Employer of Record (EOR) in Malaysia: Complete 2026 Guide
Guide to using an EOR in Malaysia — costs, EPF obligations, top providers, and comparison with setting up a local entity.
Malaysia is a growing APAC hub with a multilingual, skilled workforce and a cost-competitive labor market. With GDP growth of approximately 4.1% forecast for 2026, strong manufacturing and services sectors, and a business-friendly environment, it is an attractive alternative to Singapore for companies expanding into Southeast Asia.
Malaysia's employment framework includes the Employment Act 1955 (significantly amended in 2022), mandatory EPF retirement contributions, SOCSO social security, and sector-specific minimum wages. An Employer of Record (EOR) handles these requirements.
Why Use an EOR in Malaysia?
EPF contributions. Employers must contribute 12-13% of salary to the Employees Provident Fund (retirement savings). Combined with SOCSO and EIS, total employer statutory costs run 15-20%.
2022 Employment Act amendments. The amended Act reduced maximum weekly hours to 45, extended maternity leave to 98 days, introduced paternity leave (7 days), and expanded coverage. An EOR stays current on these changes.
Overtime restrictions. Overtime is capped at 104 hours/month with premium rates of 1.5-3x depending on the day. Miscalculating overtime triggers penalties.
Work permit complexity. Hiring foreign nationals requires Employment Pass applications through the Expatriate Committee (EC), with minimum salary thresholds and quota restrictions.
Important
For a detailed breakdown of Malaysian labor laws including minimum wages, EPF/SOCSO, working hours, and leave policies, see our Malaysia Labor Law Compliance Guide.
Key Employment Regulations
| Regulation | Details |
|---|---|
| Minimum wage | MYR 1,700/month |
| Standard hours | 45 hours/week (max 8 hours/day) |
| Overtime | 1.5x normal; 2x rest days; 3x holidays |
| Annual leave | 8 days minimum (rising with service) |
| Maternity leave | 98 days paid |
| Paternity leave | 7 days paid |
| Sick leave | 14-22 days (based on service) |
| Public holidays | 11 paid (from 15 gazetted) |
| EPF (employer) | 12-13% of salary |
| SOCSO (employer) | ~0.5% |
| EIS (employer) | 0.2% |
EOR Costs in Malaysia
Most EOR providers charge $400 to $600 per employee per month. Statutory employer costs add approximately 15-20% on top of gross salary (EPF + SOCSO + EIS).
EOR vs Setting Up a Local Entity
| Factor | EOR | Local Entity (Sdn Bhd) |
|---|---|---|
| Setup cost | $0 | MYR 5,000-15,000 ($5K-$15K) |
| Setup time | 5-10 days | 1-3 weeks |
| Best for | 1-8 employees | 8+ employees |
Break-even point: A Malaysian Sdn Bhd is relatively affordable to set up and becomes cost-effective at 5-8 employees.
Top EOR Providers for Malaysia
| Provider | Owned Entity | Starting Price | Strengths |
|---|---|---|---|
| Multiplier | Yes | ~$400/mo | APAC specialist |
| Deel | Yes | $599/mo | Fast onboarding |
| Remote | Yes | $599/mo | All owned entities |
| Oyster HR | Partner | $599/mo | Good employee experience |
For a full comparison, see our Best Employer of Record Companies guide.
Managing a Team in Malaysia?
Track time, monitor productivity, and manage schedules across time zones with HiveDesk. Works with any EOR setup — $5/user/month, all features included.