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What are the statutory requirements for new employees in Malaysia?
What are the statutory requirements for new employees in Malaysia?

[Malaysia] What you should know about hiring in MY

Danial avatar
Written by Danial
Updated over a week ago

The following are some frequently asked questions that we often encounter:

  1. I am not familiar with Malaysia's statutory requirements for new employees

  2. Can you tell me what I need to prepare before hiring employees in Malaysia?

  3. What are the essential statutory requirements I should be aware of before bringing new employees on board in Malaysia?

If you're a new employee in Malaysia or an employer looking to hire, it's essential to understand the statutory requirements that govern the employment relationship in the country.

These requirements are in place to protect the rights and interests of both employees and employers.

Here's a simple guide to some of the key statutory requirements:

1. Employment Contract:

  • Employers are generally obligated to provide new employees with a written employment contract. This contract should detail important terms and conditions of employment, including job responsibilities, salary, working hours, and leave entitlements. It's your roadmap for what to expect during your time with the company.

2. Employee Registration:

  • Employers must register their new employees with government agencies like the Social Security Organization (SOCSO) and the Employees' Provident Fund (EPF). This ensures that you, as an employee, are covered by social security and retirement savings programs.

  • EPF is Malaysia's retirement savings program. Employers are required to make regular contributions to EPF on behalf of their employees. These contributions are a percentage of your salary and are meant to secure your financial future.

  • SOCSO provides benefits like medical and disability coverage to employees in case of work-related injuries or illnesses. Employers must make contributions to SOCSO for their employees.

5. Income Tax Deductions:

  • Income tax is deducted from your salary by your employer and remitted to the Inland Revenue Board of Malaysia (LHDN). This ensures that you fulfill your income tax obligations.

6. Work Permit and Visa:

  • For foreign employees, obtaining the necessary work permit and visa is crucial. Employers are responsible for assisting their foreign employees in obtaining these documents from the Immigration Department of Malaysia.

7. Minimum Wage Compliance:

  • Malaysia has minimum wage requirements that employers must adhere to. The minimum wage may vary depending on factors such as location and sector.

8. Employment Act and Industrial Relations Act:

  • Malaysia has employment laws such as the Employment Act 1955 and the Industrial Relations Act 1967, which cover various aspects of the employment relationship. These laws govern matters like working hours, rest days, termination of employment, and dispute resolution.

  • While not mandatory for all employers, HRDF is a significant initiative aimed at promoting workforce development and training in Malaysia. It is mandatory for certain categories of employers, primarily those in sectors with a specified number of employees. Voluntary contributions are also an option for employers who want to enhance employee skills and training opportunities.

Understanding these statutory and voluntary requirements is vital for both employers and employees to ensure compliance with Malaysian labor laws.

Staying informed and seeking legal advice, when necessary, can help you navigate the complexities of employment in Malaysia effectively. πŸ˜„

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