Before hiring employees in Malaysia, there are a few important things you’ll need to know. Firstly, in Malaysia, employees pay between 0% and 30% in taxes depending on their income bracket. They also pay social security contributions up to 11.70%.
It’s also important for employers to know that employees in Malaysia can be dismissed for causes such as misconduct or poor performance. Employees dismissed for reasons not connected to their conduct are entitled to severance pay that depends on their length of service.
We know this might sound overwhelming—but it doesn’t have to be. A solution like Oyster eliminates the barriers for you. With Oyster, you can automate compliance across 180+ countries, easily managing HR and payroll—all in one, easy-to-use platform.
Get an overview of what you need to know when hiring in Malaysia below.
Employees in Malaysia work eight hours daily, 40 hours weekly.
Any overtime work is paid at the rate of 150% of the standard hourly salary. Overtime work cannot exceed:
Probation is optional, but commonly ranges from one to three months. There is no legal difference between an employee on probation and a permanent employee.
Notice periods in Malaysia depend on the length of service in the case of both dismissals and resignations. The breakdown is as follows:
Employers can also choose to pay a dismissed employee standard wages in lieu of the notice period.
Non-compete agreements are legally void in Malaysia.
Paid vacation entitlement in Malaysia depends on the length of service. The breakdown is as follows:
In Malaysia, sick leave entitlement depends on the length of service. The breakdown is as follows:
Employees in Malaysia are entitled to at least 60 days of fully paid maternity leave if they have been employed in the last four months, and have worked for the same employer for at least 90 days in the nine months prior to childbirth. The leave period can begin one month before the expected delivery date.
Employers are not required to offer paternity leave.
Employer social contributions in Malaysia are up to 15.95% of an employee’s salary. This includes contributions for:
In Malaysia, employees pay between 0% and 30% in taxes depending on their income bracket. They also pay social security contributions up to 11.70%.
Employees in Malaysia can be dismissed for causes such as misconduct or poor performance. Employees dismissed for reasons not connected to their conduct are entitled to severance pay that depends on their length of service:
Setting up a business entity everywhere you want to hire a new employee isn’t scalable—it takes too long and the legal fees are high. At the same time, understanding and adhering to the local labor laws and employee expectations can be complex and time consuming. And it’s hard to find reliable information on up-to-date employment information for all the countries where you’re considering hiring. Not to mention tracking down invoices and managing employee contracts over email and spreadsheets—that gets messy fast.
We can’t afford to take risks when it comes to compliance—we need to make sure we follow the local guidelines, especially when it comes to taxes and legalities.
With Oyster, you can manage HR and payroll, and automate compliance across 180+ countries—all in one, easy-to-use platform.