Malaysia: A Guideline to Payroll and Employer of Record

Establish your presence globally with Neeyamo as we help you go beyond borders to manage your global payroll and hire new talent in Malaysia.

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Malaysia, country of Southeast Asia, lying just north of the Equator, that is composed of two noncontiguous regions which is Peninsular Malaysia Semenanjung Malaysia, also called West Malaysia (Malaysia Barat), which is on the Malay Peninsula, and East Malaysia (Malaysia Timur), which is on the island of Borneo.

Do your organization’s expansion plans require you to hire employees in Malaysia? Do you lack a physical entity in the country – a key requisite to hire local talent? Neeyamo assists organizations worldwide with onboarding and managing employees in Malaysia- an efficient payroll system, managing local compliance requirements, benefits, and more.

Our Presence

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Kuala Lumpur, Malaysia
Neeyamo Enterprise Solutions SDN. BHD A-3-3, Plaza Bukit Jalil (Aurora Place)
No. 1, Persiaran Jalil 1, Bandar Bukit Jalil Kuala Lumpur W.P, Selangor, Kuala Lumpur, 57000

Tools And Instances

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Global Payroll

Neeyamo’s global payroll solution covering 180+ countries

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Global Work

A tech-based EOR solution to manage your extended workforce

Facts And Stats


Kuala Lumpur


Malaysian Ringgit (MYR)

Official Language


Fiscal Year

1 January- 31 December

Date Format


Country Calling Code


Other Languages

English, Chinese dialects, Tamil, Telugu, Malayalam

Time Zone

Malaysia Time (GMT +8)

Global Payroll


What is payroll?

Payroll means the list of compensation to be paid to employees of a company or organization for a set period or date.

Handling payroll for a widespread workforce can pose a significant challenge for any organization, and the added complication of compliance can make things worse. If companies spend more time processing payroll, it directly impacts day-to-day operations and their overall productivity.

Over the years, Neeyamo has observed these complexities and strived to provide a global payroll solution through a single technology platform - Neeyamo Payroll.

How is payroll calculated?

Neeyamo acts as your personalized Payroll Calculator. Ensuring adherence to local regulatory requirements using multi-level controls. Providing timely and accurate payroll, courtesy of our experts worldwide and using a tech-based integrated smart helpdesk solution with seamless support experience manned by payroll experts - Neeyamo has all your payroll needs covered.

Payroll Taxes

Payroll tax is the percentage amount retained from an employee's salary and paid to the government to invest in the general population's welfare. These are statutory in nature and are levied from both the employer and employee. Additional statutory contributions are made by employers towards aiding both short-term and long-term benefits for their employees.

Employee Taxes

Employee Contributions:

  • 9.00% - 11.00% - Provident Fund (employees under the age of 60) *The extension, which can be opted out if members choose to, will take effect from January 2022 wages (February 2022 contribution) until June 2022 wages (July 2022 contribution). After which, the minimum statutory contribution rate for employees will return to 11%. However, for employees who wish to maintain their contributions rate at 11% can do so by updating EPF
  • 0.00%-5.50% - Provident Fund (employees over the age of 60)
  • 0.50% - Social Security (SOCSO)
  • 0.20% - Employment Insurance (EIS) (monthly salary ceiling of 5,000 MYR)

Employer Taxes

Provident Fund (employees under the age of 60) 12.00% - 13.00%
Provident Fund (employees over the age of 60) 4.00% -6.50%
Social security(SOCSO) 1.75%
Employment Insurance (EIS) (monthly salary ceiling of 5,000 MYR) 0.20%
Human Resource Development Fund (over 10 employees) 1.00%

Payroll Cycle


Undoubtedly, payroll is a critical process for any organization. Pay cycle in Malaysia refers to the period for which an organization pays its employees, and this can vary depending on the pay frequency that the organization chooses to adopt.


In Malaysia, the pay frequency is usually monthly.

13th Month Cycle

In Malaysia, 13th-month payment is made at the end of the year as defined in the employment contract.

