What is an Employer of Record (EOR), and How Does it Work?

An Employer of Record (EOR) in Malaysia is a service that allows companies to hire and manage employees in Malaysia without establishing a legal entity in the country. AYP Group’s EOR Malaysia solution acts as the official employer for your employees, taking on all legal and administrative responsibilities. This includes managing payroll, taxes, benefits, and compliance with local labor laws.

By leveraging AYP Group’s EOR services in Malaysia, your company can efficiently expand into the Malaysian market, focusing on business growth while we handle the complexities of employment.

What are the Advantages of Using an EOR?

1. Accelerated Market Entry:
   ‍With AYP Group’s EOR Malaysia solution, your business can quickly establish a presence in Malaysia without the need for lengthy setup processes. This enables you to start operations and hire employees almost immediately.
2. Cost Efficiency:
   ‍Avoid the high costs associated with setting up a local entity, including legal, administrative, and HR-related expenses. The EOR model provides a cost-effective alternative, allowing you to invest resources where they are most needed.
3. Compliance Assurance:
   Navigating Malaysia’s labor laws and regulations can be complex. AYP Group ensures full compliance with all local employment laws, protecting your business from potential legal issues.
4. Administrative Relief:
   AYP Group handles all HR-related tasks, from payroll processing to employee benefits administration, freeing up your internal team to focus on strategic activities.
5. Scalability:
   Easily adjust your workforce in Malaysia according to your business needs without the limitations of managing a local entity. This flexibility is crucial for companies looking to enter or expand in the Malaysian market.

How Does an EOR Ensure Compliance? What Are the Compliance Issues to Take Note Of?

AYP Group’s EOR Malaysia solution ensures compliance by:

1. Employment Contracts:
   ‍We draft and manage employment contracts that adhere to Malaysian labor laws, including terms related to compensation, termination, and employee rights.
2. Tax and Social Security Contributions:
   AYP Group manages all payroll-related taxes and contributions, ensuring compliance with Malaysia’s tax laws and social security requirements.
3. Employee Rights and Benefits:
   ‍We ensure that your employees receive all legally mandated benefits, such as leave entitlements and social security contributions, in accordance with Malaysian law.
4. Documentation and Reporting:
   ‍AYP Group maintains thorough documentation and provides regular reports, ensuring transparency and compliance with local regulations.

Key compliance issues to note include:

• Ensuring that employment contracts are compliant with Malaysian labor laws.
• Adhering to local tax and social security regulations.
• Staying updated with changes in labor laws and regulations.

What Are the Costs Associated with Using an EOR?

The costs of utilizing an EOR in Malaysia generally include:

1. Monthly Service Fees:
   ‍AYP Group charges a monthly fee based on the number of employees managed, covering employment, compliance, and administrative tasks.‍
2. Payroll Expenses:
   This includes employee salaries, bonuses, statutory deductions, and contributions such as the Employees Provident Fund (EPF) and Social Security Organization (SOCSO) payments.
3. Setup Costs:
   Initial fees related to the onboarding of new employees, including contract preparation and compliance checks.
4. Forex Mark-up and Bank Charges:
   When dealing with multiple currencies, forex mark-ups are necessary to manage exchange rate fluctuations, ensuring consistent and accurate salary payments. Combined with applicable bank charges, these costs are integral to maintaining smooth international payroll operations.

How Does the Process of Using an EOR Work? What is the Timeline to Onboard an Employee?

The process of using AYP Group’s EOR Malaysia solution is streamlined for efficiency:

1. Initial Consultation:
   We begin with a consultation to understand your hiring needs and business goals in Malaysia.
2. Customized Proposal:
   ‍AYP Group provides a tailored proposal, outlining the scope of services, costs, and timelines.
3. Agreement and Onboarding:
   ‍Once the agreement is finalized, we initiate the employee onboarding process, including contract preparation, payroll setup, and compliance checks.
4. Employee Onboarding:
   ‍AYP Group handles all aspects of onboarding, from executing employment contracts to enrolling employees in benefits programs.

