Payroll Compliance Requirements in Malaysia
Ensuring compliance with payroll regulations is crucial for businesses operating in Malaysia. Below is a comprehensive overview of payroll compliance requirements and essential HR considerations for company directors in Malaysia.
Adherence to the following statutory obligations is essential for payroll compliance:
Employees' Provident Fund (EPF):
As an employer, your responsibilities include paying EPF contributions in respect of any person you have engaged to work under a Contract of Service or Apprenticeship. You have to ensure accurate monthly contributions are deducted from your employees’ salary and remitted to EPF
Who is employee ?
An employee is defined as a person who is employed under a contract of service or apprenticeship whose particulars are not included in the First Schedule of the EPF Act 1991.
The contract of service or apprenticeship can be written or oral, expressed or implied.
"Contract of Service" is an agreement in which a person agrees to employ another person as an employee and the other person agrees to serve his employer as an employee.
"Contract of Apprentice" means a written contract made by a person with an employer who pledge to employ the person and train or cause him to be systematically trained for a work during a specified period of time approved by the employer who in the course of the exercise the apprentice is bound to working in the service of the employer.
(Apprenticeship definition reference – Employment Act 1955)
Minimum age: Employment age is subject to Children and Young Persons (Employment) Act 1966.
Maximum Age: 75 years
Payment liabale for EPF contribution
Wages are all remuneration in money due to your employee under his contract of service or apprenticeship whether it was agreed to be paid monthly, weekly, daily or otherwise.
- Salary
- Payment for unutilised annual or medical leave
- Bonus
- Allowance
- Commission
- Wages for half day leave
- Incentive
- Arrears of wages
- Wages for maternity leave
- Wages for study leave
- Other payments under contract of service or otherwise
Payments Not Liable for Contribution
- Service charge
- Overtime payment
- Gratuity
- Retirement benefit
- Retrenchment, temporary lay-off or termination benefits
- Any traveling allowance or the value of any travel concession
- Director’s fee
For further information, refer to EPF Act 1991.
https://www.kwsp.gov.my/en/employer/introduction