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Malaysia is more than just nasi lemak and world-class beaches. It’s one of Southeast Asia’s fastest-growing talent hubs, especially for digital, finance, operations, and multilingual customer support roles. But before you onboard your first Malaysian hire, you’ll need to navigate the country’s famous “acronym soup” of statutory contributions: EPF, SOCSO, EIS, and even HRDF.
This guide breaks everything down clearly, so you can hire confidently whether you’re building a remote team or expanding into the Malaysian market through an Employer of Record Malaysia (EOR Malaysia) solution.
EPF / KWSP is Malaysia’s mandatory retirement savings scheme. Employers and employees both contribute monthly based on the employee’s wage.
Why it matters: EPF is often the highest additional cost in Malaysia payroll, especially for mid- to senior-level positions. Businesses using a Malaysian payroll calculator will quickly notice that EPF inflates employer cost by 12–13%.
Often called PERKESO, SOCSO protects against workplace accidents, occupational diseases, and invalidity.
SOCSO contributions are based on a tiered schedule depending on wages, generally ranging from < 2% and capped at a fixed amount. While the percentage is small, compliance is non-negotiable.
EIS, sometimes called SIP, provides short-term financial support for employees who lose their jobs through retrenchment or restructuring.
Even though small, EIS contributions are a common compliance error for foreign employers unfamiliar with Malaysian labor laws. Always ensure your Malaysia payroll system correctly applies it, or use a Malaysia payroll calculator to avoid misclassification. You can find the full Malaysia Employment Guide here.
Often overlooked, the Human Resource Development Fund (HRDF) requires eligible employers to contribute 1% of monthly payroll for employee training and development.
Mandatory if your company belongs to specific industries such as services, manufacturing, and mining.
Many foreign companies expanding into Malaysia are caught off guard by HRDF because it isn’t discussed together with EPF, SOCSO, and EIS, but it is enforceable and audited.
Let’s calculate the employer cost for a Malaysian employee earning:
| Component | Rate / Calculation Rule | Employer Cost (RM) |
| Gross Salary | Base Monthly Wage | RM 10,000.00 |
| EPF (KWSP) | 12% (For wages > RM 5,000) | RM 1,200.00 |
| SOCSO (PERKESO) | Employment Injury + Invalidity (Capped) | ~ RM 49.40 |
| EIS (SIP) | 0.2% (Capped) | ~ RM 19.80 |
| HRDF (Levy) | 1% (Mandatory for specific sectors) | RM 100.00 |
| TOTAL Cost | Estimated Monthly Expenditure | RM 11,369.20 |
Key takeaway: Most companies should budget 15% ~ 20% above the gross salary for statutory contributions, and use a Malaysia payroll calculator for accuracy.
Understanding the difference between hiring Malaysians vs. expats is essential.
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Statutory Contribution |
Malaysians / PRs |
Foreign Employees |
Notes |
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EPF (Employees Provident Fund) |
Mandatory |
Voluntary (mandatory from Oct 2025*) |
Foreigners may opt in today; changes are expected to increase employer costs. |
|
SOCSO – Employment Injury Scheme |
Mandatory |
Mandatory |
Covers workplace accidents. Applies to all employees regardless of nationality. |
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SOCSO – Invalidity Scheme |
Mandatory |
Not Applicable |
Only Malaysians and PRs contribute. |
|
EIS (Employment Insurance System) |
Mandatory |
Not Applicable |
Applies only to Malaysians/PRs; foreigners generally excluded. |
|
HRDF (HRD Corp Levy) |
Mandatory if the industry is covered |
Mandatory if the industry is covered |
Based on employer category, not employee nationality. |
EPF for foreign workers becomes mandatory starting October 2025, according to recent government announcements. This is a major shift and will increase employer costs significantly for expatriates. Getting these classifications wrong is one of the top reasons companies fail audits.
