Easily manage employment in Malaysia

Payroll services in Malaysia

Malaysia has a diverse economy with key industries in manufacturing, technology, and finance. With specific labor laws and tax regulations, employers in Malaysia must ensure compliance with local payroll requirements, including social security contributions, employment contracts, and tax obligations. Understanding these regulations is essential for smooth payroll operations and legal compliance.

Payroll breakdown in Malaysia

Employers in Malaysia must adhere to national payroll regulations regarding wages, taxes, and social contributions. Below is an overview of key payroll components:

Minimum wage and working hours

• Minimum wage: Malaysia’s minimum wage is MYR 1,500 per month.
• Payroll frequency: Salaries are generally paid monthly.
• Standard working hours: The normal workweek in Malaysia is 48 hours, typically spread over six days.
• Overtime: Employees are entitled to additional pay for overtime work, calculated at 150% of the regular wage for extra hours and 200% for work on public holidays.

Taxation and social security contributions

• Personal income tax: Malaysia has a progressive income tax system with rates ranging from 0% to 30% depending on income levels.
• Employer contributions:
• Employees Provident Fund (EPF): 12% to 13% of the gross salary.
• Social Security Organization (SOCSO): 1.75% of the gross salary.
• Employment Insurance Scheme (EIS): 0.2% of the gross salary.
• Employee contributions:
• Employees Provident Fund (EPF): 11% of the gross salary.
• Social Security Organization (SOCSO): 0.5% of the gross salary.
• Employment Insurance Scheme (EIS): 0.2% of the gross salary.
• Corporate tax: The corporate income tax rate in Malaysia is 24%.
• Tax reporting: Employers must file payroll taxes and contributions with the Malaysian tax authorities regularly.

Payroll compliance in Malaysia

• Employment contracts must be provided in writing and specify terms such as salary, working hours, and job responsibilities.
• Payroll deductions: Employers must ensure accurate deductions for social security, pension, and income tax.
• Employers must stay updated on changes to Malaysia’s labor laws and tax regulations to avoid penalties.

Run payroll in Malaysia with Remote

Managing payroll in Malaysia requires careful attention to tax regulations, employment laws, and social security requirements. Employers must stay informed about tax rates, wage laws, and reporting deadlines to ensure smooth payroll processing and avoid penalties.

The good news is, you can pay anyone, anywhere — from your team in the office to your team abroad, all with Remote Payroll. To see just how easy global payroll can be with Remote, book a demo today.