Hire in Malaysia
Malaysia — 33 million population, $12,570 GDP per capita. Everything you need to know about employment law, tax, compliance and hiring in Malaysia.
Capital
Kuala Lumpur (administrative: Putrajaya)
Currency
Malaysian Ringgit (MYR)
Languages
Malay, English, Mandarin, Tamil
Time zones
UTC+8 (MYT)
Hiring overview
- Typical time to hire
- 1-3 weeks for contractor, 3-5 weeks for full-time
- Entity requirement
- Malaysian Sdn Bhd (private limited). Registration at SSM (Companies Commission of Malaysia).
- EOR available
- Yes — from $399/employee/month through a Corpshore entity
- Contractor of record
- Yes — from $39/worker/month
Employment law
- Standard workweek
- 45 hours (reduced from 48 in 2023 Employment Act amendment)
- Maximum weekly hours
- 45 hours
- Minimum annual leave
- 8-16 days depending on tenure (8 days for 1-2 years, 16 days for 5+ years)
- Public holidays
- 11 per year
- Maternity leave
- 98 days (increased from 60 in 2023), paid by employer
- Paternity leave
- 7 days (introduced 2023)
- Notice period
- 4-8 weeks depending on tenure
- Severance
- 10-20 days per year depending on tenure (Employment (Termination and Lay-Off Benefits) Regulations 1980).
- Probation
- 3-6 months typical (contractual)
- Overtime rules
- 1.5x (normal day), 2x (rest day), 3x (public holiday). Applies to employees earning ≤RM 4,000/month (or all manual labourers).
Tax overview
- Income tax range
- 0% to 30%
- Corporate tax
- 24% (17% for first RM 600k for SMEs)
- Social contributions
- EPF (pension): 11% employee + 12-13% employer. SOCSO: ~1.75% employer + ~0.5% employee. EIS: 0.2% each.
- VAT / GST
- SST (Sales and Service Tax): 6-10% (replaced GST in 2018)
- Tax year
- Calendar year
- Treaty network
- Over 75 tax treaties
Compliance landscape
- Worker classification
- Employment Act 1955 (significantly amended 2022). Now covers all employees (previously limited by salary threshold).
- Data protection
- Personal Data Protection Act 2010 (PDPA). Department of Personal Data Protection enforces.
- Right to work
- Employment Pass for professionals (minimum RM 10,000/month). EP categories 1-3 based on salary level.
- Non-compete
- Enforceable if reasonable. Malaysian courts apply English common law principles.
- Collective bargaining
- Trade Unions Act 1959 governs. MTUC (Malaysian Trades Union Congress) is the main body. Union density ~6%.
Payment rails
DuitNow (instant transfer by proxy) and IBG (interbank GIRO) handle domestic transfers. DuitNow QR unifies QR payments. Wise supports MYR.
Key considerations for hiring
- 2022-2023 Employment Act amendments significantly reformed Malaysian labour law (workweek reduction, expanded maternity/paternity leave, flexible work arrangements)
- Labuan International Business and Financial Centre offers favourable tax regime for offshore entities
- Malaysia is a major semiconductor packaging and testing hub (Penang: 'Silicon Island of the East')
- Multilingual workforce (Malay, English, Mandarin, Tamil) is a key advantage for MNC shared services
Business and cultural context: Malaysia
Business culture
Multicultural (Malay, Chinese, Indian) with varying business norms. Malay culture values harmony and face. Chinese Malaysian business is relationship-driven. English is widely used in business.
Key industries
Talent pool strengths
Historical context
Malaysia's semiconductor industry, centred in Penang, began when Intel opened its first offshore assembly plant there in 1972. Today, Malaysia produces ~13% of the world's semiconductor packaging, testing, and assembly output. Penang is the 'Silicon Island of the East,' hosting Intel, AMD, Broadcom, and hundreds of E&E companies. The 2020s global chip supply chain restructuring is driving further investment.
Ready to hire in Malaysia?
Use our EOR service from $399/month and we handle employment law, payroll, tax and compliance in Malaysia for you.