Benefits and Compensations in Malaysia

Employment Law

Payroll & Tax

Compensation & Benefits

Table of Contents

Mandatory Employee Benefits in Malaysia

Non-Mandatory Employee Benefits in Malaysia

Mandatory Employee Benefits in Malaysia

Employees Provident Fund (EPF)

In Malaysia, employers are required to enroll all Malaysian citizens and permanent residents in the Employees Provident Fund (EPF) scheme. This is a mandatory retirement savings and pension plan that helps employees save for retirement, with contributions from both employers and employees.
For employees earning below RM 5,000, employers contribute 13% of the employee’s monthly salary, while employees contribute 11%. For employees earning RM 5,000 or more, employers contribute 12%. EPF contributions must be paid on a monthly basis, and this ensures compliance with Malaysian labor laws while supporting your employees' long-term financial security.

Social Security Organization (SOCSO)

In Malaysia, employers are also required to make contributions to SOCSO on behalf of their employees. This is a social insurance program that provides coverage for occupational injuries, illnesses, and disability. Both employers and employees contribute to SOCSO, and the contribution rate depends on the employee's wages.

There are two SOCSO schemes:

Employment Injury Scheme – Provides coverage for work-related accidents.
Invalidity Pension Scheme – Provides long-term financial support for employees who become permanently disabled or suffer from chronic illnesses.

Health insurance

While Malaysia’s healthcare system provides subsidized public healthcare, employers are encouraged to offer additional private health insurance as a competitive benefit, particularly for managerial or higher-income employees. For foreign employees working under Employment Pass, Temporary Employment Pass, or Professional Visit Pass, employers are required to provide private health insurance as part of their compensation package.

Additionally, employers must provide insurance coverage under the Foreign Worker Hospitalisation and Surgical Insurance Scheme (FWHS) for all foreign workers.

Non-Mandatory Employee Benefits in Malaysia

The most common non-mandatory benefits in Malaysia.

Health insurance

While Malaysia has public healthcare through government hospitals, many companies provide additional private health insurance as a non-mandatory benefit. This coverage typically includes protection for non-work-related accidents, hospitalization, and other health-related expenses. Larger companies may offer comprehensive plans, while smaller companies may offer a healthcare allowance for employees to arrange their own coverage.

Per diem

Many companies in Malaysia provide a daily travel allowance or reimburse employees for expenses incurred during work-related trips. The amount can vary based on the destination and reflects the cost of living in different regions.

Additional holiday

Most companies in Malaysia provide employees with additional annual leave beyond the statutory minimum. This can range from 14 to 20 days of paid leave yearly, depending on the industry and seniority level.

Stock options

Stock options are increasingly becoming a popular incentive in Malaysia, particularly in tech and multinational companies. Senior executives and other key employees may be offered stock options, allowing them to buy company shares at a set price, providing a direct stake in the company’s success.

Bonus

It is common for companies in Malaysia to offer annual bonuses, which can be either discretionary or contractual. The bonus amount typically depends on both individual and company performance. During strong economic periods, bonuses may equal two to three months’ salary, providing an attractive reward for employees.

Relocation package

Companies that relocate employees and their families often cover relocation expenses, such as shipping costs for personal belongings, airfare, housing costs, and even school fees for children. This is common in multinational companies or for roles involving foreign assignments.

Life Insurance

Some companies in Malaysia provide life insurance as part of their executive compensation packages, recognizing the importance of financial security. Alternatively, companies may offer allowances for employees to arrange their own life insurance plans.

Visa sponsorship

For multinational companies in Malaysia hiring foreign talent, visa sponsorship is a common non-mandatory benefit. This support helps foreign employees secure the required permits to work legally in the country.

Flexible working

Flexible working arrangements are becoming more popular in Malaysia, especially in tech companies. This may include options for remote working, flexible working hours, or allowing employees to choose when and where they work, depending on the nature of their role.

Hardware

Tech companies in Malaysia typically provide IT equipment and allow employees to choose their preferred computers or other necessary gear when they join. This practice is becoming more common to ensure employees have the right tools to perform their job effectively.

Career Development

Many companies in Malaysia prioritize employee development by offering a variety of training opportunities. These can include tech workshops, paid conferences, professional training allowances, or subscriptions to industry resources. Providing these opportunities helps employees stay updated with industry trends and supports their career growth.

Conclusion

Make your compensation and benefits packages in Malaysia work for both your team and your compliance needs. With Glints by your side, you can offer competitive benefits that resonate with local talent while staying up-to-date with Malaysia’s employment laws.

Schedule a call with us to see how we can help you design and manage a benefits package that attracts talent and ensures compliance in Malaysia.

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