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hire in Malaysia

Malaysia PEO &
Employer of Record

SALARY PAYMENT IN Malaysian Ringgit (MYR, RM)




TIME TO HIRE 24 hours

Hire and pay talents
with Horizons in
180+ countries

Simple, compliant hiring with Horizons PEO

Hire in Malaysia

Horizons ensures day-to-day guidance to help your business navigate Malaysia labor laws and regulations. Horizons also ensures payroll is processed weekly or fortnightly (the standard periods in Malaysia ), and that taxes are withheld as required.

As the Malaysia Employer of Record, Horizons is responsible for employee income tax withholding, payment of payroll taxes to state authorities, and submission of tax returns to the Malaysia Tax Office. 

Partnering with our Malaysia PEO is the quickest and most cost-effective way to enter the Malaysia market.

malaysia map

Facts & Stats

PEO Platform Hire in Malaysia, and pay employees through our platform or app. PEO Cost Our Malaysia PEO solution is the most affordable on the market. Time-to-hire Fast onboarding in Malaysia, hire in as little as 24 hours.
Contracts We draft labor contracts compliant with Malaysian labor law. Local Benefits We administer all mandatory benefits and contributions in Malaysia. 180+ Countries It doesn’t stop with Malaysia — we are an international PEO
stay compliant with Malaysia labor laws

Employment Laws

Malaysia employment contract types

When hiring employees in Malaysia, employers should draft concise, written contracts that detail the terms and conditions of employment. The contract provisions should always be written in both English and Malay.

Employment contracts in Malaysia should include the following provisions:

  • Job description and duties
  • Compensation and benefits
  • Termination requirements
  • Severance pay

Letters of offer and employment contracts must detail salary and compensation in the local Malaysian Ringgit (MYR).

When your business partners with Horizons’ Malaysia PEO, our in-country experts will assist you to draft letters of offer and employment contracts that comply with local employment legislation.



Probationary period

3 – 6 months recommended

Termination notice period0 to 2 years employment: 4 weeks notice required
2 to 5 years employment: 6 weeks notice required
>5 years employment: 8 weeks notice required
Severance0 to 1 year employment: none
1 to 2 years employment: 10 days salary
2 to 5 years employment:  15 days salary
Above 5 years employment:  20 days salary


Probationary period

3 – 6 months recommended

Termination notice period0 to 2 years employment: 4 weeks notice required
2 to 5 years employment: 6 weeks notice required
>5 years employment: 8 weeks notice required
Severance0 to 1 year employment: none
1 to 2 years employment: 10 days salary
2 to 5 years employment:  15 days salary
Above 5 years employment:  20 days salary

Working hours in Malaysia

The standard work week in Malaysia is 40 hours, with employees generally working eight hours per workday. Business hours of operation are typically from 9am to 5pm – Monday through Friday. For every six days that an employee works, he/she must receive one rest day. During an employee’s rest day, they are prohibited from working. 

Employees in Malaysia should not work more than 48 hours per week. Any requested time in excess of 48 hours is payable at a rate that is 1.5x the employee’s base salary.

Hire compliantly in Malaysia without a local entity.

Quick, compliant hiring in 24 hours—no subsidiary required.

Public holidays in Malaysia

Malaysia has a range of national public holidays that are celebrated annually. In 2023 these holidays are:
Date Holiday name
22 Jan, 2023 Lunar New Year’s Day
23 Jan, 2023 Second Day of Lunar New Year
22 Apr, 2023 Hari Raya Puasa (Tentative Date)
23 Apr, 2023 Hari Raya Puasa Day 2 (Tentative Date)
1 May, 2023 Labour Day
4 May, 2023 Wesak Day
5 Jun, 2023 The Yang di-Pertuan Agong’s Birthday
29 Jun, 2023 Hari Raya Haji (Tentative Date), Hari Raya Haji holiday (Tentative Date)
30 Jun, 2023 Hari Raya Haji (Day 2) (Tentative Date)
19 Jul, 2023 Muharram/New Year (Tentative Date)
31 Aug, 2023 Malaysia’s National Day
16 Sep, 2023 Malaysia Day
28 Sep, 2023 The Prophet Muhammad’s Birthday (Tentative Date)
12 Nov, 2023 Diwali/Deepavali
25 Dec, 2023 Christmas Day

Tax in Malaysia

Malaysian residents pay income tax with rates between 0% and 28%. Income greater than MYR 1,000,000 requires a tax rate of 28%. In the event of accidental death, disability or illness to an employee in Malaysia, the Malaysian Social Security System, or SOCSO, will provide monetary assistance to the employee and their family. 

