Payroll in Malaysia

Mercans stands as your trusted ally and premier payroll provider in Malaysia, offering superior payroll solutions (Managed & SaaS). Our steadfast dedication to delivering exceptional payroll services in Malaysia remains unmatched. Drawing from extensive experience in the payroll sector, Mercans ensures precise and compliant payroll processing, making us the preferred partner for businesses across the spectrum. Rely on Mercans as your dedicated local payroll company in Malaysia for punctual and accurate payroll management, including the convenience of multi-currency transactions within the Malaysian market. We provide a team of seasoned payroll experts well-versed in local regulations, offering comprehensive assistance for a seamless and customized payroll experience tailored to your specific business requirements.

Everything you need to know before running payroll in Malaysia

Working Hours

In Malaysia, standard working hours are generally up to 45 hours per week under the Employment Act amendments, typically spread across five or six working days depending on employer arrangements. Any work beyond this duration qualifies as overtime and must be compensated at statutory premium rates.

Basic Facts

• Official State Name: Malaysia
• Population: Approximately 33+ million
• Capital: Kuala Lumpur
• Major Languages: Malay
• Currency: Malaysian Ringgit (MYR)
• Main Industries: Manufacturing, services, technology, tourism, and oil and gas
• Internet Domain: .my
• International Dialing Code: +60

Working Conditions and Wages

Employers must comply with statutory requirements relating to working hours, overtime, paid leave, and contributions to employee benefit schemes.

Overtime

Overtime payments under Malaysian labor law include:

• Normal working days: At least 1.5 times the hourly rate.
• Rest days: Higher rates depending on hours worked.
• Public holidays: Up to 3 times the hourly rate for overtime work.

Minimum Wages

Malaysia operates a national minimum wage system which is periodically revised by the government. Employers must apply the latest officially published rates applicable to their business category and location.

13th Month Salary

There is no statutory requirement for a 13th-month salary in Malaysia, although it is commonly provided as a discretionary bonus.

Payroll Cycle

Payroll in Malaysia is typically processed monthly, with salaries generally paid within seven days after the end of the payroll period.

Company Formation in Malaysia

Businesses in Malaysia can be established under several structures including sole proprietorships, partnerships, companies, and limited liability partnerships.

Key Requirements

• At least one director residing in Malaysia for private companies.
• Registration with the Companies Commission of Malaysia (SSM).
• Compliance with the Companies Act 2016.

Registration Process

• Reserve company name.
• Submit incorporation documents through MyCOID.
• Register for tax and statutory obligations.

Payroll Compliance in Malaysia

Statutory Filings and Contributions

Government Requirements

• Registration with Employees Provident Fund (EPF).
• Registration with Social Security Organisation (SOCSO).
• Registration with Inland Revenue Board (LHDN).
• Registration for Employment Insurance System (EIS).

Ongoing Compliance Requirements

• Monthly EPF contributions.
• SOCSO and EIS contributions.
• Monthly Tax Deduction (MTD/PCB) submissions.

Payroll Requirements

• Employers must provide payslips detailing salary and deductions.
• Salary payments must be made within statutory deadlines.

Payroll Taxes in Malaysia

Statutory Contributions

Employers must comply with statutory contribution schemes such as EPF, SOCSO, and EIS, with contribution rates defined by law and updated periodically.

Social Security Organisation (SOCSO)

SOCSO provides coverage for employment injury and invalidity, with contributions shared between employer and employee.

Personal Income Tax

Income tax in Malaysia is based on a progressive tax system, with rates updated annually by the Inland Revenue Board. Tax residency is determined by physical presence and other statutory criteria.

Employee Benefits in Malaysia

Mandatory Benefits

• Employees Provident Fund (EPF).
• Social Security Organisation (SOCSO).
• Employment Insurance System (EIS).

Supplementary Benefits

• Medical insurance.
• Life and disability insurance.
• Wellness and training programs.

Leave Benefits in Malaysia

Annual Leave

• 8 to 16 days depending on years of service.

Sick Leave

• 14 to 22 days depending on service length.

Maternity Leave

• Minimum statutory maternity leave entitlement applies under current law.

Benefits of Payroll Outsourcing in Malaysia

• Ensures compliance with evolving regulations.
• Enhances scalability and flexibility.
• Provides access to payroll expertise and technology.
• Reduces administrative burden and operational risk.

Payroll Solutions in Malaysia

• SaaS: Multi-country payroll platform.
• Managed Services: Full payroll outsourcing.

Streamline Payroll with Mercans’ Technology and Integrations

• Technology: Learn more here
• Integrations: Discover integration options here
• Recognitions: Explore achievements here