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Malaysia is one of the easiest places in Southeast Asia to build a team. Most people speak English, salaries cost less than in Singapore, and Kuala Lumpur and Penang are home to a large pool of tech, finance, and shared-services talent.
The salary figure in an offer letter is only part of what you pay, though. On top of it come retirement and social security contributions, monthly tax withholding, a set leave structure, and, from this year, stamp duty on employment contracts. Foreign employers who budget for salary alone usually find out about the rest at the first payroll run.
This guide covers what you’ll pay, when you’ll pay it, and the rules that commonly trip up companies new to Malaysia payroll.
Most packages have three layers: the monthly salary, the contributions and benefits the law requires, and the extras employers add to compete for talent.
| Compensation Component | Typical Practice |
|---|---|
| Base salary | Fixed, paid monthly |
| Annual performance bonus | Common, usually discretionary |
| EPF | Mandatory (subject to eligibility) |
| SOCSO | Mandatory (subject to eligibility) |
| EIS | Mandatory (subject to eligibility) |
| Annual leave | Statutory minimum, rising with years of service |
| Medical benefits | Widely provided, often through a panel clinic arrangement |
| Transport or meal allowance | Optional, set by company policy |
| Mobile or internet allowance | Common for hybrid and remote roles |
For mid-level and senior hires, the extras often decide whether a candidate accepts. Group health insurance, a training budget, flexible hours, and leave above the statutory minimum are now standard in many tech and professional services companies.
The Employment Act 1955 sets the basic rules for salary payments in Malaysia. In 2026, employers need to:
Almost all salaries are paid by bank transfer. If you run payroll in several countries, fix a Malaysia payroll calendar early. EPF, SOCSO, EIS, and income tax payments are all due by the 15th of the following month, so a salary run that slips can push your statutory payments late too.
This is where most of the cost on top of salary comes from. Add these contributions into your hiring budget before you make an offer.
| Contribution | What It Covers | Who Pays |
|---|---|---|
| EPF (KWSP) | Retirement savings | Employer and employee |
| SOCSO (PERKESO) | Work injury, disability, and death | Employer and employee |
| EIS (PERKESO) | Income support after involuntary job loss | Employer and employee |
| LINDUNG 24 Jam (PERKESO) | Accidents outside working hours | Employee only (deducted by employer) |
EPF is Malaysia's national retirement fund. For Malaysian employees under 60, the employer pays 13% of monthly wages for employees earning RM5,000 or less and 12% for those earning more. The employee pays 11%. There is no salary cap, so contributions grow with pay.
Since 1 October 2025, foreign employees with valid work passes (other than domestic workers) must also be registered. For them, the employer and the employee each pay 2%.
SOCSO covers employees who are injured at work, develop an occupational disease, become disabled, or die because of their employment. Contributions are based on wages up to a RM6,000 monthly ceiling. For employees under 60, the employer pays 1.75% and the employee 0.5%. Foreign workers are covered too.
EIS gives temporary income and job-search support to employees who lose their jobs involuntarily. It uses the same RM6,000 ceiling, and the employer and employee each pay 0.2%.
PERKESO's newest scheme started on 1 June 2026. It covers employees for accidents outside working hours, such as on weekends or holidays. The employer doesn't pay into it, but has to deduct the employee's contribution from salary and send it to PERKESO with the regular SOCSO payment. The rate is 0.75% of wages up to RM6,000 until May 2028, then rises to 1% and later 1.25%.
Foreign employees must participate. Malaysian employees could opt out during a window that closed on 31 August 2026, and new hires have 30 days from registration to opt out. Check each employee's status before running payroll so you don't deduct contributions you shouldn't.
Malaysian law doesn't require bonuses. You only have to pay one if it's written into the employment contract, a collective agreement, or company policy. Still, most employees expect one, and leaving it out of a package can make the offer look weak.
Annual performance bonuses are the most common. They're usually paid at year-end or after the financial year closes, and the amount depends on individual performance, company results, and management discretion. In many companies one to two months' salary is normal, and more in good years or high-paying sectors.
Contractual bonuses are different. If the contract promises a fixed amount, such as a guaranteed 13th-month payment, a sign-on bonus, or a completion bonus, you must pay it.
On payroll, bonuses count as wages for EPF and are subject to monthly tax deduction (PCB). They are not subject to SOCSO or EIS.
The Employment Act 1955 also sets minimum working conditions and leave entitlements.
Normal hours are capped at 8 hours a day and 45 hours a week. Employees covered by the Act who earn RM4,000 or less a month are entitled to overtime pay for hours above these limits.
| Length of Service | Minimum Annual Leave |
|---|---|
| Less than 2 years | 8 days |
| 2 to 5 years | 12 days |
| More than 5 years | 16 days |
Employees get paid sick leave when a registered medical practitioner certifies it. If they're hospitalised, they get up to 60 days of paid hospitalisation leave a year, in addition to their regular sick leave.
| Length of Service | Paid Sick Leave |
|---|---|
| Less than 2 years | 14 days |
| 2 to 5 years | 18 days |
| More than 5 years | 22 days |
Budget 2027 proposes longer maternity leave, but only for the public sector. Private-sector entitlements stay the same.
Employees get at least 11 paid public holidays a year. Five are fixed by law:
The employer chooses the other six from the gazetted list. Most choose the major festivals: Hari Raya Aidilfitri, Chinese New Year, Deepavali, and Christmas.
Each month, you'll withhold and pay:
Late or incorrect payments can lead to penalties, interest, and audits. These are easy to avoid if your payroll process is reliable.
Running payroll in several countries means following several sets of employment law, tax rules, contribution schemes, and currencies. Slasify brings international hiring onto one platform.
With Slasify, you can:
Whether it's your first developer in Kuala Lumpur or a regional sales team, Slasify takes care of the employment and payroll compliance so you can start hiring quickly. Book a free consultation to see how our Employer of Record and global payroll solutions work in Malaysia.
1. Can a foreign company hire employees in Malaysia without a local entity?
Yes. An Employer of Record like Slasify becomes the legal employer in Malaysia and handles payroll, contributions, and compliance. You manage the employee's day-to-day work.
2. What is the minimum wage in Malaysia?
RM1,700 per month as of October 2026. Budget 2027 proposes raising it to RM2,000 from June 2027, with micro, small, and medium enterprises exempt for now.
3. How much does it cost to employ someone in Malaysia on top of salary?
For a Malaysian employee, employer contributions usually add about 15% to 16% of salary: 12–13% EPF, 1.75% SOCSO, and 0.2% EIS (SOCSO and EIS stop at the RM6,000 ceiling). For a foreign employee, EPF is 2%, so the total is closer to 4%. Benefits and allowances are extra.
4.Do foreign employees in Malaysia have to contribute to EPF?
Yes. Since 1 October 2025, foreign employees with valid work passes (other than domestic workers) must contribute 2%, and their employer pays another 2%.
5. Are bonuses mandatory in Malaysia?
No, unless the contract, a collective agreement, or company policy promises one. Most employers still pay an annual bonus.
6. When must salaries be paid in Malaysia?
At least once a month, and no later than seven days after the end of the wage period.
7. Do employment contracts need to be stamped in Malaysia?
Yes, if the monthly salary is above RM3,000 and the contract was signed on or after 1 January 2026. Stamp duty is RM10, and the contract must be stamped through LHDN's MyTax portal within 30 days of signing.
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