Global coverage
Available in +150 countries
Employer costs, taxes, minimum wage and leave rules for hiring here, plus the faster route: hire a contractor with Ontop, no local entity needed.
2026
Currency
MYR RM (Malaysian Ringgit)
Employer contributions
~13% EPF employer + 1.75% SOCSO + 0.4% EIS
Minimum wage
MYR 1,700/month (2025-26)
Payment frequency
Monthly
Calendar year (Jan 1 - Dec 31)
Capital
Kuala Lumpur
Timezone
MYT (GMT+8)
Employee or contractor
If the work is project-based or you need to move fast, a contractor gets you the same talent with a fraction of the paperwork.
Employee
~MYR 9,040 total
/month
For a gross salary of
MYR 8,000 gross/month
Setup
Local entity or employer of record, plus tax and social security registration
Employer contributions
~13% EPF employer + 1.75% SOCSO + 0.4% EIS
Mandatory extras
Annual Bonus
Monthly admin
Monthly payroll - EPF/SOCSO/EIS by 15th - MTD monthly - EA Form March - PCB remittance
Contractor with Ontop
No local entity
$49
/contractor/month
The agreed rate, plus Ontop from $49 per contractor per month.
Sign a contract, yours or an Ontop template. No local registration on your side.
No employer contributions: the contractor handles their own taxes and social security.
One payment per invoice, in one payroll run.
Paid into their Ontop Global Account in USD.
See the full side-by-side comparison
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A contractor's rate usually covers their own taxes, so compare total cost, not just gross pay. Run your numbers in the contractor vs employee calculator.
Hiring here: the full breakdown
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Payroll guide
Employer costs come on top of gross pay. Use these figures to budget a hire and to compare it with a contractor rate.
Total monthly cost
~MYR 9,040 total
Example gross salary
MYR 8,000 gross/month
~MYR 5,680 net
Net pay to the employee
Tax and employee contributions
Withheld from gross pay
~MYR 1,040 EPF + SOCSO
Employer contributions on that salary
Employer contributions
~13% EPF employer + 1.75% SOCSO + 0.4% EIS
Employee contributions
11% EPF employee (under 60) + 0.5% SOCSO + 0.2% EIS + income tax
Total cost above gross
~13% above gross (EPF)
Figures are estimates for planning. Rates change with each budget and can vary by sector, so confirm them before you make an offer.
What people earn here, from the legal floor to the main cities, plus the extra pay most employers budget for.
National average
~MYR 4,000
Per month
Kuala Lumpur
MYR 5,000 - 15,000
~35%
Penang
MYR 4,000 - 11,000
~15%
Monthly gross. National average salary per year:
~MYR 48,000
Minimum wage
MYR 1,700/month (2025-26)
Paid:
Monthly
Extra pay
Annual Bonus
Discretionary; 1-2 months common
December/January
Collective agreements can set sector minimums above the national one. Check whether one applies to the role before you set the salary. Next step: estimate the full cost of an employee.
Who collects what, how often, and what happens when a payment is late.
Income tax brackets
1% up to MYR 5,000 / 3% / 8% / 13% / 21% / 24% / 25%
Tax year:
Calendar year (Jan 1 - Dec 31)
Filing calendar
Monthly EPF by 15th; SOCSO/EIS by 15th
Social security payments
April 30 (e-Filing BE/B form)
Income tax
By March 1
Employee tax certificate
EA Form (Yearly Remuneration)
April 30
Annual return
Income Tax Return (BE/B)
Late payment penalties
Late EPF: 6% annual dividend loss + RM 1,000-10,000 fine; late SOCSO: 6% per annum
Who collects what
LHDN (Inland Revenue Board)
Income tax and MTD
EPF (KWSP)
Provident fund
SOCSO (PERKESO) + EIS
Social security and employment insurance
The time off and paid leave every employee is entitled to by law. Budget for it when you compare an employee with a contractor.
Annual leave
Annual Leave
8 days (year 1-2) / 12 days (2-5 yrs) / 16 days (5+ yrs)
Public holidays
~13 public holidays (federal + state)
Sick leave
Sick Leave
14 days (hospitalization: 60 days) employer paid
Maternity leave
16 weeks (98 days) maternity
Full pay from employer (first 5 surviving children)
The contracts you can use, and what ending an employment relationship costs.
Permanent
Permanent Employment Contract
Fixed term
Fixed-Term Contract
Independent contractor
Independent Contractor / Sole Proprietor
Collective agreements
Collective Agreement (CA)
Ending employment
Termination Benefits
How it is calculated
Per Employment (Termination and Layoff Benefits) Act 1980; 10-30 days/year
Calling someone a contractor does not make them one. If the role works like employment in practice, local authorities can reclassify it, with back contributions and penalties.
The errors that most often trigger back payments and penalties here, and what to do instead.
EPF Contribution on Wages vs Allowances
Risk Level: HIGH
EPF contributions are due on all wages defined under EPF Act 1991, including overtime, commission, and contractual allowances. Excluding regular allowances (petrol, phone) from EPF contributions is a common employer error that KWSP auditors challenge.
Foreign Worker Levy and Quota Non-Compliance
Risk Level: HIGH
Malaysia requires employers to obtain work permits for foreign workers and pay an annual levy (RM 640-1,850 depending on sector and source country). Employing workers with expired permits or without proper levy payment triggers JTKSM raids and fines of MYR 10,000-50,000 per worker.
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Next topicOntop is the Global Workforce Engine for contractor teams: contracts, compliance documents and payments in 150+ countries.
150+
countries
$49
per contractor per month
1 run
to pay your whole team
USD
Global Account for every contractor
FAQ
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Ontop works with contractors, not employees. As Contractor of Record, Ontop handles contracts, compliance documents and payments for contractors in 150+ countries. To employ someone, you need a local entity or an employer of record. Ontop doesn't act as your employer of record.
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Employers pay contributions on top of gross salary. The cost table on this page shows the rates that apply here and a worked monthly example. A contractor with Ontop costs the agreed rate plus Ontop from $49 per contractor per month.
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Many countries require an extra month or an annual bonus for employees. The salaries section on this page shows the one that applies here and when it is usually paid. Contractors are paid what you agree in the contract.
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Employers withhold income tax and the employee's social security share every pay run, then pay them to the local authorities. The taxes section on this page lists the brackets, rates and filing deadlines that apply here.
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Yes. The contractor vs employee calculator compares the full cost of an employee, employer contributions included, with a contractor rate plus Ontop's monthly fee.
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When the work is project-based, you need to start fast or you don't have a local entity. If the person will work fixed hours, under your direction and only for you, local law may treat them as an employee, so hire them as one.
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Misclassifying employees as contractors, missing tax and social security deadlines, and ignoring collective agreements that set higher wage floors. The mistakes section on this page covers the ones that come up most often here.
Compare employer costs, taxes and contractor rules in nearby countries:
Ready to hire? See Ontop pricing or learn how to build a global team without an employer of record.
Ready to hire? See Ontop pricing or learn how to build a global team without an employer of record.