As of March 2024, the estimated population of Malaysia is 34,308,525.
The currency in Malaysia is the Malaysian Ringgit (MYR). The currency symbol is RM.
In Malaysia, employees with contracts for an unspecified duration are considered permanent employees. Such a contract remains in force until terminated by either party. There are no special provisions further highlighting the definition of permanent employment.
In Malaysia, the law requires a written contract: If the service provided or the determined time of employment is longer than 1 month If no time is specified, but the time reasonably required for the specified work to be completed may exceed 1 month. Every written contract must include a provision for termination of the agreement by either party, and be registered (stamped) through the Stamp Assessment and Payment System Employment contracts executed, renewed, or amended from January 1, 2026, are subject to stamp duty, and late stamping will be subject to a penalty.
The Employment Act of Malaysia does not specify conditions uniquely applicable to temporary employees. However, temporary employee contractors must follow certain requirements when assigning employees to work for third-party employers. Employee contractors must conclude all contracts for their employees contracted to third-party employers in writing. The contractor must also maintain a register of all employees and their information. These contracts and registers must be kept and made available to the Labor Director General in the event of an inspection.
The labor code of Malaysia does not provide for a probationary period. Common practice suggests an average of 6 months.
Effective January 1, 2023, working hours are 45 hours per week. A full working day is 8 hours, but an employer may require an employee to work up to 10 hours, depending on business needs. In case of shift work, an employer may require an employee to work in excess of 45 hours per week, but in no case may the average work hours exceed 45 in a 3-week period. An employee may apply for a flexible working arrangement to vary the hours of work, days of work, or place of work concerning their employment. In cases where there are applicable collective agreements, any application made by the employee must be consistent with the terms and conditions in the collective agreement. Generally, an employee in Malaysia cannot be required to work more than 5 consecutive hours without a break of at least 30 minutes. If the work, by its nature, must be carried on continuously and requires continual attention, an employee may be required to work for up to 8 consecutive hours. In this event, an employer has to provide a break of at least 45 minutes, during which an employee must be allowed to eat a meal.
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In Malaysia, an employee is entitled to paid annual leave based on the length of service with their employer: After 12 months of continuous service with the same employer, employees are entitled to 8 days of paid annual leave for the first 2 years of their employment 12 days of leave for 2 to 5 years of service with the same employer 16 days of leave for over 5 years of working for the same employer. Annual leave days are paid at the employee’s ordinary wage rate and can be carried over to the next year. Annual leave entitlement may be canceled in cases where an employee misses work without the permission of the employer, and without reasonable excuse, for more than 10% of working days during the 12 months of the continuous service cycle.
To claim paid sick leave, an employee must be examined by a registered medical practitioner (chosen by the employer, and at the employer's expense), who determines whether sick leave may be granted. The duration of paid sick leave depends on the length of employment with the current employer: 14 days in total per calendar year for less than 2 years of employment 18 days in total per calendar year for 2 to 5 years of employment 22 days in total per calendar year for over 5 years of employment 60 days per year in case of hospitalization, irrespective of the duration of employment Sick leave is paid at the employee's ordinary wage rate. Effective January 1, 2023, hospitalization leave will be a separate leave from sick leave to provide additional protection for employees. If hospitalization is required, as certified by a registered medical practitioner or officer, an employee is entitled to a total of 60 days of paid leave per calendar year in addition to the sick leave.
Beginning January 1, 2023, female employees in Malaysia are entitled to 98 days of maternity leave. Additional protections are in place for pregnant employees by prohibiting companies from terminating employees who are pregnant or have pregnancy-related illnesses. An employee is entitled to a maternity allowance if she has been employed at any time in the 4 months leading up to her confinement, and for a total of at least 90 days in the nine months before confinement. An employee is not eligible for a maternity allowance if, at the time of confinement, she has 5 or more living biological children. The maternity allowance is equal to the daily wages of the employee. The employer pays the total cost of the maternity allowance. Maternity leave can begin no earlier than 30 days before confinement, and no later than one day after confinement.
Effective January 1, 2023, married employees are entitled to 7 days of paid paternity leave for each delivery. This leave is available for a maximum of 5 times, irrespective of the number of spouses. The employee must have been continuously employed by the same employer for at least 12 months immediately before paternity leave starts. The employee is responsible for notifying his employer of his spouse's pregnancy at least 30 days from the expected confinement or as early as possible after the birth.
Per Malaysian labor law, the required notice period must be included in any written contract of employment and must be the same for both the employer and the employee. The minimum statutory length of the notice period must be as follows: 4 weeks if the employee has been employed for less than 2 years 6 weeks if the employee has been employed for 2 years or more, but less than 5 8 weeks if the employee has been so employed for 5 years or more. A notice period is not required for termination of the employment contract in the event of any willful breach by the other party of a condition of the contract. A contract can also be terminated without notice after due inquiry in the event of gross misconduct by the employee.
Malaysian labor law states that employees who are covered under the Employment Act (EA) are entitled to severance benefits if they have been employed for at least 12 months before their dismissal. Covered employees dismissed due to gross misconduct, as well as employees who are rehired within 7 days of dismissal by the same employer, are not eligible to receive severance benefits. Employees are entitled to severance pay on the following scale, according to the duration of their employment: Between 1 and 2 years - 10 days’ wages for every year of employment Between 2 and 5 years - 15 days’ wages for every year of employment Over 5 years - 20 days’ wages for every year of employment Employees are entitled to receive written termination benefits amount and its calculation method. Termination benefits must be paid no later than 7 days from the termination date.
