Malaysia is a very attractive location for businesses, a more cost effective alternative to Singapore. The country's diverse nature also makes it easier to find the right talent for your workforce making it a great place for business ventures. However, dealing with people from so many backgrounds and ethnicities can be a challenge. To help companies prepare themselves for business, Links created a legislative page of the main employment laws and best practices in Singapore. Please note that all the information listed below are to be used as a general guideline, for more detailed accounts of laws and regulations, please visit the official governmental websites.
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To register a company in Malaysia, the company need to register under SSM (Suruhanjaya Syarikat Malaysia) and every company needs at least one director who is at least 18 years of age and Malaysia resident.
Requirements to register a sole proprietorship or partnership are:
For more information, visit page https://www.nbc.com.my/facts-for-registering-a-company-in-malaysia.html
(Source: Suruhanjaya Syarikat Malaysia)
Every new company setup must apply for tax register to get tax reference number and this can register via e-Daftar website.
Steps as follow below:
Reminder: All documents need to be submitted within 14 days from the date of application, otherwise, the e-Daftar application will be cancelled.
For more information, visit page http://edaftar.hasil.gov.my/indexBI.php
(Source: LHDN Malaysia)
To open a corporate bank account in Malaysia, banks will generally require the following items:
Depending on the bank, additional documents may be required, so make sure to check carefully with the local bank so you can prepare all the necessary documents.
For Malaysia residents, every employee and employer is obliged to pay a certain amount of the employee's monthly wage into 3 types of social funds body which are Employee Provident Fund (EPF), Social Security Organization (SOCSO) & Employment Insurance System (EIS).
For more information:
Employee Provident Fund (EPF) : http://www.kwsp.gov.my/portal/en/web/kwsp/home
Social Security Organization (SOCSO): https://www.perkeso.gov.my/index.php/ms/
Employment Insurance System (EIS): https://www.perkeso.gov.my/index.php/ms/
Any foreign national who is not a citizen of Malaysia intending to enter and reside in Malaysia as a permanent resident may apply for an Entry Permit in accordance with Section 10, of the Immigration Act and Regulation 4, Immigration Regulations 1963. An Entry Permit is issued is in the form of document.
If you are engaging foreigners to work, term & conditions as follow: http://www.imi.gov.my/index.php/en/foreign-worker.html(Source: Immigration Department of Malaysia)
Minimum Wages Permits
The current minimum wage is RM1, 100 for those in the Peninsular Malaysia and RM920 for Sabah, Sarawak and Labuan.
MINIMUM WAGES RATE
(As per Guidelines on the Implementation of the Minimum Wages Order 2018 [P.U (A) 265/2018])
|RM 1,100||Number of working days in a week||RM 5.29|
The Malaysian Employment Act defines the work weeks as 48 hours, with a maximum of 8 working hours per day.
Annual leave entitlement depends the years of service with an employer. One’s years of service begins from the day the employee starts working with the employer.
|Year of Service||Days of Leave|
|< 2 years||8|
|> 2 years and < 5 years||12|
|> 5 years and more||16|
The following overtime payments apply to anyone with a monthly salary below RM2,000:
Work on rest day
(a) In the case of an employee employed on a daily, hourly or other similar rate of pay who works on a rest day, he shall be paid for any period of work—
(b) In the case of an employee employed on a monthly rate of pay who works on a rest day, he shall be paid for any period of work
(c) For any work carried out in excess of the normal hours of work on a rest day by an employee mentioned in paragraph (a) or (b), he shall be paid at a rate which is not less than two times his hourly rate of pay.
(d) In the case of an employee employed on piece rates who works on a rest day, he shall be paid twice his ordinary rate per piece.
Work during Public Holiday
Employees who have served the company for at least 12 months are eligible for retrenchment benefits.
The amount of severance payment an employee is entitled to is subject to the provisions of these regulations. In any case it shall not be less than:
Employer must process this payment to employee no later than 7 days of termination date.
Employers have a duty to report the value of BIK provided to employees in the respective employees’ EA form as well as the company’s E form annually.
Tax are collected from employees through compulsory monthly deduction from remuneration by the 15th of the following month under the Monthly Tax Deduction (MTD) system.
Gains and profits arising from Employee Share Option Scheme (ESOS) is subject to tax.
If the share option exercised by the employee is received in the form of cash and not shares, tax will be imposed on the date the option is exercised.
Employer must ensure MTD for the perquisite is calculated based on the Additional Remuneration Formula in the month the perquisite is received.
MTD Calculation for ESOS refer to website below:
For every new employees, you are required to register for tax number, EPF, SOCSO & EIS for monthly contribution.
In order to register these statutory board, there are few forms require to fill in and submit over the statutory board counter.
Ministry Of Human Resources (MOHR) is a ministry of the Government of Malaysia that is responsible for skills development, labour, occupational safety and health, trade unions, industrial relations, industrial court, labour market information and analysis, social security.
Employers are expected to follow the guideline from Ministry Of Human Resources (MOHR).(Source: http://www.mohr.gov.my)
According to the Malaysia Employment Act, every female employees shall be entitled to 60 days of maternity leave subject to all maternity leave requirements in the Malaysia Employment Act.
Maternity Leave entitlement for case below:
Male employees are eligible to 2 working days leave for the birth of their own child up to 5 surviving child.
Malaysia employees who have completed their probation are entitled to paid sick leave.
|Year in Service||Minimum Entitlement|
|1st to 2nd||14|
|3rd to 5th||18|
|6th and above||22|
The financial filing is counted from January to December.
Tax payments should be processed electronically.
EA form & E form
Salaries are paid electronically via giro through employee bank accounts by producing a file and sending it to the bank. A local in-country bank account is required.
Bonuses are treated as ‘Additional Wages’ along with commissions etc.
The Annual Wage Component is made up of the Annual Wage Supplement (AWS) and any other annual bonuses.
Period covered – January - December.
Employer is to complete E & EA form provide to employees by 1st March each year. Employees are to then file returns not later than 30th April each year.
Public Holiday in Year 2019 may differ depending on the state’s calendar. Make sure to track according to the location in question.
Business closed follow Kuala Lumpur Public Holiday. Most businesses are closed for 2 days during Chinese New Year & Hari Raya.
General Working Hours: 08:30-17:30
Standard time zone: UTC/GMT +8 hours