Currency CurrencyMalaysian Ringgit (MYR) Working Time Work Week45 - 48 hours Employer Taxes Employer Taxes 6.25% - 15.95%

Hire in Malaysia

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Malaysia offers internationally recruiting companies a well-educated workforce and the Malaysian Government is continuously investing in human resource development. This, together with the country’s low employment costs and the generally high proficiency in English, makes Malaysia a top hiring destination.

Basic Facts about Malaysia

  1. OFFICIAL STATE NAME Federation of Malaysia (Persekutuan Malaysia)
  2. Capital Kuala Lumpur
  3. population 31.60 million
  4. official LANGUAGE Malay
  5. Currency Malaysian Ringgit (MYR)
  1. Show public holidays
    01 Jan New Year's Day
    28 Jan Thaipusam
    01 Feb Federal Territory Day *
    12 Feb Chinese New Year
    13 Feb Chinese New Year
    29 Apr Nuzul Al-Quran
    01 May Labour Day
    13 May Hari Raya Aidilfitri
    14 May Hari Raya Aidilfitri
    26 May Wesak Day
    07 Jun Agong's Birthday
    20 Jul Hari Raya Haji
    10 Aug Awal Muharram
    31 Aug Merdeka Day
    16 Sep Malaysia Day
    19 Oct Prophet Muhammad's Birthday
    04 Nov Deepavali
    11 Dec Sultan of Selangor's Birthday **
    25 Dec Christmas Day

    * Kuala Lumpur only. ** Selangor only.

Employment Contract

According to the 1955 Employment Act, any employment agreement which is set to exceed one month requires a written employment contract outlining the basic terms of employment such as:

  • Identification of both parties 
  • Date of commencement (and employment duration for temporary contracts) 
  • Workplace
  • Job description, duties and responsibilities  
  • Basic salary as well as other compensation or benefits 
  • Payment conditions
  • Probation period
  • Working hours 
  • Total number of holidays
  • Notice periods and formalities of employment termination
  • Clauses relating to health and safety

Employees in Malaysia can either be employed for a fixed period or permanently.

Probation Period

Probation periods are optional. Most employers request a probation period between one and three months

Working time

Employment in Malaysia is mainly regulated by the 1955 Employment Act which also sets the basic rules of employment such as working hours, sick leave and holidays. However, the Employment Act only covers some specific categories of employees as well as those workers who are employed under a contract of service and whose monthly salary does not exceed MYR 2,000.

Working Hours and Breaks

A standard working week in Malaysia comprises 48 hours, i.e. eight hours per day over a six-day week. Every employee needs to have one full day of rest per week. After five hours of consecutive work, employees are entitled to a 30-minute break


Any work beyond 48 hours is considered overtime and needs to be remunerated at a rate of 150% of the employee’s normal salary – this applies to overtime work on regular working days only.


Employees in Malaysia have to be paid at least once a month. Payments must be made by the 7th of the following month.

Minimum Wage

In May 2022, the national minimum wage will rise to MYR 1,500 per month – currently, it is fixed at MYR 1,200.

Sick Pay

Under Malaysia’s Employment Act, employee sick leave entitlements are regulated as follows:

Length of service Without hospitalisation Hospitalisation leave
< 2 years up to 14 days up to 60 days
2 to 5 years up to 18 days up to 60 days
> 5 years up to 22 days up to 60 days

Sick leave days as stated above are fully paid – only upon presentation of a medical certificate not older than 48 hours.


There is no legal requirement for a 13th salary but performance-based bonuses are quite common.

Taxes and Social Security Contribution

Employees and employers in Malaysia are subject to the following tax and social security contribution rates (as of March 2022):


24% corporate tax rate

6% service tax and 10% sales tax (VAT standard rates)


individual income tax rates:

up to 30% *

social security

up to 15.95% of employee’s salary including:

1.75% for workers under 60 and 1.25% for workers over 60 to Social Security Organisation (SOCSO)

0.2 % to Employment Insurance System (EIS)  – only for workers aged 18 to 60 

12% or 13% for workers under 60 and 4% or 6.5% for workers over 60 to Employees Provident Fund (EPF)

1% of employee’s salary to Human Resources Development Fund (HRDF) for companies with more than ten employees


up to 11.7% of employee’s salary including:

0.5% to Social Security Organisation (SOCSO) – only for workers aged 18 to 60 

0.2 % to Employment Insurance System (EIS) – only for workers aged 18 to 60 

11% Employees Provident Fund (EPF) – different rates apply for workers over 60

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Individual income is taxed progressively based on the following tax brackets (percentage rates given only apply to income exceeding the respective tax bracket threshold):

– up to MYR 5,000: 0%

– MYR 5,000 – MYR 20,000: 1% on excesses

– MYR 20,000 – MYR 35,000: MYR 150 + 3% 

– MYR 35,000 – MYR 50,000: MYR 600 + 8% 

– MYR 50,000 – MYR 70,000: MYR 1,800 + 13%

– MYR 70,000 – MYR 100,000: MYR 4,400+ 21%

– MYR 100,000 – MYR 250,000: MYR 10,700 + 24%

– MYR 250,000 – MYR 400,000: MYR 46,700 + 24.5%

– MYR 400,000 – MYR 600,000: MYR 83,450 + 25%

– MYR 600,000 – MYR 1,000,000: MYR 133,450 + 26%

– MYR 1,000,000 – MYR 2,000,000: MYR 237,450 + 28%

– over MYR 2,000,000: MYR 517,450 + 30%

Employee Benefits

Annual Leave

The number of paid vacation days an employee can claim depends on the employee’s length of service:

  • less than two years: eight days
  • between two and five years: twelve days
  • more than five years: sixteen days

During their first year at the company, employees receive a prorated share of their annual leave. 

Furthermore, employees are entitled to additional paid days off on public holidays. Malaysia counts various public holidays on the national as well as on the regional level. Employees should receive paid time off on at least eleven of them.

Maternity Leave and Paternity Leave

Following a revision of Malaysia’s Employment Act, female employees now have the right to take 98 days of maternity leave during which she receives a maternity allowance. However, the following conditions must be fulfilled:

  • the employee must have worked for the employer during at least 90 days out of the nine months before birth
  • the employee must have been employed by the company at any time in the four months before the start of maternity leave
  • the employee has not already had more than four children

Since March 2022, fathers are entitled to 7 days of paid paternity leave

Parental Leave

There are no legal provisions for parental leave.

Additional Leave and Benefits

In addition to the leave entitlements mentioned above, employers usually grant extra leave in the following cases:

  • death of a close friend or family member
  • marriage
  • need to prepare for exams

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Employment termination

In addition to employment termination by default – i.e. in case of a fixed-term contract – resignation and mutual agreement, employment may be terminated due to one of the following reasons (non-exhaustive list):

  • redundancy, collective dismissal and business-related reasons
  • misconduct or breach of employment contract
  • constant underperformance and incapability

Statutory notice periods are the same for employees and employers and depend on the employee’s length of service (see table below). Severance pay is reserved for employees who are covered by Malaysia’s Employment Act and who have not been dismissed due their own personal behaviour. Amounts are set as follows:

Length of service Notice period Severance pay
 < 2 years 4 weeks 10 days for each year
2 to 5 years 6 weeks 15 days for each year
> 5 years 8 weeks 20 days for each year

Payment in lieu of notice is possible. 

Hiring in Malaysia?

Not sure if you should start with a contractor or go ahead and hire a full-time teammate in Malaysia? The Lano platform makes it easy to go from freelance to full-time employee. Get expert guidance from the Lano team to compare your options and keep growing.