You have a business. You need help. You are about to hire someone.
This is the moment every Malaysian business owner secretly fears — not because hiring is hard, but because the statutory compliance minefield between "we have a deal" and "you are legally employed" is genuinely terrifying if nobody explained it to you.
Let me explain it.
The Short Version
| What | Deadline |
|---|---|
| Register with EPF | Within 7 days of first hire |
| Register with SOCSO / EIS | Within 30 days of first hire |
| Register with LHDN (PCB) | ASAP, SSM docs within 14 days |
| Pay salary | By 7th of following month |
| Remit EPF, SOCSO, EIS, PCB | By 15th of following month |
Don't skip any of these. Failure to register with EPF, SOCSO, or EIS carries fines up to RM10,000 and potential imprisonment. The LHDN penalty for late PCB remittance is 10–100% of the tax owed.
Step-by-Step Process
Step 1: Issue a compliant employment contract.
Must be in writing. Must state: position, salary, working hours, leave entitlements, termination notice period. For employees earning RM4,000/month or less, the Employment Act 1955 applies fully.
Step 2: Register with EPF (KWSP) within 7 days.
Register as an employer at the EPF i-Akaun Employer portal. You'll need: company SSM registration, director's IC, and company bank account details.
Step 3: Register with SOCSO (PERKESO) within 30 days.
Via the ASSIST portal. EIS registration is bundled with SOCSO — one registration covers both.
Step 4: Register with LHDN for employer PCB/MTD number.
Via e-Daftar on the MyTax portal. PCB (Potongan Cukai Berjadual) is monthly tax deduction from employee salary, remitted to LHDN by the 15th of the following month.
Step 5: Register with HRDF (HRD Corp) if you have 10+ Malaysian employees. Levy is 1% of monthly wages per Malaysian employee.
Step 6: Run your first payroll. Pay salary by 7th of following month. Issue a payslip (mandatory).
Step 7: Remit all contributions by 15th of each month. EPF, SOCSO, EIS, and PCB — all due on the 15th for the previous month.
Contribution Rates (2026)
| Contribution | Employer | Employee | Notes |
|---|---|---|---|
| EPF (KWSP) | 13% (≤RM5,000) / 12% (>RM5,000) | 11% | Employee can opt for 9% voluntarily |
| SOCSO (Employment Injury) | ~1.75% | 0.5% | Capped at RM4,000 wages |
| EIS (Employment Insurance) | 0.2% | 0.2% | For retrenched workers |
| HRDF / HRD Corp | 1% (10+ staff) / 0.5% optional (<10) | None | Malaysian employees only |
| PCB / MTD (income tax) | Withhold & remit only | 0–30% | Employer deducts, remits to LHDN |
Budgeting tip: Add 15–20% above gross salary to cover employer-side statutory costs.
Employment Act 1955 — Key Provisions
| Provision | Requirement |
|---|---|
| Minimum wage (2026) | RM1,700/month |
| Working hours | Max 8 hrs/day, 48 hrs/week |
| Annual leave | 8–16 days (depends on years of service) |
| Sick leave | 14–22 days (depends on years of service) |
| Maternity leave | 98 consecutive days (mandatory) |
| Overtime | 1.5× normal; 2× rest days; 3× public holidays |
| Termination notice | 4–8 weeks (depends on years of service) |
What New Employers Get Wrong
Waiting for 30 days to register EPF. Technically legal, practically risky. Register everything in week one.
No written employment contract. An unsigned or verbal agreement still creates obligations under the Employment Act. Always have it in writing.
Forgetting PCB ≠ the employee's full income tax. PCB is a monthly estimate — employees still need to file their own tax return.
Not issuing payslips. Mandatory under the Employment Act. Must be itemised showing gross, deductions, and net pay.
Foreign employees and EPF (from October 2025). Mandatory EPF contributions for foreign workers now apply. Many legacy payroll setups are not yet updated.
Missing HRDF at 10 employees. If you hit 10 Malaysian employees at any point, the 1% levy kicks in. Easy to miss. Late payments attract 6% interest per month.
FAQ
Do I need EPF for part-time employees?
Yes. EPF applies to all employees paid wages — whether full-time, part-time, or contract.
Can I hire on freelance basis to avoid EPF/SOCSO?
Only if genuinely self-employed (multiple clients, controls own work, invoices you). If the arrangement looks like employment, LHDN/SOCSO can recharacterise it and backdate contributions.
What's the difference between EPF and SOCSO?
EPF is individual retirement savings (you get it back). SOCSO is social insurance (pays out only if workplace accident, disability, or death occurs). Both mandatory.
What happens if I don't register?
Fines up to RM10,000 per offence, up to 3 years imprisonment for persistent non-compliance, and backdated liability with interest.
Key Government Links
- EPF employer registration: kwsp.gov.my
- SOCSO ASSIST portal: assist.perkeso.gov.my
- LHDN MyTax (PCB): mytax.hasil.gov.my
- HRD Corp: hrdcorp.gov.my
This guide is part of Sorted — step-by-step guides for Malaysian life admin. Built because government websites are terrible and you deserve better.
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