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Employment in Malaysia

Malaysian employment law appears complex and confusing when looking from outside view although in some ways there are many similarities to other countries. However, there are key differences that one must be aware of for compliance with local laws. For this and many other reasons the following are only guidelines in the broadest sense, and professional legal services are recommended when employing in Malaysia.

Key points on employment in Malaysia

There are several key areas to be aware of within Malaysia’s employment regulatory framework, especially for companies that plan to initiate a full local office and human resources department. These challenges can be mitigated by use of a locally sourced payroll provider who is familiar with all of the local laws and rules for both local employees as well as foreign nationals.

  1. Contracts

    For employment periods over one month, the employee must be given a contract that specifies work hours, overtime, benefits and termination policies.

Employee Entitlements

Information Explanation
Time Off Work ?

An employee is entitled to paid annual leave of

  • Eight days for every twelve months of continuous service with the same employer if employee has been employed by that employer for a period of less than two years
  • Twelve days for every twelve months of continuous service with the same employer if employee has been employed by that employer for a period of two years or more but less than five years
  • Sixteen days for every twelve months of continuous service with the same employer if employee has been employed by that employer for a period of five years or more
Medical Leave ?

An employee is entitled to paid sick leave, where no hospitalization is necessary,

  • Fourteen days in the aggregate in each calendar year if the employee has been employed for less than two years
  • Eighteen days in the aggregate in each calendar year if the employee has been employed for two years or more but less than five years
  • Twenty-two days in the aggregate in each calendar year if the employee has been employed for five years or more
  • Sixty days in the aggregate in each calendar year if hospitalization is necessary, as may be certified by such registered medical practitioner or medical officer

Employment Termination

Information Explanation
Resignation / End of Service Payment ?

Monthly as event occurs.

Outsourcing Employment Through a GEO Employer of Record Service

Compliance with local employment requirements is just one of the issues foreign companies face when employing staff in Malaysia. For companies which intend to employ their staff directly through their incorporated Malaysian entity, professional legal advice is recommended. Shield GEO provides an alternative path for companies to outsource the employment of their staff in Malaysia.

As a Global Employer Organization (GEO), Shield GEO acts as the Employer of Record and ensures the employment is compliant with host country regulations regarding employment. In addition Shield GEO will handle payroll processing, tax and immigration. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Malaysia.

The Shield GEO solution is an attractive alternative where:

– the company is looking to employ staff quickly

– the company doesn’t have an appropriately incorporated entity in Malaysia

– the company wants to work within a defined budget

– the company wants to limit its initial commitment in Malaysia

– the company needs help with tax, employment, immigration and payroll compliance in Malaysia

Shield GEO can contract directly with the company to employ and payroll their staff in Malaysia. Shield GEO supplies local employment contracts for the staff, which ensure that local statutory requirements are met covering issues such as termination, probation periods, leave entitlements and statutory benefits.  Shield GEO is able to advise companies how to cover local employment regulations whilst still providing consistent global employment policies. Understand more about outsourced employment through Shield GEO.

Malaysia

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