The typical timeline to onboard an employee in Malaysia through our EOR service is 1 to 3 weeks, depending on the complexity and specific requirements.

How Does an EOR Manage Employee Benefits and Payroll?

AYP Group’s EOR Malaysia service manages employee benefits and payroll with precision:

1. Payroll Management:
   ‍We ensure timely and accurate payroll processing, including salary disbursement, tax deductions, and EPF/SOCSO contributions.
2. Employee Benefits Administration:
   AYP Group manages statutory benefits like health insurance, leave entitlements, and retirement contributions, ensuring compliance with Malaysian laws.
3. Benefits Optimization:
   ‍We continuously review and optimize benefits packages to ensure they are competitive and compliant with local regulations.

What is the Process of EOR in Malaysia for Foreign Employees?

AYP Group’s Employer of Record (EOR) in Malaysia service simplifies the hiring and management of foreign employees:

1. Needs Assessment:
   ‍We begin by evaluating your business requirements to determine the most suitable work permit in Malaysia, such as the Employment Pass (EP) or Professional Visit Pass (PVP).
2. Work Permit Application:
   ‍AYP Group handles the entire application process for the work permit in Malaysia with the relevant authorities, ensuring full compliance with Malaysian immigration regulations and timely approval.‍
3. Employment and Onboarding:
   ‍We draft compliant employment contracts in line with Malaysian labor laws and manage the onboarding process, including setting up payroll and administering employee benefits.‍
4. Ongoing Compliance:
   ‍AYP Group ensures continuous adherence to local labor laws, manages any HR-related issues, and handles the renewal of work permits in Malaysia as needed.‍
5. Offboarding:
   ‍When an employee’s tenure ends, we manage the entire exit process, including work permit cancellations and final payroll processing, ensuring all legal obligations are met.

This process allows your company to efficiently hire and manage foreign talent in Malaysia without establishing a local entity, leveraging AYP Group’s EOR in Malaysia services for seamless and compliant operations.

How to Get Started with EOR?

Starting with AYP Group’s EOR Malaysia solution is straightforward:

1. Contact Us:
   ‍Reach out to our team for an initial consultation to discuss how our EOR services in Malaysia can support your business expansion in Malaysia.‍
2. Assessment and Proposal:
   ‍We will assess your needs and provide a customized proposal, including detailed pricing and service offerings.‍
3. Agreement and Implementation:
   ‍Upon agreement, we will initiate the onboarding process, taking over all employment-related functions to ensure a smooth transition.‍
4. Ongoing Support:
   ‍AYP Group continues to provide ongoing HR, compliance, and payroll management support, ensuring your business operates seamlessly in Malaysia.

Use Case: How Employer of Record (EOR) helps company to expand without an entity in Malaysia

A European software company aimed to expand its operations into Malaysia to tap into the growing tech industry. Instead of establishing a local entity, which would involve significant time and financial investment, they chose AYP Group’s EOR Malaysia solution.

Challenges:

• Urgent need to enter the Malaysian market to gain a competitive advantage.
• Navigating Malaysia’s complex employment regulations.
• Establishing a local HR infrastructure would have been resource-intensive.

Solution:

AYP Group provided a comprehensive EOR solution, including:

• Rapid Onboarding:
  ‍Quick setup of employment contracts and payroll management.
• Compliance Management:
  ‍Handling of all local tax and labor law compliance.
• Employee Benefits:
  ‍Administration of statutory benefits like EPF, SOCSO, and health insurance.

Outcome:

The company successfully hired and onboarded employees in Malaysia within weeks, allowing them to start operations immediately. They avoided the costs and complexities of setting up a local entity while remaining fully compliant with all regulatory requirements. The use of AYP Group’s EOR solution enabled seamless expansion, providing the agility to scale quickly in a new market.

With AYP Group’s Employer of Record solution in Malaysia, businesses can efficiently expand their operations without the need for a local entity, ensuring compliance, cost-effectiveness, and a smooth transition into new markets. Contact us today to learn how our EOR Malaysia services can support your business growth.