Malaysia
Malaysia’s a modern, bustling SE Asian country with some of the world’s best remote talent. If you’re thinking about hiring in Malaysia (or if you’ve already found someone), read on—we’ll teach you how to hire in Malaysia without paying thousands in legal fees or spending months buried under paperwork.
Country snapshot
CURRENCY
Malaysian Ringgit (MYR)
EMPLOYER TAXES
Up to 15.95%
PAYROLL FREQUENCY
Monthly
OFFICIAL LANGUAGE
Malay
It’s the fastest way to hire globally
Hiring employees takes months, at the minimum. When you hire with Thera's locally-generated contracts, it’s a matter of days or weeks. This means you can hire the best talent, fast, without losing them to a hellish procession of paperwork.
It’s a lot cheaper
It costs just $0 to sign up for Thera, then $25 per month to hire your contractors with Thera. If you hired employees manually (or did contracting on your own), you’d likely be on the hook for thousands of dollars each month. Setting up an entity alone can cost tens of thousands of dollars.
It’s more flexible for you & your team
Can be less risky than hiring employees
Hiring employees is a bigger commitment, and can open you up to increased liabilities and regulations. When you hire contractors overseas, your biggest risk is misclassification—but laws surrounding contractor classification are often significantly more straightforward.
Some people want to be employees
The contractor life isn’t for everyone—some people want the security that being an employee often appears to provide. Though it’s rare, this does happen, and it’s one disadvantage of manage an all-contractor team.
You might not have as much control over your talent
Most countries’ contractor-employer relationship laws stipulate that the employer can’t set fixed working hours, among other things. These laws give contractors more freedom over how and when they do their work than an employee would have. In reality, however, most contractors are willing & able to work on the company’s schedule—it’s a matter of setting expectations beforehand.
Want to hire someone in Malaysia? Excellent. But, no matter where you’re from, labor laws in Malaysia are different from those in your home country (unless you’re from Malaysia, of course). Read on to learn about your options, plus as the easiest way to make remote hires in Malaysia.
Hire talent as contractors
Hire talent as employees
If you’ve read up until this point, you’ll know that it’s easier, cheaper, and more flexible to hire contractors in Malaysia than employees. Still, there are valid reasons why you might want to hire employees instead. The content below is for you—we’ll cover employer taxes and obligations in Malaysia.
Employer tax
Provident Fund (employees under the age of 60)
Provident Fund (employees over the age of 60)
Social Security (SOCSO)
Employment Insurance (EIS)
Human Resource Development Fund (over 10 employees)
Paid Time Off (PTO)
PTO is calculated by the:
- Up to two years of employment: 8 days per year
- Between 2 to 5 years: 12 days per year
- 5+ years: 16 days per year
Public Holidays
There are 6 compulsory public holidays and 10 optional public holidays (employer should choose at least 5 of these but it is common for offices to close on all).
State day is a compulsory public holiday and the day varies from state to state. All other holidays are national.
Sick Days
The duration of sick leave entitlement provided to workers is dependent on how long they have been employed by their employer:
- Up to two years of employment: 14 days per year
- Between 2 to 5 years: 18 days per year
- 5+ years: 22 days per year
Maternity Leave
Female employees are covered in full by the employer for a least 90 days if they have been employed in the last four months and have worked for the same employer for at least 90 days in the 9 months prior to childbirth.
Paternity Leave
There are no provisions in the law regarding paternity leave for the private sector, however, in the public sector, fathers are entitled to 7-14 days.
Parental Leave
None.
Other Leave
None.
Marriage Leave
None.
Bereavement Leave
None.
Termination Process
Employees can be dismissed for misconduct or poor work performance. Termination is subject to employee challenge for unfair dismissal.
It is recommended that proper procedure is followed (warning, time and guidance to improve performance) in order to reduce the likelihood of an unfair dismissal claim.
Notice Period
The notice period in Malaysia is:
No set amount but should be equitable between employee and employer.
Severance Pay
Minimum termination benefits for employees who are fired for reasons not connected to their conduct are as follows:
- Up to two years of employment: 10 days per year
- Between 2 to 5 years: 15 days per year
- 5 plus years: 20 days per year
Probation Period
Probation is optional. The common practice is to have 1-3 months probations.
The Employment Act does not distinguish between employees on probation and permanent employees.
Working Hours
Working hours are limited to 48 hours per week. The most common office practice is 45 hours per week (9 am-6 pm, Mon-Fri)
Overtime
The minimum guideline for overtime pay in the Employment Act is:
- Extra hours worked on a normal working day – 150%
- Rest days – 200%
- Public holidays – 300%
The Employment Act only covers manual workers and non-manual workers with a monthly salary that does not exceed RM 2,000. However, these guidelines are often used as guidance in Common Law cases for other employees.
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