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Employee Leasing in Malaysia

Malaysia offers businesses wishing to expand their activity in Southeast Asia some great competitive advantages. Thanks to its strategic location, its well-developed infrastructures, and its very friendly business environment, Malaysia allows companies that choose it as a destination for their business expansion to gain many benefits.

One of the fastest and safest ways for expanding activity in Malaysia is through employee leasing. The employee leasing services offered by FMC Group give businesses access to a highly-skilled local team in Malaysia without having to establish a subsidiary in the country.  Moreover, FMC Group covers the entire administrative and legal sides of employee management, allowing company leaders to focus on meaningful business decisions that directly impact their growth in Malaysia and Southeast Asia.


  • Advantages of Employee Leasing in Malaysia
  • Employee Leasing Services Offered by FMC Group
  • Advantages of the Malaysian Market
  • Recruitment in Malaysia
    • Minimum Wage and Payroll
    • Social Contributions and Taxes
    • Working Hours and Overtime
    • Vacation Days
    • Parental Leave and Sick Leave
    • Notice Period
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Stephan Dorn FMC Group

Advantages of Employee Leasing in Malaysia

  • Employee leasing in Malaysia gives you easy and quick access to the large market of Southeast Asia.
  • Employee leasing gives you control of a local team in Malaysia that is already familiar with the local market and can help you establish an adapted growth strategy.
  • Employee leasing allows you to have full access to the Malaysian talent pool and to make time and cost savings on the recruitment process.
  • Delegating the administrative management of employees to FMC Group will let you focus entirely on business decisions in order to achieve quick results.
  • Employee leasing provides you with flexibility as you can easily increase or decrease the size of your staff in Malaysia as your activity progresses.

Employee Leasing Services Offered by FMC Group

  • We look for and choose the best candidates that fit your requirements;
  • We negotiate and conclude employment contracts;
  • We pay social security contributions and taxes according to the Malaysian law;
  • We manage the payroll of your employees according to international standards;
  • We pay all expenses and allowances after your approval;
  • We monitor paid vacation days for your employees;
  • We negotiate and implement private health insurance if requested;
  • We maintain regular communication with you regarding the management of your employees.

Management and Reporting Flow of Employee Leasing Services

Management and Reporting Flow Chart

Advantages of the Malaysian Market

  • Malaysia is located in the center of Southeast Asia and, in addition to its local market of over 33 million people, gives access to a market of more than 650 million people thanks to its membership in the Association of Southeast Asian Nations (ASEAN). The country is also in close proximity to India and China, two of the largest consumer markets worldwide.
  • In addition to being part of the ASEAN Free Trade Area, Malaysia has signed seven bilateral Free Trade Agreements, with Australia, Chile, India, Japan, New Zealand, Pakistan, and Turkey. Moreover, Malaysia is a signatory of many regional trade agreements, such as the Trade Preferential System-Organization of Islamic Conference and the Developing Eight Preferential Tariff Agreement.
  • Malaysia has an export-driven diversified economy that has become focused in recent years on high technology, knowledge-based, and capital-intensive industries. Malaysia’s manufacturing sector plays an important role in global supply chains, thanks to the country’s location near major trade routes, while the services sector is contributing to local economic growth and development.
  • Malaysia has a very friendly business environment that encourages foreign investors. The country ranked third in the East Asia and Pacific region and 12th worldwide in the World Bank’s 2020 Doing Business ranking.
  • Malaysia enjoys reputable infrastructures, including 18 free industrial zones, and two major highways, one of which extends over 800 kilometers and connects Malaysia to Singapore and Thailand. The country also has seven major seaports – notably Port Klang on the Strait of Malacca, which ranks as the 12th-largest container port in the world – and six international airports – the largest of which, Kuala Lumpur International Airport, has a capacity of 70 million passengers and 2.9 million tons of cargo per year.

