A Complete Guide to Local and Foreign Employment Policies
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| **Information updated as of May 2025 |
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Hiring employees in Malaysia—whether they are locals or foreigners—requires strict compliance with employment laws and immigration policies. This guide covers the key legal requirements, including the latest updates on minimum wage, and employer obligations in 2025.
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Hiring Local Employees in Malaysia
1. Compliance with the Employment Act 1955
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The Employment Act 1955 governs employment relationships for:
- Employees earning RM4,000 or less per month (some protections extend to higher earners);
- Covers work hours, rest days, overtime, contract termination, and other labour rights.
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2. Mandatory Statutory Contributions
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Employers must register and contribute to the following statutory funds:
- EPF – Employees Provident Fund
- SOCSO – Social Security Organisation
- EIS – Employment Insurance System
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3. Minimum Wage Policy (Effective August 1, 2025)
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From August 1, 2025, a unified minimum wage applies across all businesses regardless of size:
- Monthly minimum wage: RM1,700
- Hourly rate: RM8.72 (based on a 48-hour work week)
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Temporary Exemption:
Companies with fewer than 5 employees (excluding those under MASCO-listed occupations) are allowed to continue paying below RM1,700 until July 31, 2025. |
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Hiring Foreign Employees in Malaysia
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1. Who Is Eligible to Hire Foreign Workers?
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Only employers in government-approved sectors are allowed to hire foreign workers. These sectors include:
- Manufacturing
- Construction
- Agriculture & Plantation
- Services (e.g., cleaning, food & beverage, security)
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2. Foreign Worker Quotas and Conditions
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- Employers must obtain Quota Approval before recruitment
- Workers must undergo and pass FOMEMA medical screening (mandatory for PLKS holders)
- Workers must be recruited from government-approved source countries only
- Foreign employees are also subject to the RM1,700 minimum monthly wage, unless exceptions apply (e.g., domestic workers under special regulations).
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Employer Obligations & Legal Compliance
As an employer, you are responsible for:
- Keeping complete records of contracts, passports, and permits
- Ensuring all foreign workers have valid work visas
- Managing renewals, medical screenings, and insurance purchases
- Providing minimum wage and fair working conditions
- Foreign employees who stay in Malaysia for more than 182 days are considered tax residents and are required to file taxes accordingly
Key Systems and Portals
- MDEC / ESD Portal – Required for hiring expatriates in high-tech or skilled sectors
- ePPAx System – MOHR’s online system for managing foreign worker applications
- FOMEMA – Platform for mandatory medical screenings
- MyEG – Used for permit renewals and related immigration services
Final Thoughts
With Malaysia’s workforce becoming increasingly regulated and diversified, employers must stay informed and compliant with both local labour laws and foreign hiring requirements. Legal hiring practices not only reduce risk but also enhance the company’s reputation and employee satisfaction.
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