SOCSO is comprised of funds that are contributed by employers and employees. The amount depends on monthly salary and is calculated at 0.5% of monthly earnings. The employer then contributes 1.75% on top.

Additionally, the Employment Provident Fund covers pensions and provides employees with the ability to withdraw money for certain reasons. These reasons could include buying a house or obtaining treatment for a serious medical condition. 

Both employers and employees contribute to the Employment Provident Fund. When employees earn more than MYR 5,000 per month, the rate of contribution is 11% for employees and 12% for employers. When employees earn less than MYR 5,000 per month, employers contribute 13%.

If an employee is a foreign citizen, these contributions are optional. However, for Malaysian citizens and permanent residents, contributions are mandatory.

Health insurance

In Malaysia, there is compulsory universal healthcare, which is funded through payroll taxes and the general budget. Additionally, private health care is available.

The public healthcare system in Malaysia is recognized as providing very good patient care. However, long wait times lead many people to pay a premium for private healthcare.

Vacation leave

Employees in Malaysia are granted paid leave annually. The amount of total leave is determined by the length of time an employee has been with a company. Based on the time that an employee has been with a company, vacation leave is as follows:

  • For employees that have been with a company less than two years, they receive eight vacation days per year
  • For employees that have been with a company more than two years, but less than five years, they receive 12 vacation days per year
  • For employees that have been with a company more than five years, they receive 16 vacation days per year

If an employee has not been with an employer for a consecutive, 12-month period, they will receive leave that is proportionate to their time with the company.

In Malaysia, male employees that have been with a company for a period of three years, can take paid religious leave. This cannot exceed more than 30 days and is a one-time action. 

Sick leave

The Employment Act in Malaysia  governs sick leave for most employers. In order to be covered by the local employment act, the employee must have a contract, receive less than MYR 2,000 each month, and be involved in specific work – such as vehicle operations.

For employees that meet these requirements, sick leave will be determined by the following:

  • For employees that have been with a company less than two years, they are eligible for 14 day’s sick leave per year
  • For employees that have been with a company more than two years, but less than five years, they are eligible for 18 day’s sick leave per year
  • For employees that have been with a company more than five years, they are eligible for 22 day’s sick leave per year

If an employee has an illness or condition that requires hospitalization, they can become eligible for 60 day’s paid sick leave per year. To be eligible for this amount of leave, the employee would need to provide their employer with appropriate documentation from a certified medical practitioner.

Any employee not covered by Malaysia’s Employment Act needs to refer to their employment contract when determining their sick leave entitlements.

Maternity and paternity leave

In Malaysia, expectant mothers have up to 60 consecutive days of leave. During their pregnancy, female employees may also acquire a maternity allowance that goes towards their leave entitlements. Expectant fathers have up to 30 days before the birth date to commence leave. However, they are unable to commence this form of leave after their child’s birth. 

Women qualify for maternity allowances when they have less than five children. They also need to have been with their employer for no less than 60 days before the birth. Standard rates of pay apply, with either an allowance or MYR 6 per day (whichever is higher at the time). If there is no policy that states otherwise, fathers can take at least one day off and at most 14 days.


Termination and severance

Severance pay is available to employees that are covered by the Malaysian Employment Act. There will be a minimum severance amount that is set by an employee’s notice period.

Payment terms are based on the number of years that an employee has served within their industry. If a worker is not classified as an Employment Act (EA) employee, the severance amount is determined by standards that are set in their employment contract.

Employers are prohibited from terminating an employee on maternity leave – unless the company is shutting down. Disabled persons are also protected from discriminatory termination by trade union groups.