Global Work


An Employer of Record (EOR) service provider helps you eliminate the hassle of handling complexities while onboarding a new employee in an international location. They help bridge the gap that otherwise mandates organizations to have a local registered entity and a local bank account, prior to making a job offer to an international hire.

An EOR service provider acts as a legal employer, facilitates salary payments, and manages other statutory requirements such as health insurance, payroll taxes, and employee benefits ensuring compliance with local tax laws and regulations.

This allows organizations to focus on collaborating with the employee in Malaysia for operational tasks, with the knowledge that they have a cost-effective solution support their global payroll & HR requirements, as they continue their global expansion.

HR Mandates and Practices

Minimum Wage

The national minimum wage is 1,200 MYR per month (until December 31, 2022) or 1,500 MYR per month for companies in the private sector with five or more employees.


For any overtime work carried out more than the normal hours of work, the employee shall be paid at a rate not less than 1.5 times his hourly rate of pay irrespective of the basis on which his rate of pay is fixed. The maximum number of overtime hours that an employee can be required to work is 104 hours per month.

Any work carried out on a rest day, or any of the gazetted public holidays, or any paid holiday substituted therefore, shall not be construed as overtime work.

No employer shall require any employee under any circumstances to work for more than twelve hours in any one day.

Data Retention Policy

  • Accounting documents - 10 years
  • Correspondance and mail - 10 years
  • Tax Dossier (Transfer pricing) - 10 years
  • Corporate Income Tax documents (including workers' pay slips) - 10 years
  • VAT documents - 10 years
  • Annual Single Report - 5 years

Hiring and Onboarding Requirements


To hire employees in Malaysia, first mandatory step involves starting with an employment contract. Employers must create a written agreement before officially hiring an employee in Malaysia. Policy of hiring differs from company types however employment contract is the mandatory part.


The employer will require the employee to submit the following:

  • Copy of National Registration Identity Card (“NRIC”)
  • Passport – For Foreign Employees
  • Employment pass – Foreign Employees
  • Details of the employee’s bank account
  • Copy of highest educational certificates
  • Latest comprehensive Resume
  • Release letter from previous employer in Malaysia (for change of employer only)
  • Supporting document from Approving Agency / Regulatory Body (if applicable)
  • Latest 3 month’s salary slips (for Employment pass renewal and change of position)
  • Latest e-BE /e-M tax filing (for Employment pass renewal or change of position or change of employer)
  • Tax payment receipts (if any)
  • Latest EA Form (for Employment pass renewal or change of position or change of employer
  • Sex, race, Foreign Worker’s Social Security Number, Identity Number in Country of Origin (from NRIC)
  • Particulars of Next-of-Kin- Name, Address, Contact number, Relationship to the employee
  • Dependents’ Details- Name, Correspondence address, Relationship with worker, Contact details (phone number and email address), Identity Number In Country of Origin
  • Marital Status and Spouse’s Details (if applicable), that full name, NRIC/passport number, Income tax number, telephone number
  • Income Tax Number- From tax returns if applicable
  • Email address- Details from Latest Resume
  • Telephone Number (House and Mobile) - Details from Latest Resume
  • Residential and Correspondence Addresses- Details from Latest Resume
  • Particulars of Previous Employer
  • Optional document- Medical Report


The probationary period is between one to three months.


Public Holidays

Malaysia has 11 paid public leaves.

An additional public holiday for Hari Raya Aidilfitri will be celebrated on either April 21, 2023 (if 1 Syawal occurs on Saturday, April 22, 2023) or April 24, 2023 (if 1 Syawal occurs on Friday, April 21, 2023).

Sick Leave

The number of paid sick days in Malaysia also depends on the duration of employment. The illness should be confirmed by the medical practitioner, medical officer, or dental surgeon. At the same time, the employees should inform their employers on sick leave during 48 hours after commencement or be deemed absent from work without reasonable excuse. If the illness is more serious and requires hospitalization, the employees receive 60 days of paid sick leave in total, notwithstanding the period of employment.

