Situated in the heart of Southeast Asia, Malaysia is well-known for its rich cultural diversity and dynamic urban centers. From Langkawi’s breathtaking beaches to Penang’s bustling street markets, the country offers a unique blend of attractions that draws travelers and expatriates alike.
Malaysia also appeals to businesses looking for cost-effective, highly skilled full-time and part-time employees interested in remote work.
Key takeaways:
- A culturally inclusive atmosphere makes Malaysia an appealing workplace for global talent.
- The country ranks third in Asia and 25th globally for its citizens’ proficiency in English.
- The digital nomad visa enables remote workers to stay for up to two years while contributing to the local economy.
Advantages of Hiring in Malaysia
Malaysia ranks third in Asia and 25th globally for English proficiency according to the 2023 EF English Proficiency Index. The country also has a literacy rate of 95%, and over 500,000 students graduate annually in fields like business and technology.
Initiatives like Google’s “Gemilang” program seek to upskill 300,000 Malaysians by 2026, and the Malaysian government is further supporting these efforts through the Human Resources Development Fund (HRDF) for critical industry training.
Key stats include:
- Languages: Malay and English
- Currency: Malaysian Ringgit (MYR)
- Capital City: Kuala Lumpur
- Population: 34.1 Million
- Cost of Living Rank: 159th
A Blueprint for Growth
The Malaysian government’s proactive measures to nurture a robust digital ecosystem include the Digital Investment Office (DIO), which set a goal of MYR 130 billion in sustainable digital investments by 2025. This initiative aligns with global trends toward digitalization and Industry 4.0, presenting significant opportunities for remote workers seeking global employment opportunities.
Microsoft has also announced a significant investment of $2.2 billion over the next four years to develop cloud and artificial intelligence infrastructure in Malaysia.
The company’s investment will create an AI Center of Excellence and provide training for 200,000 Malaysians, supporting the country’s digital transformation and positioning it as a hub for advanced technologies and a desirable option for employers seeking international tech talent.
Top remote job sectors in Malaysia include:
- Information Technology
- Software Engineer
- Digital Marketing
- Social Media Content
- Customer Support
- Graphic Design
Employment Laws: Hiring Compliantly in Malaysia
Employment Contracts
There are two common types of mandatory employment contracts in Malaysia.
- Permanent employment contracts offer indefinite employment with no specified end date.
- Fixed-term employment contracts are intended for specific projects with a set duration and terminate on the specified date. However, repeated renewals may result in the employee being considered permanent in the eyes of Malaysian courts should the employee later be dismissed.
Working Hours & Pay
Working hours in Malaysia are capped at eight hours a day, 45 hours a week. As of 2024, the minimum wage is MYR 1,500 per month.
It’s customary, but not legally required, for employers to pay a 13th-month salary payment in Malaysia at the end of each year.
As of 2023, employees have the right to apply for flexible work arrangements, such as the ability to work from home, alter their work hours, or compress their work week. Employers have 60 days to respond with either an agreement or a reason for the rejection.
Probation Periods
In Malaysia, probation periods aren’t legally required, but when used, they typically last between three and six months.
Employer Taxes
Employers in Malaysia are responsible for several mandatory payroll contributions based on their employees’ gross salary, including:
- Provident Fund: 4-13%
- Social Security: 1.75%
- Employment Insurance: 0.2%
- Human Resource Development Fund: 1%
Termination Process & Severance Pay
There is no at-will employment in Malaysia. However, employers can terminate an employment contract for various reasons, including poor performance, redundancy, or mutual agreement.
Notice periods vary according to the employee’s years of service:
- Less than 2 years: 4 weeks’ notice
- 2 to 5 years: 6 weeks’ notice
- 5+ years: 8 weeks’ notice
Employees are entitled to severance pay if laid off after 12 months of continuous employment. It’s calculated according to years of service and last drawn salary:
- Less than 2 years: 10 days’ wages
- 2 to 5 years: 15 days’ wages
- 5+ years: 20 days’ wages
Paid Leave Laws in Malaysia
Vacation and Holiday
The amount of paid leave in Malaysia depends on the employee’s years of service.
- Less than 2 years: 8 days
- 2 to 5 years: 12 days
- 5+ years: 16 days
In addition, paid public holidays in Malaysia include Chinese New Year, Hari Raya Aidilfitri, and Merdeka Day.
Sick Leave
Employees can receive paid sick leave based on their length of service and must provide a medical certificate. Here’s how it breaks down:
- Less than 2 years: 14 days
- 2 to 5 years: 18 days
- 5+ years: 22 days
Employees can also receive up to 60 days of annual hospitalization leave if necessary.
Maternity Leave
Pregnant employees in Malaysia are entitled to 98 consecutive days of fully paid maternity leave, which can begin no earlier than 30 days before the expected delivery date. If a mother wants to return to work during maternity leave she can do so with her employer’s approval and a medical certificate.
Paternity Leave
Male employees receive seven days of paid paternity leave if they have completed at least 12 months of service with their employer.
Why Digital Nomads Love Malaysia
The DE Rantau programme allows digital nomads to live in Malaysia, a top digital nomad destination, for up to 12 months. At that point, visitors can apply to have their visa renewed for an additional 12 months.
Cities like Kuala Lumpur and Penang are particularly appealing destinations for expats, as they feature vibrant communities and coworking spaces that encourage collaboration.
The low cost of living lets digital nomads enjoy a comfortable lifestyle while nomad-ready hubs enhance community support.
How to Pay Remote Workers in Malaysia
If you’re managing payroll for remote teams in Malaysia, several options are available for paying your workers, such as PayPal, Wise, local payment gateways like iPay88 and Billplz, or bank wire transfers.
However, some challenges to consider when paying international staff include:
- Non-compliance with local payroll regulations can lead to legal issues.
- Currency fluctuations may result in underpayment or overpayment of salaries.
- High transaction fees can reduce the net salaries employees receive.
- Online payroll platforms can pose data security risks to sensitive information.
Partnering with an Employer of Record (EOR) is one way to eliminate these risks, as EORs assume liability for global talent, including managing payroll and ensuring compliance with local laws.
Hire in Malaysia with RemoFirst
RemoFirst simplifies the process of employing remote staff in over 180 countries, including Malaysia, by acting as the legal employer for remote international employees.
As an EOR, we help companies, from startups to corporations, hire remote employees quickly and efficiently without establishing a local entity or navigating complex labor laws.
Book a demo to learn how RemoFirst can simplify your hiring process in Malaysia.
