Hiring your first employee in Malaysia as a foreign-owned company

In short: Before a foreign-owned Malaysian company pays its first salary, it should be registered as an employer with EPF, SOCSO (PERKESO) and LHDN, issue a written contract that meets the Employment Act 1955, and pay at least the minimum wage. If the first hire is a foreigner, the company in Peninsular Malaysia or Labuan also needs prior approval under section 60K of the Employment Act, and from October 2025 wages EPF applies to eligible non-citizen employees too. Paul Hype Page provides first-hire and payroll services that cover these steps.

Before you hire: check what is already registered

When a company is incorporated through SSM’s MyCoID system, its data can be shared at the same time with the Employees Provident Fund (EPF), the Inland Revenue Board (LHDN), the Social Security Organisation (PERKESO, also known as SOCSO) and HRD Corp. That does not mean every account is ready to use. Before the first payroll, confirm that the company has:

• an EPF employer number;
• a PERKESO employer registration for SOCSO and the Employment Insurance System (EIS);
• an LHDN employer tax file (E number) for monthly tax deductions; and
• a corporate bank account to pay salaries and contributions from (see how to open a corporate bank account in Malaysia).

LHDN states that a business or company with employees must register an employer tax file. PERKESO requires employers to register once they employ at least one employee, generally within 30 days. Sources: LHDN employer responsibilities and PERKESO employer registration.

Step 1: the employment contract and minimum wage

Section 10 of the Employment Act 1955 requires a contract of service for a period exceeding one month to be in writing, with a clause setting out how either party may end it. A clear written contract also helps with Employment Pass, bank and payroll checks later. Source: Employment Act 1955 (as at 1 August 2023).

The national minimum wage under the Minimum Wages Order 2024 is RM1,700 a month, and it has applied to all employers since 1 August 2025. In Budget 2027 the government announced an increase to RM2,000 from June 2027, with an exemption announced for micro, small and medium enterprises with sales below RM50 million. Check the gazetted order before relying on the new rate. Sources: Minimum Wages Order 2024 and Bernama, 9 October 2026.

For leave, working hours and other statutory terms, see our guide to employment law in Malaysia.

Step 2: statutory contributions at a glance

• EPF. Mandatory for Malaysian employees and, from October 2025 wages, for eligible non-Malaysian citizen employees. For non-citizens who became members on or after 1 August 1998, the rate is 2% from the employer and 2% from the employee. Permanent residents, and members registered before 1 August 1998, keep the higher standard rates.
• SOCSO (PERKESO). Covers Malaysian employees under the Employees’ Social Security Act 1969. Foreign workers, including expatriates, have been covered by the Employment Injury Scheme since 1 January 2019 and by the Invalidity Scheme since 1 July 2024.
• EIS. The Employment Insurance System covers Malaysian citizens and permanent residents. Legal foreign workers are covered under the Employment Injury Scheme instead, not EIS.
• PCB/MTD. Monthly tax deductions are calculated on each employee’s remuneration and paid to LHDN.
• HRD Corp levy. Employers in covered sectors with 10 or more Malaysian employees must register and pay the levy. Smaller employers may be able to register voluntarily.

EPF contributions and PCB are both due on or before the 15th of the following month. Sources: KWSP, contribution for non-Malaysian citizen employees, KWSP, employer mandatory contribution, PERKESO booklet on foreign worker protection and LHDN employer responsibilities. For more detail, see our employer guide to EPF, SOCSO, EIS and MTD.

Step 3: if your first hire is a foreigner

Many foreign-owned companies first hire a manager or specialist from abroad. That adds a separate approval track:

• Section 60K approval. No employer may employ a foreign employee without prior approval from the Director General of Labour. Since 1 January 2023 this has applied to private-sector employers in Peninsular Malaysia and Labuan. Since 1 July 2025, employers that need it for new Employment Pass and Professional Visit Pass applications apply through the Xpats Gateway on the ESD portal. ESD states that JTKSM processes applications within 10 working days and that approvals are valid for 12 months. Renewals and some other cases are exempt.
• After approval. Within 14 days of employing the foreign employee, the employer must furnish the Director General with the employee’s particulars. Employing a foreign employee without approval can lead to a fine of up to RM100,000, imprisonment of up to five years, or both.
• Job advertisement. Most new Employment Pass applications also need a MYFutureJobs advertisement acknowledgement letter from PERKESO, obtained through the Xpats Gateway, unless the position is exempt.
• Protecting local staff. The Employment Act prohibits terminating a local employee in order to employ a foreign employee, and in a redundancy, foreign employees in similar roles must be let go first.

Sources: ESD Xpats Gateway FAQ and Employment Act 1955, sections 60K–60N. Sabah and Sarawak have their own labour laws, so check the rules for the state where the employee will work.

The company must also be registered with ESD before it files an Employment Pass. ESD guidance sets minimum paid-up capital of RM500,000 for a 100% foreign-owned company, RM350,000 for a joint venture with at least 30% foreign equity, and RM1,000,000 for foreign-owned companies in wholesale, retail and trade, which also need a WRT licence (see our licensing services). Paul Hype Page has the solution: we help you plan and sequence that capital, the licences and the ESD registration. This is not a waiver of the requirement, and pass approval is not guaranteed. See our Malaysia Employment Pass services and the guide to hiring foreigners in Malaysia.

Step 4: your first payroll month

1. Sign the written contract and collect the employee’s identity and bank details.
2. Register the employee with EPF and PERKESO, and notify LHDN of the new employee on Form CP22 within 30 days of the start date.
3. Calculate gross pay, EPF, SOCSO, EIS where it applies, and PCB.
4. Pay the salary through the corporate bank account and issue a payslip.
5. Pay EPF, SOCSO, EIS and PCB on or before the 15th of the following month.
6. Keep payroll records. LHDN asks employers to keep records for seven years.

At year end, employers give each employee Form EA by the last day of February and file Form E with LHDN by 31 March.

How Paul Hype Page helps with your first hire

Paul Hype Page provides first-hire and payroll services for foreign-owned companies, alongside our company secretary services. We can register the company as an employer where needed, prepare the section 60K and ESD applications for expatriate hires, and run monthly payroll and the statutory filings, including for eligible non-citizen employees. Paul Hype Page & Co is an accounting firm as well as a corporate service provider. We are not a Malaysian licensed tax agent, so a licensed tax agent should review tax positions beyond statutory payroll filings. See our guide to payroll compliance for foreign-owned businesses and the full market-entry sequence for foreign-owned companies.

Talk to Paul Hype Page

Planning your first hire in Malaysia? Contact us and we will map out the registrations, contracts, approvals and payroll calendar for your company. If you have not yet set up the company, start with our Malaysia company incorporation services.

Frequently asked questions