The following are some frequently asked questions that we often encounter:
What are the steps an employer should take when an employee resigns in Malaysia?
How should an employer handle the clearance process and return of company assets when an employee is leaving the company in Malaysia?
What are the legal requirements for providing termination benefits or severance pay to an employee who is being laid off in Malaysia?
For an employee who is resigning from the company, the company will have to report the following to each different statutory board:
1) EPF/KWSP (Employees Provident Fund/Kumpulan Wang Simpanan Pekerja)
When an employee is leaving your company in Malaysia, there is no requirement to submit any special forms to KWSP (EPF).
Take note that it is essential to notify KWSP if your company will not be employing any workers temporarily or permanently.
2) SOCSO/EIS (Social Security Organization/Employment Insurance System)
Companies will need to update the employee's resignation date, you can do so through the Assist Portal.
Follow this link for more information:
3) LHDN (Inland Revenue Board/Lembaga Hasil Dalam Negeri)
When an employee is leaving the company, you must do the following:
Submit Form CP22A (can be generated in Talenox) at least 30 days in advance of the employee’s departure
Withhold any money payable to the employee until you receive a clearance letter from LHDN in specific situations, including when:
The employee is about to retire.
The employee is about to leave Malaysia permanently (in this case, Form CP21 would be submitted instead of Form CP22A).
The employee was eligible for PCB (Potongan Cukai Berjadual) but no deductions were made.
Companies will be held responsible for any tax due from the employee.
Failure to comply with these requirements may lead to prosecution, and if convicted, you could face a fine ranging from RM200 to RM2,000 or imprisonment for up to six months, or both.
When an employee is leaving the company, there are some situations where an employer need not notify LHDN or withhold money payable to the employee.
These are the following situations:
The employer is aware that the employee will continue working in Malaysia (LHDN advises keeping a signed confirmation of the employee's new employment in case of a PCB audit)
PCB was correctly deducted from the employee’s salary
The employee's salary was below the PCB threshold