Don't overlook the HRDF levy. While EPF and SOCSO get all the attention, failing to register for HRDF (mandatory for many industries with 10+ Malaysian employees) can lead to unexpected fines. Slasify's EOR solution ensures all these 'hidden' contributions are calculated automatically.
Hiring in Malaysia can feel overwhelming, especially without local expertise. Slasify makes expansion simple through its Employer of Record Malaysia (EOR Malaysia) and global payroll service platform.
Navigating Malaysia’s statutory contributions can feel like walking through a compliance minefield, especially for foreign companies without a legal entity or an in-house HR specialist familiar with EPF, SOCSO, EIS, and HRDF. Slasify makes expansion simple through its Employer of Record Malaysia (EOR Malaysia) and global payroll service platform.
Setting up a Malaysian entity can take months and requires ongoing statutory filings, audits, and administrative upkeep. Slasify removes that burden by becoming the official legal employer for your Malaysian hires.
You still maintain full control of day-to-day operations, KPIs, and performance management. Meanwhile, Slasify handles onboarding, employment contracts, statutory registration, and payroll setup on your behalf.
All compliance risks associated with Malaysian employment laws shift from your company to Slasify. This gives you immediate access to Malaysian talent, without incorporation delays or legal exposure.
Malaysia’s statutory contributions span multiple government agencies, including EPF/KWSP, SOCSO/PERKESO, EIS/SIP, and HRDF. Each comes with its own rules, wage caps, and classification requirements.
Slasify’s payroll management solution automates all calculations, applying the correct contribution rates based on salary tiers and employee nationality. It deducts contributions accurately, submits payments directly to KWSP and PERKESO, and generates compliant payslips and payroll reports.
Malaysia’s labor landscape is constantly evolving, especially for foreign workers. Key changes, such as mandatory EPF for foreigners starting October 2025, can significantly impact payroll costs.
Other ongoing updates include SOCSO categorization rules, HRDF sector eligibility, and changing EPF salary thresholds. Slasify continuously monitors these regulations and automatically updates your payroll settings.
Slasify enables you to hire top Malaysian talent within days, eliminating the need to open a local Sdn. Bhd. or register for employer accounts with EPF, SOCSO, or tax authorities.
You also avoid the complexity of local bank setup, corporate tax filings, and long-term administrative obligations. With flexible scaling, you can expand or downsize without entity risks.
This makes Slasify ideal for market testing, remote team expansion, short-term projects, or hiring individuals and full teams across multiple countries. Your team works for you, while Slasify manages payroll, benefits, and compliance end-to-end.
Beyond Malaysia, Slasify supports multi-country hiring so you can manage global payroll across Asia, Europe, and the Americas from one platform.
You gain unified oversight of benefits, leave, tax compliance, and cross-border contractor payments. All payroll and HR processes are consolidated into a single global payroll service with streamlined invoicing.
No more juggling multiple vendors or inconsistent local processes. Ready to Hire in Malaysia? Let Slasify Help. Don’t let payroll complexity stall your expansion. Let’s calculate your Malaysia hiring budget today.
Yes. EPF will become mandatory for foreign workers starting in October 2025, based on recent government announcements.
Failure to pay SOCSO can result in penalties, interest charges, and potential legal action, and the employer may still be liable for employee claims even if contributions were not made.
For employees earning RM5,000 or more, the employer’s EPF contribution is 12% of the employee’s monthly wage.
Q4: Do remote contractors in Malaysia require EPF and SOCSO contributions?
No. Independent contractors are not employees, so EPF, SOCSO, and EIS contributions are not required, but misclassification risks exist if contractors function like full-time staff.
The HRD Corp Levy is a 1% monthly training and development fund that is mandatory for companies in eligible industries such as services, manufacturing, and mining.
Yes. Foreign companies can hire Malaysian employees without setting up a local entity by using an Employer of Record (EOR) Malaysia service like Slasify, which becomes the legal employer on your behalf.
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