High-Speed Market Entry into Malaysia with PEO/EOR

peo eor malaysia
Table of Contents

This Webinar session aims to explain how businesses can achieve high-speed market entry into Malaysia through a Professional Employer Organisation (PEO) or Employer Of Record (EOR).

Free On-Demand Webinar | Malaysia | 25th June 2020, Morning and Afternoon Session

Entering Malaysia's Market Quickly and Compliantly with PEO/EOR

In this episode, you will understand how a PEO or EOR can help your business to expand into Malaysia in a more cost-effective and compliant way.

How Does a POE/EOR Work in Malaysia?

It involves a co-employment relationship between the PEO/EOR and your company. In this regard, the PEO/EOR will service your company in areas like HR consulting, payroll processing, employee benefits administration and labour law compliance management.

On the other hand, your company retains control over its core business and maintains management rights.

AYP Group's Scope of PEO/EOR Services

The following are key HR functions we can manage on behalf of your business:

  • Drafting and maintenance of employment contracts
  • Providing insurance coverage for your employees and their dependents
  • On-boarding
  • Processing of payroll, salary and statutory contributions
  • Aligning your business in compliance to Malaysia's labour laws
  • Supporting your business in day to day HR operations

Benefits of Using a PEO/EOR in Malaysia

The key benefits of using a PEO EOR include the following:

  • Increases cost savings in HR administration and processing
  • Allows for greater focus on your core business
  • Increases productivity
  • Reduces compliance risks
  • Minimizes bureaucratic hassles

Understanding Malaysia's Contract Types, Labour Laws and Employee Benefits

For detailed explanations and elaborations on the mentioned terms, you may refer to the Webinar recording that has been uploaded on YouTube:

High-Speed Market Entry into Malaysia with PEO/EOR

1. Contract Types

In Malaysia, there are two types of contracts:

  • Permanent employment contracts
  • Fixed-term contracts

Any employment lasting more than a month must be formalized through a written contract.

2. Labour Laws

Employment law in Malaysia is generally governed by the Employment Act (EA) 1955. Non-EA employees, however, are governed by their contract of employment.

3. Employee Benefits

Employee benefits include salary payment, leave entitlement, termination payment and statutory contributions.

Firstly, regular and overtime pay rates must follow the guidelines for work days, rest days and public holidays.

Next, depending on their duration of service, employees are entitled to a stipulated set of annual and medical leave days. Likewise, employees' termination payment is pro-rated and varies according to their employment tenure.

Furthermore, employers must process the termination payment within 7 days from termination.

Finally, mandatory statutory contributions for both employer and employees include the following:

  • Employees Provident Fund (EPF)
  • Social Security Organization (SOCSO)
  • Employment Insurance System (EIS)

Top 5 FAQs on PEO/EOR in Relation to Malaysia's Labour Laws

In our concluding section, we shortlisted key FAQs for further understanding and clarification.

1. What is EPF and is it compulsory in Malaysia?
EPF refers to the Employees Provident Fund. To this end, employees contribute 7% of their salary while employers contribute a minimum of 12% to the EPF.

Essentially, it is a compulsory pension scheme that provides retirement savings and contributions for all citizens and permanent residents working in Malaysia.

2. Is medical insurance compulsory in Malaysia?
No, it is not compulsory. If an employer can afford to provide coverage, it is up to his or her discretion to do so.

3. Are there any changes for tax filing of employer and individual returns in 2020?
Yes. To control the spread of COVID-19, the Malaysian Inland Revenue Board (MIRB) extended the deadlines to file for tax returns and balance of tax payments by two more months.

For example, a statutory deadline on 31st March for tax returns is now extended to 31st May. Accordingly, the deadline for individual income tax returns without business income is extended from end of April to end of June while those with business income is extended from end of June to end of August.

4. What is the minimum wage in Malaysia 2020?
Considering the new wage hike on 1st February, it is now 1,200 ringgits per month.

5. What is the minimum salary to pay income tax in Malaysia?
An annual income of 34,000 ringgit after EPF deductions. However, if you were only employed for less than 60 days, you are not required to file for taxes.

If you have further questions, feel free to contact us

Let us help you with your business plans!

Featured Content

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2. 6 Tips for Onboarding New Employees from Different Countries

3. Engaging Employees Remotely

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