Those employees whose illness doesn’t require hospitalization are entitled to 14 days per year if employed for 1-2 years, 18 days per year if employed 2-5 years, 22 days per year if employed longer than 5 years.

Maternity Leave

Female employees are entitled to 98 consecutive days of paid maternity leave for each child up to 5 children, starting as early as 30 days before childbirth and no later than the day after the birth of the child. If a doctor certifies that an employee is unable to perform the duties satisfactorily due to advanced pregnancy, an employer may require that the employee begin maternity leave up to 14 days before the due date.

Paternity Leave

Fathers also get leave for 7days, working fathers are eligible for paternity leave for up to five children. They must also have worked at the company for at least 12 months to be entitled to such leave.

Other Leaves

  • Compassionate or bereavement Leave: usually granted for 1-3 days.
  • Marriage Leave: Maybe granted for one to three days
  • Study Leave: subject to employers’ approval, granted for the period of employee training or examination.


Notice Period

There are no statutory notice periods in Malaysia, but 30 days’ notice is commonly given.

Severance Pay

In Malaysia, severance pay is mandatory if applicable, but the amount differs based on the length of service.

  • Ten 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.


Types of Visas

The type of visa a person needs to travel to Malaysia will depend on their citizenship and the purpose of their trip. All foreign visitors must have a passport with a minimum validity of six months upon arrival at a port of entry

  • Single entry Visa to Malaysia
  • Multiple Entry Visa to Malaysia (e-Visa)
  • Transit Visa
  • Malaysia eNTRI visa (Electronic Travel Registration & Information)
  • Malaysia Visa upon Arrival
  • Malaysia e-Visa Medical

Single entry visa (e-visa)

The Malaysia single entry visa is valid for up to three months from date of issue. Malaysia offers a single entry visa to foreign nationals who wish to enter the country with the purpose of a social visit (tourism).

Multiple Entry Visa to Malaysia (e-Visa)

The Multiple Entry Visa to Malaysia is issued to foreign nationals that need to enter the country for business or government-to-government matters. Once approved, it is valid for a period within three to twelve months from the date it was issued. Indian and Chinese citizens who wish to visit Malaysia with the purpose of a social visit (tourism) is also eligible to get the Multiple Entry Visa to Malaysia. Upon entering Malaysia with this visa type, the holder is granted a stay of up to 30 days. It is important to note that the stay cannot be extended.

Multiple entry Visa is granted on condition - The applicant must provide proof of sufficient funds staying in Malaysia. The applicant is required to have a return flight. Tour groups are not eligible to obtain this visa type.

Transit visa

The transit visa is issued to travelers who will be entering to Malaysia on transit to other countries. However, if the traveler will not be leaving the airport they are not required to get the transit visa. A transit visa for Malaysia is needed only if the person will be leaving the airport and staying in Malaysia for a short period of time. Certain countries do not enjoy visa-free entry to Malaysia; a free transit pass can be obtained for stays of up to 120 hours when transiting through Kuala Lumpur International Airport. The traveler must have an onward ticket departing from Kuala Lumpur and the flight should be operated by Air Asia or Malaysia Airlines

Citizens of Bhutan, China, Myanmar and Nepal are eligible for free transit pass.

Malaysia eNTRI visa (Electronic Travel Registration & Information)

The eNTRI is an electronic travel authorization that grants its holder a stay of 15 days in Malaysia. The government of Malaysia introduced eNTRI, Electronic Travel Registration and Information system, for citizens of India and the People’s Republic of China. Getting a Malaysia eNTRI visa is a simple process. The eNTRI can be easily completed online; applicants need to provide a few essential personal details and passport information. Most eNTRI applications are processed and approved within 1 business day. The visa is valid for 3 months from the moment it is issued. Once an eNTRI visa has been used, the holder will need to wait up to 3 months before they can apply for a new eNTRI. This type of visa for Malaysia cannot be extended.

