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Malaysia Employment Guide

Your essential guide to the workforce, working customs, and labor rules in Malaysia

Access essential insights to manage employment smoothly, stay compliant, and build a thriving team
Capital
Kuala Lumpur
Time Zone
Kuala Lumpur UTC +8
Currency

Ringgit Malaysia (RM)

Languages
Bahasa Malaysia, English, Mandarin, Tamil
Payroll
Monthly
Employers Tax
14.45%
Employer of Record (EOR)
Professional Employer Organization (PEO)

Employment Law

Payroll & Tax
Compensation & Benefits
Talent Landscape
Malaysia is rapidly transforming under the Twelfth Malaysia Plan 2021-2025; realigning its labor market and developing future-ready talent. This is giving rise to a strong pipeline of hybrid Malaysian talent, who are generalists with key competencies across multiple skill sets. International companies also view Malaysian talent as having the qualities they require for industrial expansion, most notably in the tech and engineering sectors.

In-Demand Roles

Sales Executive
Full Stack Developer
Backend Developer
Frontend Developer
Web Developer
Working Culture
Collectivism over Individualism
Majority of local firms practice group-centeredness — the traditional value of cooperation amongst group members to maintain group harmony.

Strong religious influence
As a Muslim-majority country, a culture of modesty and gratitude is prevalent in Malaysia. This influences business attire as well as office norms. Employers should provide concessions when it comes to Friday prayers and Ramadan working hours.
Relationship oriented
Trust is a key factor in the Malaysian workplace. Personal relationships play a big role when it comes to interacting with others, often delving into questions about personal lives such as family.
Value harmony over conflict

In the Malaysian workplace, peace is valued over confrontation. Employees avoid direct conflict, so building strong relationships helps create a space for open, honest communication and conflict resolution.

Average Salary

Job Position
Avg Monthly Salary (USD)
*3-5 Years of Experiences
Tech Engineering
Software Engineer

$1,900

AI Engineer
$2,000
Business Development & Sales
Business Development Officer
$1,200
Sales Manager
$1,400
Product
Product Manager
$1,800
Data
Data Analyst
$1,100
Data Scientist
$1,700
Marketing & PR
Marketing Associate
$1,000
Marketing Manager
$1,500
Public Relations Manager
$1,300
Corporate Services
Human Resources Generalist
$900
Accountant
$1,000
Administrative Officer
$800
Job Position
Avg Monthly Salary (USD)
*3-5 Years of Experiences
Tech Engineering
Software Engineer
$1,900
AI Engineer
$2,000
Business Development & Sales
Business Development Officer
$1,200
Sales Manager
$1,400
Job Position
Avg Monthly Salary (USD)
*3-5 Years of Experiences
Product
Product Manager
$1,800
Data
Data Analyst
$1,100
Data Scientist
$1,700
Job Position
Avg Monthly Salary (USD)
*3-5 Years of Experiences
Marketing & PR
Marketing Associate
$1,000
Marketing Manager
$1,500
Public Relations Manager
$1,300
Job Position
Avg Monthly Salary (USD)
*3-5 Years of Experiences
Corporate Services
Human Resources Generalist
$900
Accountant
$1,000
Administrative Officer
$800

Payroll

Minimum Wage

Malaysia has a minimum wage of RM1,500 as of May 2022 across all states

Basic Salary

An employee’s basic salary excludes overtime pay and other compensation

Overtime Pay

Employees are entitled to overtime pay. The rate increases depending on the day:

Normal work day: not less than 1.5 times the hourly rate of normal working hours.

  • Rest day: 2x the hourly pay rate
  • Public holiday: 3x the hourly pay rat


Employment Law

Types of Employment Contracts

  • Open-Ended (Permanent) or Fixed-Term.
  • Contracts lasting over 1 month must be written, outlining key terms (e.g., work location, wages, benefits).
  • Must be retained for 6 years after expiration.

Working Hours

• Max 8 hours/day, 45 hours/week.

Probation Period

  • Typically up to 3 months, extendable based on performance.

Holidays

Employees receive 11 paid holidays yearly, including:

  1. National Day
  2. Birthday of Yang di-Pertuan Agong (1st Monday of June)
  3. Ruler’s Birthday (August 24)
  4. Workers’ Day (May 1)
  5. Malaysia Day (September 16)

Employers can select 6 additional holidays from:

  • Prophet Muhammad’s Birthday
  • Chinese New Year (2 days, 1 day in some states)
  • Vesak Day
  • Hari Raya Puasa (2 days)
  • Hari Raya Haji (1 day, 2 days in some states)
  • Deepavali
  • Christmas Day
  • Nuzul Al-Quran (certain regions)

Employee Leave

Annual Leave

  • 8 days: Less than 2 years
  • 12 days: 2-5 years
  • 16 days: 5+ years

Special Leaves

  • Maternity Leave: Minimum 98 days.
  • Paternity Leave: Minimum 7 days.
  • Compassionate Leave: At employer's discretion.

Medical Leave

  • 14 days: Less than 2 years
  • 18 days: 2-5 years
  • 22 days: 5+ years
  • Hospitalization: 60 days per year.

Taxes

Employer Tax

Employers must pay monthly withholding tax to the Inland Revenue Board (LHDN) by the 15th of each month. The fiscal year is from January 1 to December 31.

