Malaysia HR & Payroll Compliance Guide
Running compliant payroll in Malaysia means getting four statutory schemes right every month — EPF, SOCSO, EIS and PCB/MTD — on top of the baseline set by the Employment Act 1955. This guide summarises the current rates and rules in one place.
1. EPF (KWSP) — retirement savings
Employees Provident Fund contributions are split between employer and employee, based on age and (for employers) monthly wages:
| Category | Employee share | Employer share |
|---|---|---|
| Malaysian/PR, under 60 | 11% | 13% (wages ≤RM5,000) or 12% (wages >RM5,000) |
| Malaysian/PR, 60 and above | 5.5% | 6.5% (wages ≤RM5,000) or 6% (wages >RM5,000) |
| Foreign employees (all ages) | 2% | 2% |
The foreign-worker rate of 2%/2% took effect from October 2025. Employers remit the combined contribution to KWSP by the 15th of the following month.
2. SOCSO (PERKESO) — social security
SOCSO covers employment injury and invalidity schemes, split by employer and employee, on wages up to a monthly ceiling of RM6,000 (effective since October 2024):
| Category | Employee share | Employer share |
|---|---|---|
| Malaysian/PR, under 60 | 0.5% | 1.75% |
| Malaysian/PR, 60 and above | 0% | 1.25% |
| Foreign employees | 0% | 1.25% |
3. EIS — Employment Insurance System
EIS provides income support and re-employment assistance if an employee loses their job. It's a flat 0.2% from the employer and 0.2% from the employee, on the same RM6,000 monthly wage ceiling as SOCSO, and is typically paid together with the SOCSO contribution.
4. PCB / MTD — monthly tax deduction
Potongan Cukai Bulanan (Monthly Tax Deduction) is a progressive deduction of an employee's income tax, withheld from salary each month and remitted to LHDN (the Inland Revenue Board). The amount depends on the employee's chargeable income, personal reliefs and any additional remuneration for that month, calculated against LHDN's current Schedule of Monthly Tax Deductions or via LHDN's e-PCB / e-Data PCB calculation tools. Because brackets and reliefs are revised periodically, PCB should always be calculated from LHDN's current published schedule rather than a fixed rate table, and recalculated whenever an employee's pay changes.
5. Statutory payment deadlines
EPF, SOCSO and EIS contributions are all due by the 15th of the month following the wage month they relate to. Late payment attracts penalties, so the statutory filing step is usually the hard deadline the rest of the payroll cycle is built backward from.
6. Minimum wage
Malaysia's national minimum wage is RM1,700 per month (RM8.72 per hour), applied uniformly to all employers nationwide with no differentiation by company size, since August 2025.
7. Employment Act 1955 coverage
Following the 2022 amendment, the Employment Act has applied to all employees, regardless of wages, since 1 January 2023. A small number of provisions — including overtime pay and certain termination benefits — apply in full only to employees earning RM4,000 a month or less; employees above that threshold rely on their contract terms for those specific items.
8. Overtime rates
For employees covered by the Employment Act's overtime provisions, the minimum multipliers on the ordinary hourly rate are:
| When worked | Minimum rate |
|---|---|
| Overtime on a normal working day | 1.5× hourly rate |
| Work on a rest day, beyond normal hours | 2× hourly rate |
| Work on a public holiday, beyond normal hours | 3× hourly rate |
Overtime is capped at 104 hours per month under the Act. Employers in shift-heavy industries such as manufacturing and logistics should treat these multipliers as the floor, not a suggestion — see our Manufacturing Payroll Guide for how this plays out with multiple shifts and OT tiers in practice.
9. Records
Employers are expected to keep accurate payroll and employee records — including wages, contributions and hours worked — and to be able to produce them on request from KWSP, PERKESO, LHDN or the Labour Department. Treat "can we produce this instantly" as the practical test, rather than any single retention number.