Malaysia Visa upon arrival

A visa on arrival for Malaysia is available under certain conditions. Nationals of China and India who are arriving to the country directly from Singapore, Indonesia or Thailand and hold a valid visa for any of these three countries can get a visa on arrival for a stay of up to 7 days.

The visa on arrival can be obtained at Kuala Lumpur-International, Johor Bahru, Kota Kinabaly, and Penang airports. However, the traveler will need to provide their return flight ticket and prove that they carry at least 1000 USD. The visa on arrival carries a cost as well; the traveler should pay 407 Malaysian ringgit (100 USD). Other currency will not be accepted to make the payment of the visa on arrival.

Malaysia e-Visa medical

The Malaysia medical e-Visa is available to patients who wish to travel to Malaysia for medical treatment, procedures or services. To successfully apply for the Malaysia online medical visa applicants need to meet certain requirement which includes making a medical appointment with a MHTC (Malaysia Healthcare Travel Council) member hospital and submitting a hospital appointment letter. Patients can stay in the country for periods of up to 30 days using the Malaysia e-Visa medical.

Foreign patients are only able to use the e-Visa to book appointments as Malaysia’s approved private hospitals and healthcare providers. Public healthcare is not available for e-Visa holders.

Applicants need to apply for the medical e-Visa at least 14 working days before their intended date of travel. The e-Visa allows one, singular entry into Malaysia and is valid for 3 months from the date of issue providing the applicant’s passport remains valid.

Online visa

If you are from a country that is not exempt from Malaysia visas, then you will have to apply for one before you are allowed to travel there. However, there are several countries that can stay in Malaysia for specific periods of time without having to get a visa. But for a period exceeding the duration of the allowed visa-free travel, you will have to apply for a visa. For example, if you are a citizen of a member state of the European Union or from the USA, you don’t need to get a visa if you only intend to stay in Malaysia for a maximum of 90 days. But if you intend to stay for longer than 90 days, you do need to apply for a Malaysia visa, or the appropriate Pass related to your travel (work, study, family reunification etc.

When to apply

  • You can only apply for a Malaysian visa online if you are travelling for tourism purposes.
  • For any other purposes, such as for business, you will have to apply in person at the nearest Malaysian Mission Abroad (Embassy/Consulate/High Commission) or through an authorized Visa Application Center.

Foreign Nationals can apply for Malaysia Visa in two ways manually or online. Malaysia offers the online Malaysia Visa application to handful countries such as Bangladesh, Bhutan, China, India, Montenegro, Myanmar, Nepal, Pakistan, Serbia and Sri Lanka. Indian and Chinese nationals are eligible for the eNTRI (Electronic Travel Registration and Information).

Documents required for Malaysian Visa

  • Two copies of the Malaysia visa application form
  • Original passport.
  • Two photocopies of passport
  • Two passport size pictures.
  • A copy of flight itinerary, including a confirmed return ticket.
  • Proof of accommodation in Malaysia, such as a hotel booking.
  • If you are staying with friends/family, include an invitation letter.
  • Bank statements from the past three months.
  • If you are applying for a Malaysia Visa with Reference: Original approval letter from the Immigration Department of Malaysia or another authority.

Once you have completed your application, your Malaysia e-Visa will be processed within 48 hours, provided that they fall on working days, not weekends or public holidays. Additionally, if there are any problems on the online application system, such as crashes or maintenance, the processing time for the Malaysia e-Visa may be delayed.

Validity of visa

  • An e-Visa for Malaysia is valid for three months, and allows the holder to stay in the country only up to 30 days within this time frame.
  • If you are an Indian national, you can apply for either a Multiple Entry Visa or a Single Entry Visa. The e-Visa is still valid for three months and you cannot stay longer than 30 days in any trip.
  • If you are from any of the other countries eligible for the Malaysian e-Visa, you are only allowed to apply for a Single Entry Visa and stay up to 30 days.

Employee Background Checks

Legal and Background Checks

Background checks are not addressed in the labor code.

Last updated on August 7, 2023

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