Malaysia's national retirement scheme is the Employees Provident Fund (EPF), known in Malay as Kumpulan Wang Simpanan Pekerja (KWSP). The statutory minimum retirement age in Malaysia is 60 years, and EPF members may begin withdrawing their retirement savings at age 55. Members who continue working and contributing after age 55 have those post-55 contributions held in a separate retirement account that becomes accessible only when the member reaches age 60. The maximum age for contribution is 75. Employees younger than 55 may apply to make pre-retirement withdrawals for specific purposes. These include, among others, the purchase or construction of a house, repayment of a housing loan, higher education expenses for the member or their child, approved medical treatment, incapacitation, and permanent emigration from Malaysia. Self-employed individuals, gig economy workers, and others without a regular income may make voluntary contributions to the EPF through the i-Saraan program. Additionally, persons in the fishing and farming industries are eligible for social security compensation.
In Malaysia, a member of the Employees Provident Fund may nominate another person to be the recipient of any outstanding credit in the event of the employee’s death or incapacitation. Contributions to the scheme are paid by both employees and employers. Social Security Fund pays survivors pension if the deceased was under 60 years of age and had made monthly insurance contributions for at least 24 out of the 40 months preceding their death or was in receipt of an invalidity pension. Payments are made to the widow or widower for life, and each child until the child either marries or turns 21, whichever occurs earlier. The dependents are entitled to receive a pension at the rate of 50% of their average assumed monthly wage, increased by 1% for every 12 months’ contributions that are paid in excess of the first 24 months, limited to a maximum of 65%. The minimum pension is MYR 475 (Malaysian ringgits) per month. The Social Security Organization (PERKESO) also provides benefits to survivors of a deceased employee who died in a work accident or due to an occupational disease. Benefits are paid at a daily rate of 90% of the average assumed daily wage subject to a minimum of MYR 30 per day and a maximum of MYR 178.50 per day. Beneficiaries include surviving spouses, children, and parents, siblings and grandparents in the absence of spouse and children.
Employees under 60 years old who are incapable of engaging in any substantially gainful activity due to a morbid condition of permanent nature are eligible for pension if they have paid at least 24 monthly contributions during the 40 months prior to the onset of disability. The pension is paid as 50% of the average monthly wage of the employee in the last 24 months, increased by 1% for every year of contributions after the first 24 months, limited to a maximum of 65%. A constant attendance allowance worth MYR 500 per month is paid to those who are severly incapacitated and require constant attention. For temporary disability due to work accidents or diseases, benefits are paid after four days as an amount equivalent to 80% of the average daily wage. For permanent disability, 90% of the average salary is paid as a pension. Contributions to the scheme are paid by both employees and employers.
Malaysia taxes income that is earned in Malaysia. Income earned outside Malaysia is not taxed, even if the money is brought into Malaysia, as long as it has already been taxed in the country where it was earned. This exemption is in place until December 31, 2036. The year of tax assessment runs from January 1 through December 31. Malaysia uses a progressive tax system. Different portions of an individual's income are taxed at different rates. The highest rate applies only to the portion of income that falls into that bracket, not to the whole income. Income tax rates for the assessment years 2025 and 2026 vary between 0% and 30% of the taxable income. Non-residents are liable to pay tax at a rate that depends on the type of income, ranging from 10% to 30%.
The Government of Malaysia issues the following types of visas:
All non-citizens must obtain a valid work pass before starting employment in Malaysia. For skilled and professional roles, this is done through the Employment Pass (EP) system, which is divided into 3 categories (I, II, and III) based primarily on salary level, job seniority, and duration of stay. Effective June 1, 2026, Malaysia increased the minimum salary thresholds and clarified the duration framework for each category: Category I (Top-level professionals): Minimum salary of MYR 20,000 per month, valid for up to 10 years, renewable, and eligible for dependent passes. The threshold was previously MYR 10,000. Category II (Mid-level professionals): Salary between MYR 10,000 and MYR 19,999 per month, valid for up to 10 years (with a succession plan), renewable, and eligible for dependent passes. The threshold was previously MYR 5,000 to MYR 9,999. Category III (Entry-level skilled professionals): Salary between MYR 5,000 and MYR 9,999 per month (MYR 7,000 to MYR 9,999 for the manufacturing and manufacturing-related services sector), valid for up to 5 years (with a succession plan). Passes issued on or after June 1, 2026 are now eligible for dependent passes. The former rule of no dependent passes and a maximum of 2 renewals continues to apply only to Category III passes issued before June 1, 2026. The threshold was previously MYR 3,000 to MYR 4,999. Other permits include the Visit Pass (Temporary Employment for foreign workers in manufacturing, construction, plantation, agriculture, and services), the Professional Visit Pass (for short-term technical assignments), and the Resident Pass-Talent (for long-term skilled talent). Effective March 16, 2026, companies operating in the manufacturing sector or in selected services sectors under the authority of the Malaysian Investment Development Authority (MIDA) must submit Employment Pass (EP), Employment Pass for Foreign Graduate (EP-FG), Professional Visit Pass (PVP), and Dependant Pass / Long-Term Social Visit Pass applications through the MIDA Expatriate System (MES). From June 1, 2026, MES became the sole channel for these companies, replacing the legacy Xpats Gateway and ESD Online submissions. Companies outside MIDA's authority continue to apply through the Expatriate Services Division (ESD) of the Immigration Department of Malaysia. Appeals for rejected Employment Pass (EP) and Professional Visit Pass (PVP) applications must be submitted within 14 days of the Expatriate Committee's rejection decision.
