Hiring Employees in Malaysia

Updated on Tuesday 24th January 2023

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When hiring employees in Malaysia the employer will need to observe the Employment Act and comply with all of the legal requirements for providing an adequate work environment and sufficient benefits. 

Employees can be a driving force for a company in Malaysia. Local and foreign business owners can hire the right candidate irrespective of his or her nationality. The employment contract is the basis for the employment relation and the liabilities both parties will face during its validity period.

The team of experts working at our law office in Malaysia can help you understand the legal considerations for hiring employees in the country and the liabilities that arise after doing so.

The employment contract in Malaysia

The employment contract will include general information about the employer and the employee, such as identification details, the type of work and working hours, remuneration, and paid leave. Specific information is also included, where applicable, regarding bonuses and other types of benefits that employees may be entitled to according to the nature of their work. The employment contract can be concluded for a limited or unlimited period. The conditions for termination and discharge will also be included in this document.

The Employment Act and other laws and regulations, such as the Employment Termination and Lay-Off Benefits Regulations, are the main sources for drawing up an employment contract and observing the legal requirements for hiring employees in Malaysia.

One of our lawyers in Malaysia can help you draw up an employment contract that will include all of the needed clauses and, if needed, additional ones like those for confidentiality. 

If residency in Malaysia is on your mind, we suggest you ask for specialized help from our lawyers. with the necessary experience and professionalism, your case will be resolved in the shortest possible time, because we will take care of the preparation of the documents and the collaboration with the relevant authorities. it is much more advisable to call on specialized support instead of acting on your own because this way you will not face situations in which the documents or the application are rejected.

Regulations for working in Malaysia

The Employment Act stipulates the conditions for hiring employees, wages payments, terminating an employment relationship or hiring foreign employees. The normal working hours should not exceed eight hours per day or forty-eight hours per week. Employees are entitled to paid holidays and annual leave which may be calculated according to seniority. Sick leave and maternity leave also apply.

The employer and the employee must make social security contributions.  The usual tax rate for the employer is 1.75% for every employee. A contribution to the Employees Provided Fund is also required from both parties and it has progressive rates of the employee’s salary. 

You can contact our law firm in Malaysia for more detailed information about how to hire employees in the country.