Malaysia Labor Law Guide for Hiring Employees and Contractors
This labor law guide for Malaysia has important information for businesses looking to hire employees or contractors in the country. Malaysia is a country in Southeast Asia.
As of 2023, Malaysia’s economy has shown a steady growth trajectory, with an estimated GDP of over $375 billion USD. The key sectors driving economic activity include manufacturing, oil and gas, palm oil production, financial services, and tourism. The manufacturing sector, particularly electronics and electrical products, remains pivotal, while the services sector also contributes significantly to GDP growth.
The Malaysian Ringgit (MYR) is the official currency.
Minimum Wage
MYR 1,500 per month (varies by region and category)
Overtime Wage
1.5 times the regular hourly wage
Meal Breaks
Minimum of 30 minutes
Rest Breaks
Minimum of 10 minutes
Working hours
Maximum 8 hours per day, 48 hours per week
Salary Payment Cycle
Monthly
Payroll Taxes
SOCSO, EPF, EIS
Paid Vacation
Minimum of 8 days (rising with length of service)
Overtime Hours
Beyond 8 hours per day or 6 days per week
Night Shift Hours
No mandate
Holidays
11 days
No Work Days
Sundays (for certain industries)
Contracts with employees should be formalized in writing and must include essential clauses such as job description, salary, working hours, leave entitlements, and termination conditions.
The Employment Act 1955 governs the employment relationship, and distinct regulations apply to employees and contractors, with contractors typically not enjoying the same rights and protections as full-time employees.
- EPF: 12-13% (employer contribution)
- SOCSO: 0.5% (employer contribution)
- EIS: 0.2% (employer contribution)
| Income Level (MYR) | Tax Rate |
|---|---|
| Up to 5,000 | 0% |
| 5,001 to 20,000 | 1% |
| 20,001 to 35,000 | 3% |
| 35,001 to 50,000 | 8% |
| 50,001 to 100,000 | 14% |
| 100,001 to 250,000 | 21% |
| 250,001 to 400,000 | 24% |
| Above 400,000 | 30% |
- Annual Leave: Beginning at 8 days per year, increasing with length of service.
- Maternity Leave: 98 days with full pay.
- Paternity Leave: No statutory requirement; often company policy.
- Sick Leave: 14 to 22 days per year, depending on the period of service.
- Adoption Leave: No statutory requirement; often company policy.
| Holiday | Date |
|---|---|
| New Year’s Day | January |
| Chinese New Year | Varies |
| Hari Raya Puasa | Varies |
| Hari Raya Haji | Varies |
| National Day | 31 August |
| Deepavali | Varies |
| Christmas Day | 25 December |
- Retirement Benefits: Contributions to EPF.
- Healthcare: SOCSO contributions ensure medical care and benefits.
- Annual Bonuses: Not mandated but commonly practiced.
- Gratuity: Often included in employment contracts as a form of end-of-service benefit.