Recruitment in Malaysia

Minimum Wage and Payroll

  • The national minimum wage in Malaysia is set at MYR 1,200 (EUR 257) per month in urban areas and MYR 1,100 (EUR 236) in rural areas.
  • Salaries are usually paid monthly on the last working day of the month.
  • It is customary to pay employees a 13th-month bonus at the end of the year, but it is not legally required.

Social Contributions and Taxes

Employer Contributions
Employees Provident Fund 12.00% – 13.00% (employees under the age of 60)

4.00% – 6.50% (employees over the age of 60)

Social Security 1.75%
Human Resource Development Fund 1.00% (if the company has over 10 employees)
Employment Insurance 0.20%
Total 13.95% – 15.95% (employees under 60)

5.95% – 9.45% (employees over 60)

Employee Contributions
Employees Provident Fund 9.00% – 11.00% (employees under 60)

0.00% – 5.50% (employees over 60)

Social Security 0.50%
Employment Insurance 0.20%
Total 9.70% – 11.70% (employees under 60)

0.70% – 6.20% (employees over 60)

Employee Income Tax
Up to MYR 5,000 yearly 0.00%
Between MYR 5,000 and 20,000 1.00%
Between MYR 20,000 and 35,000 3.00%
Between MYR 35,000 and 50,000 8.00%
Between MYR 50,000 and 70,000 13.00%
Between MYR 70,000 and 100,000 21.00%
Between MYR 100,000 and 250,000 24.00%
Between MYR 250,000 and 400,000 24.50%
Between MYR 400,000 and 600,000 25.00%
Between MYR 600,000 and 1,000,000 26.00%
Between MYR 1,000,000 and 2,000,000 28.00%
From MYR 2,000,000 30.00%


Working Hours and Overtime

  • The legal working hours limit in Malaysia is 48 hours per week and eight hours per day.
  • Overtime payment is compulsory when employees exceed the legal working hours limit. It is calculated based on 150% of the regular salary rate on weekdays, 200% on rest days and weekends, and 300% on public holidays.

Vacation Days

  • Employees in Malaysia are entitled to eight days of paid leave per year within the first two years of employment.
  • Between the third and fifth years of service, employees can take 12 days of paid leave per year.
  • After five years of service, employees have the right to 16 days of paid leave per year.
  • Malaysia celebrates 12 nationwide public holidays, in addition to around 30 territorial public holidays, celebrated only in some states.
  • Nationwide public holidays are:
    • Chinese New Year: First two days of the first lunar month – between January and February;
    • Labor Day: May 1st;
    • Vesak: First full moon in May;
    • Yang di-Pertuan Agong’s Birthday: First Monday of June;
    • Independence Day: August 31st;
    • Malaysia Day: September 16th;
    • Deepavali: The day preceding the new moon in the Hindu month of Aippasi – between October and November;
    • Christmas Day: December 25th;
    • Islamic New Year: First day of the year according to the Islamic calendar;
    • Prophet Muhammad’s Birthday: Varies according to the Islamic calendar;
    • Eid al-Fitr: Varies according to the Islamic calendar (two days);
    • Eid al-Adha: Varies according to the Islamic calendar (two days).

Parental Leave and Sick Leave

  • Female employees in Malaysia are entitled to 90 consecutive days of paid maternity leave, including a maximum of 30 days before the due date. Payment during this period is covered by Social Security. Employees are eligible for paid maternity leave for up to five births.
  • There is no paid paternity leave entitlement for new fathers in the Malaysian private sector. Meanwhile, public sector employees are entitled to seven days of paternity leave.
  • Employees with less than two years of service are entitled to 14 days of paid sick leave per year. The duration increases to 18 days per year for employees with two to five years of service and to 22 days for employees with more than five years of service. Pay during sick leave is fully covered by the employer at the regular salary rate of the employee.

Notice Period

  • There are no statutory notice periods in Malaysia, but it is common for employees to give 30 days’ notice.

Disclaimer: Although we carefully researched and compiled the above information, we do not give any guarantee with respect to the actuality, correctness, and completeness.