Hiring in Malaysia

The terms set out role, salary in MYR, working hours, leave, notice and any restrictive covenants. The EOR is the counterparty to the employee, which is what removes the need for your own entity.

English is the standard contract language for commercial roles. Post-employment non-competes are largely void under the Contracts Act 1950, so lean on confidentiality terms instead.

Fixed-term contracts are permitted, but repeated renewals for ongoing work invite scrutiny and most EORs default to indefinite terms.

Set probation from day one. An extension should be confirmed in writing before the original period ends, with a documented reason.

Some EORs shorten probation as policy because they, not you, carry the dismissal risk. Ask before you agree a start date.

Overtime is paid at 1.5 times the hourly rate for covered employees, with higher rates on rest days and public holidays and a cap of 104 hours a month.

Most professional hires sit above the threshold, so overtime becomes a contractual matter rather than a statutory one. Put the position in writing either way.

Market practice for professional roles is 14 to 18 days, well above the statutory floor, so quote the market figure when you budget.

Paid sick leave splits into outpatient and hospitalisation entitlements. Maternity leave is 98 days and paternity leave 7 days, both paid by the employer, so confirm the EOR has priced them in.

Either side may terminate on notice or pay in lieu. Statutory termination benefits of 10 to 20 days' wages per year of service apply only to employees earning RM4,000 a month or less; above that, severance is a matter of contract and market practice.

The EOR runs the process as the legal employer and will want the paperwork in order, including final pay, unused leave and any contractual severance. Unfair dismissal claims go to the Industrial Court, which can order reinstatement, so keep a documented reason.

Private medical cover, dental and group life are standard for professional roles even though they are not mandatory.

EORs often bundle benefits through a group scheme. Ask what is included in the fee and what is billed on top.

Employer contributions add roughly 13% to 16% on top of gross salary for local hires. That is before the EOR fee.

Tax clearance is the trap. When a foreign employee leaves Malaysia, the employer must file Form CP21 at least 30 days ahead and withhold final pay pending clearance, so build that into the offboarding timeline.

Ask whether the EOR sponsors directly or refers to a partner. A partner-model EOR often cannot sponsor at all, and the salary floors raised on 1 June 2026 (from RM5,000 a month for Category III to RM20,000 for Category I) apply to every new pass and renewal.

Most roles must be advertised to local candidates on MYFutureJobs first. Set start dates after approval, not before.

Get the data processing terms in the service agreement, not just the privacy notice. Cross-border transfers need a destination with comparable protection, and breaches must be reported to the Commissioner within 72 hours.

Ask where payroll data is hosted and who in the partner chain can see it.

Incorporation here is quick, but the running cost is the point: a locally resident director, a licensed company secretary, accounting, audit requirements and the paid-up capital needed to sponsor Employment Passes set an annual floor.

Permanent establishment risk is about what people do, not where payroll sits. Revenue-generating activity can create exposure regardless of the employment route.