A payroll service in Malaysia handles payroll, tax, and compliance, ensuring businesses meet Malaysian labor laws and superannuation requirements. It simplifies expansion by managing payroll operations.
Malaysia payroll management requires navigating complex labor laws, statutory contributions, and tax obligations. Employers must ensure compliance with the Employment Act 1955, the Income Tax Act, and other relevant regulations. This guide provides a detailed overview of Malaysia payroll requirements, statutory deductions, and best practices for businesses looking to outsource payroll services efficiently.
Payroll in Malaysia is governed by various laws that define employer obligations concerning salary payments, statutory deductions, and benefits. Companies that fail to comply with these regulations may face penalties, audits, and legal consequences.
Under the Employment Act 1955, employees must be paid their wages no later than the seventh day after the end of the wage period. This applies to all workers earning up to RM2,000 per month or engaged in manual labor. While the Act does not cover higher-income employees, most employers follow these best practices for compliance.
Employers must provide itemized payslips detailing basic salary, overtime pay, statutory deductions, and any additional benefits. This ensures Malaysia payroll transparency and reduces potential disputes.
Overtime pay is mandatory for employees covered by the Employment Act. The rates are:
Bonuses are not a statutory requirement but are commonly offered as incentives. If included in the employment contract, employers must ensure timely payments.
The EPF (KWSP) is a mandatory retirement savings scheme for Malaysian employees. Contribution rates are:
EPF payments must be submitted by the 15th of the following month to avoid penalties.
SOCSO provides medical benefits and disability coverage, while EIS supports employees in case of job loss. Contribution rates are:
These contributions must also be submitted monthly through PERKESO.
Malaysia follows a progressive tax system where tax rates range from 0% to 30%, depending on an employee’s annual income.
Employers must deduct Monthly Tax Deductions (MTD/PCB) from salaries and submit them to the Lembaga Hasil Dalam Negeri (LHDN) before the 15th of the following month.
Employers must:
Failure to comply can lead to financial penalties and legal action.
Payroll mistakes can lead to audits, fines, and legal issues. Common non-compliance cases include:
Managing Malaysia payroll can be complex, especially for companies unfamiliar with local compliance. Many businesses choose to outsource payroll services to streamline operations and ensure accuracy.
AYP provides comprehensive outsource payroll services tailored for businesses operating in Malaysia. Our solutions include:
We handle all payroll, tax filings, and compliance matters while your business focuses on operations.
AYP acts as the legal employer, ensuring payroll compliance, employee benefits administration, and tax submissions.
Our experts manage Malaysia payroll, covering salary payments, tax deductions, and statutory contributions.
Partnering with AYP helps businesses outsource payroll services with confidence, ensuring compliance and efficiency.
Employers who fail to pay salaries on time may face fines under the Employment Act 1955 and potential labor disputes.
Foreign employees are not required to contribute to EPF but may opt to do so voluntarily.
Late EPF payments are subject to fines and penalties imposed by KWSP.
No, bonuses are not mandatory unless stated in the employment contract.
Outsourcing payroll ensures compliance, reduces administrative burden, and helps businesses manage salaries and statutory payments efficiently.
With AYP’s expertise, businesses can navigate Malaysia payroll with ease and ensure seamless compliance. Contact us today to learn how we can support your outsource payroll services needs.