Employee Tax Rates (2023 onwards)

Province
Monthly Minimum Wage (IDR)
(USD)
DKI Jakarta
5,067,381
$325
Papua
4,024,270
$258
North Kalimantan
3,361,653
$215
Bangka Belitung
3,640,000
$233
North Sulawesi
3,545,000
$227
Aceh
3,460,672
$222
South Sumatra
3,456,874
$221
Riau Islands
3,402,492
$218
West Papua
3,393,000
$217
East Kalimantan
3,360,858
$215
North Sulawesi
3,545,000
$227
Riau
3,294,625
$211
South Kalimantan
3,282,812
$210
Central Kalimantan
3,261,616
$208
North Maluku
3,200,000
$205
Jambi
3,037,121
$195
Gorontalo
3,025,100
$194

Annual

Taxable

Income (MYR)

Tax on First Amount (MYR)

Tax Rate on

Excess (%)

5,000 to 20,000

0

1%

20,000 to 35,000

150

3%

35,000 to 50,000

600

8%

50,000 to 70,000

1,800

13%

70,000 to 100,000

4,400

21%

100,000 to

250,000

10,700

24%

250,000 to 400,000

46,700

24.50%

400,000 to 600,000

83,450

25%

600,000 to 1M

133,450

26%

1M to 2M

237,450

28%

Above 2M

517,450

30%

Province
Monthly Minimum Wage (IDR)
(USD)
Maluku
2,949,953
$189
West Sulawesi
2,914,958
$187
Southeast Sulawesi
2,885,964
$185
Bali
2,813,672
$180
West Sumatra
2,811,449
$180
North Sumatra
2,809,915
$180
Central Sulawesi
2,736,698
$175
Banten
2,727,812
$175
Lampung
2,716,497
$174
West Kalimantan
2,702,616
$173
Bengkulu
2,507,079
$161
West Nusa Tenggara
2,444,067
$157
East Nusa Tenggara
2,186,826
$140
East Java
2,165,244
$139
Special Region of Yogyakarta
2,125,897
$136
West Java
2,057,495
$132
Central Java
2,036,947
$130

Annual Taxable 
Income (MYR)

Tax on First Amount (MYR)

Tax Rate on Excess

(%)

5,000 to 20,000

0

1%

20,000 to
35,000

150

3%

35,000 to 50,000

600

8%

50,000 to 70,000

1,800

13%

70,000 to 100,000

4,400

21%

100,000 to

250,000

10,700

24%

250,000 to 400,000

46,700

24.50%

400,000 to 600,000

83,450

25%

600,000 to
1M

133,450

26%

1M to 2M

237,450

28%

Above 2M

517,450

30%

Province
Monthly Minimum Wage (IDR)
(USD)
DKI Jakarta
5,067,381
$325
Papua
4,024,270
$258
North Kalimantan
3,361,653
$215
Bangka Belitung
3,640,000
$233
North Sulawesi
3,545,000
$227
Aceh
3,460,672
$222
South Sumatra
3,456,874
$221
Riau Islands
3,402,492
$218
West Papua
3,393,000
$217
East Kalimantan
3,360,858
$215
North Sulawesi
3,545,000
$227
Riau
3,294,625
$211
South Kalimantan
3,282,812
$210
Central Kalimantan
3,261,616
$208
North Maluku
3,200,000
$205
Jambi
3,037,121
$195
Gorontalo
3,025,100
$194
Maluku
2,949,953
$189
West Sulawesi
2,914,958
$187
Southeast Sulawesi
2,885,964
$185
Bali
2,813,672
$180
West Sumatra
2,811,449
$180
North Sumatra
2,809,915
$180
Central Sulawesi
2,736,698
$175
Banten
2,727,812
$175
Lampung
2,716,497
$174
West Kalimantan
2,702,616
$173
Bengkulu
2,507,079
$161
West Nusa Tenggara
2,444,067
$157
East Nusa Tenggara
2,186,826
$140
East Java
2,165,244
$139
Special Region of Yogyakarta
2,125,897
$136
West Java
2,057,495
$132
Central Java
2,036,947
$130

Non-Resident Tax Rate: 30% fixed.

Zakat

Zakat, a religious obligation, is mandatory for Muslim employees. Employers may facilitate this deduction on their behalf.

Bonus

Labor law in the Philippines provides for a 13th salary which should be paid by the 24th of December of every year, or in two installments – one in June and one in December.


Pro-rating applies if an employee commences work at any time within the calendar year, and has worked for at least a month

Termination

Termination with Notice

  • Legal only if there is a just or authorized cause.
  • Written notice must specify the reason, allowing at least 5 days for employee response.
  • Further notice is needed if termination proceeds.
    • Causes: Misconduct, contract breach, poor performance.
    • Witnesses and records are required.

Notice Period

  • If no notice is given, employees are entitled to equivalent wages.
    • 4 weeks: Less than 2 years of service
    • 6 weeks: 2-5 years of service
    • 8 weeks: 5+ years of service

Severance Pay

  • No severance for "just cause" terminations.
  • For "authorized cause," severance includes at least 1 month’s pay per service year (6+ months count as 1 year).
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