Navigating employee terminations and handling severance packages can be complicated for companies expanding overseas for the first time. Horizons’ Malaysia PEO can mitigate risk for foreign companies and provide guidance through this process.  

hassle-free Malaysia compensation & benefits

Compensation & Benefits

Malaysia compensation laws

Malaysia has a standardized minimum wage of MYR 1,050 per month, or MYR 5.05 per hour. Employers are advised to include compensation amounts in all employment contracts. Contracts should be signed by both parties, to avoid any future litigation. 

Overtime pay is also regulated through Malaysia’s compensation laws. For any employees that work more than 48 hours per week, additional hours must be paid at a rate that is 1.5x the employee’s normal wage.

Minimum Wage Country Comparison Chart(Per month in USD)
Switzerland (Geneva)$4,000
Guaranteed benefits in Malaysia

For employers that manage benefits themselves, it is crucial that all employees receive the benefits that are guaranteed by Malaysian law. Benefits must include paid annual leave that reflects the length of time an employee has been with the company. As an example, employees with less than two year’s company service receive eight vacation days for each year worked. For any employees with five or more year’s company service, they receive 16 vacation days for each year worked. 

Malaysia’s universal healthcare system – which is funded through employee and employer taxes – covers all employees.

Female workers are entitled to no fewer than 60 consecutive day’s maternity leave. Whilst pregnant, female employees are also entitled to a maternity allowance. Maternity leave can commence anytime within 30 days of a female employee’s expected due date.

Malaysia benefit management

To successfully oversee benefits management, employers should not only identify guaranteed benefits, but also supplemental benefits that employees may expect. As an example, whilst a 13th month bonus is not mandatory in Malaysia, a large section of employers offer one. Performance-based bonuses (such as sales commissions) are also expected by many employees – but are not compulsory. 

Malaysia’s public health system often has long wait times, leading many people to pay higher premiums for private health insurance. As an incentive to their employees, some employers offer group private health insurance, group life insurance, and group accident insurance. This is often distributed as a monthly allowance for employees.


Benefits and compensation restrictions

Malaysia’s employment laws fall under the Employment Act of 1955. This documents restrictions that pertain to compensation and benefits. It’s vital that employers understand employment laws before establishing a business in Malaysia and paying employees. 

When you partner with Horizons, we assist you to determine the most suitable benefits for your employees. We also ensure that your employees are paid accurately, on-time, and in accordance with Malaysian employment legislation. 

Hire in Malaysia in 24h
without your own local entity.

With Horizons, you get quick service, transparent pricing, and expert support.


A Malaysia PEO and a Malaysia EOR are two types of companies which specialize in providing human resources services to businesses in Malaysia.

The main difference between a Malaysia PEO and a Malaysia EOR is in the scope of their services.

Malaysia PEOs provide a full range of HR services, including payroll, benefits administration, and employee recruiting—all under one roof as a co-employer. Engaging a Malaysia PEO is essentially outsourcing your HR duties in Malaysia.

Malaysia EORs actually take over as the legal employer of your employees based abroad. Malaysia EORs become responsible for labor compliance for your employees in Malaysia.

At Horizons, we offer both PEO and EOR services in Malaysia. Get in touch now and let us know what service you are seeking.

A PEO in Malaysia can feasibly hire both local and foreign nationals to work in Malaysia.

However, the ability of Horizons to sponsor your foreign national employee in Malaysia may be limited due to visa quotas practiced in many countries.

Contact us with your requirements and our Global Mobility team with review the case and get back to you within 2 business days.

In most cases, Horizons’ Malaysia PEO can hire & onboard your employee within 24 hours. The actual start date of the employee will depend on their notice period obligation to their previous employer as well as any relevant hiring rules in Malaysia.

It is possible to get a work visa in Malaysia. Horizons’ Global Mobility team is a dedicated team of work visa experts. They assess the details of each case to determine feasibility and costs before Horizons applies for the work visa on behalf of your employee. If the Global Mobility team determines that your case is feasible, the process is smooth and transparent. Visa spots in Malaysia are limited, however—get started today to secure your employees’ visa spot.