 12 months. The entitlement increases with the length of service, up to a maximum of 16 days per year after 5 years of service. Employers may provide additional annual leave days as part of their employment contract or collective agreement.

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Sick Leave

Employees in Malaysia are entitled to paid sick leave if they are certified by a registered medical practitioner as being unfit for work. The entitlement is 14 days per year for employees who have been employed for less than 2 years, and 18 days per year for employees who have been employed for 2 years or more.

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Other Leave

Employees in Malaysia may also be entitled to other types of leave, such as compassionate leave, study leave, or marriage leave. The entitlements for these types of leave vary depending on the company's policies or collective agreements.

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Other Benefits

Employees in Malaysia may also be entitled to other types of leave, such as compassionate leave, study leave, or marriage leave. The entitlements for these types of leave vary depending on the company's policies or collective agreements.

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Holidays

There are 14 public holidays in Malaysia, including religious holidays such as Eid al-Fitr and Eid al-Adha, as well as national holidays such as Independence Day and Malaysia Day. Employees are entitled to paid leave on these days, and employers may choose to provide additional leave days as part of their employment contract or collective agreement.

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Taxation

The taxation system in Malaysia is relatively straightforward, with personal income tax and corporate tax being the main sources of revenue for the government. The social security system provides a safety net for employees, while the GST has been abolished and is no longer a consideration for taxpayers. It is important for individuals and businesses to ensure that they comply with all relevant tax laws and regulations to avoid penalties and legal consequences.

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Personal Income Tax

Personal income tax is levied on individuals' income in Malaysia. The tax rates are progressive, ranging from 0% to 30%, depending on the amount of income earned. For resident individuals, the tax year is from January 1 to December 31, and the tax return must be filed by April 30 of the following year. The tax authorities in Malaysia have implemented a self-assessment system, where taxpayers are required to compute and report their tax liability on their own.

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Social Security

The social security system in Malaysia is administered by the Social Security Organization (SOCSO). The system provides protection to employees against occupational injuries, invalidity, and death. The contribution rate for employees is 0.5% of their monthly wages, while the employer's contribution rate ranges from 1.75% to 4.75%, depending on the nature of the business. Self-employed individuals are also required to contribute to SOCSO.

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Other Taxs

Corporate Tax

Corporate tax is imposed on the income of companies in Malaysia. The tax rate is 24% for resident companies, while non-resident companies are subject to a tax rate of 24% or a lower rate as stipulated by the Double Taxation Agreement between Malaysia and the foreign country where the company is incorporated. The tax year for companies is generally the financial year end, and the tax return must be filed within 7 months from the financial year end.

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Goods and Services Tax (GST)

The goods and services tax (GST) was introduced in Malaysia in 2015 but was abolished in 2018. The GST was a consumption tax that was levied on the supply of goods and services in Malaysia. The standard rate was 6%, with certain items exempt from the tax.

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Visas and Foreign Workers

It is important to note that the Malaysian government has strict laws and regulations regarding the employment of foreign workers, and employers and employees must ensure that they comply with all relevant laws and regulations to avoid penalties and legal consequences.

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General Information

Types of Work Visas

There are several types of work visas in Malaysia, including:

• Employment Pass (EP) I: for foreign professionals, managers, and executives who earn a monthly salary of RM5,000 or more
• Employment Pass (EP) II: for foreign professionals, managers, and executives who earn a monthly salary of RM2,500 to RM4,999
• Professional Visit Pass (PVP): for foreign experts who are invited to work on a short-term basis in Malaysia
• Temporary Employment Pass (PLKS): for foreign workers in the manufacturing, construction, and services sectors
• Resident Pass-Talent (RP-T): for foreign talent who have been identified by TalentCorp Malaysia as having high-level skills and expertise

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Application Process

The application process for a work visa in Malaysia involves several steps, including:

• Obtaining a job offer from a Malaysian employer
• The employer must apply for the work visa on behalf of the employee
• The employer must submit the necessary documents, such as the employee's passport, educational qualifications, and employment contract, to the relevant authorities
• The authorities will review the application and may conduct an interview with the employee
• If the application is approved, the employee will be issued a work visa

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Requirements

The requirements for a work visa in Malaysia vary depending on the type of visa. However, some common requirements include:

• A valid passport with at least 6 months validity remaining
• Educational qualifications that are relevant to the job
• A job offer from a Malaysian employer
• Proof of financial stability, such as bank statements or income tax returns
• Medical examination results

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Duration of Work Visa

The duration of a work visa in Malaysia depends on the type of visa and the employee's contract with the employer. Employment Passes are usually issued for up to 2 years, while Professional Visit Passes are issued for up to 12 months.

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Renewal

Work visas in Malaysia can be renewed if the employee's contract with the employer is extended. The renewal process is similar to the initial application process and must be initiated by the employer.

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