PEO & Employer Of Record Services in Malaysia
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PEO in Malaysia

Hire Globally, Pay Locally, Expand Effortlessly

Through our PEO (Professional Employer Organization) services in Malaysia, INS Global can help you set up, hire employees, and quickly start working. We are your local partner in Human Resources services, helping you to cut through the red tape and limit the costs connected to global expansion.  

Our PEO services (sometimes called an EOR) in Malaysia works as a local partner that provides HR services for companies looking to expand their business in foreign markets without requiring them to establish a separate legal entity.  

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PEOs can provide several services to help you build a successful company in Malaysia. Our PEO in Malaysia can legally employ your staff, manage employee services (payroll outsourcing and benefits), and handle local regulations, saving you time and money.  

Want to have a Team in Malaysia TODAY?

Show me how to grow my business now!

We prefer to let others grow their business.

EMployer of record

PEO in Malaysia - Summary

Benefits of using a Professional Employer Organization in Malaysia  

Assured Legal Compliance

The PEO’s local knowledge of legal and administrative best practices will ensure that your company maintains compliance with each area of local laws.  

Reduced HR Errors

Common issues with HR can lead to an increasingly high incidence of fees and fines when entering Malaysia. A PEO provides local expertise that will help reduce these costly errors 

Faster Company Growth

By providing payroll outsourcing services in Malaysia, alongside recruitment and contractor management, a PEO takes care of the HR processes required for your entry into Malaysia while your company increases its speed of growth  

Fast Market Entry

Estimated time for Company Incorporation in Malaysia: 4-12 months  

Estimated time to establish a PEO relationship in Malaysia: 5 days  

*Estimate  

One Platform For Everything

A PEO handles every aspect of critical HR services and streamlines these services into one point of contact to reduce errors and increase efficiency 

Why Utilize a PEO in Malaysia Instead of Company Incorporation?

Incorporating a company in Malaysia can be a difficult, time-consuming process that requires you to establish a legal and physical presence. Our PEO allows your company to operate without having to go through the traditionally required steps to form a separate entity.

A PEO:
  • Payment calculation and processing
  • Arranging payslips
  • Tax calculation and management
  • Withholding social security contributions
  • Regulatory Compliance Assurance
Infographic | INS Global

Testimonial

Manuel Ramos

TERAO ASIA

Managing Director

We think INS Global is a good solution about starting business in new and complex markets. Understanding the market doesn’t mean you need to set up a company immediately.

5/5

How Does a PEO Operate in Malaysia?

INS Global’s PEO professionals manage your employee recruitment and management needs in Malaysia in 4 simple steps:

  1. We discuss your goals and needs, then formulate a plan that best suits your business  
  2. Our PEO provides a legal entity through which you can bring in staff to begin your company’s operations in Malaysia  
  3. We manage the administrative and legal aspects of hiring and paying your employees  
  4. Your staff continue day-to-day business operations, working towards your success in the Malaysian market while we take care of HR  

Understanding the Difference Between a PEO and EOR

Once your team has decided that expanding into Malaysia is the right decision, the next step is understanding the difference between an EOR and a PEO to take full advantage of these two solutions. 

  • A PEO provides HR services to employees under the directive of other companies.
  • These services include but are not limited to, payroll outsourcing, filing taxes, and legal regulatory compliance.  
  • An EOR is similar to a PEO but will also legally and officially hire employees on behalf of another company. 
  • In addition to what a PEO provides, an EOR is also responsible for all the liabilities of employment and recruitment. 
  • Under a PEO agreement, the contract remains strictly between your company and the employee. 
  • In an EOR agreement, the contract is directed by your company but made fully between the EOR and the employee.  

Labor Law in Malaysia

Employment Contracts In Malaysia

The Employment Act of 1955 is the main source of legislation related to labor matters in Malaysia. The Employment Act provides the minimum terms and conditions for applicable employees. Any contract that attempts to offer less favorable benefits than those stipulated in the Employment Act shall be void and the benefits replaced with those in the Employment Act.  

The Employment Act does not apply to all employees. The protection offered under it is only applicable to these categories of workers:  

  • Domestic servants whose monthly salary is less than RM2,000 
  • Employees who are working in manual labor 
  • Employees engaged in the operation or maintenance of mechanically propelled vehicles 
  • Employees who supervise or oversees other employees engaged in manual labor 
  • Employees engaged in any capacity on a vessel 
  • Domestic servants 

 

The minimum wage is RM1,000 per month, as stipulated by the Minimum Wages Order of 2016. In general, an employer is required to deduct from their employee’s salary every month their contribution to the Employees Provident Fund (EPF), their contribution to social security organization (SOCSO), and their monthly income tax deduction.  

Working Hours In Malaysia

Based on section 60A(1) of the Employment Act, no qualified employee shall be allowed to work for: more than 5 consecutive hours without a period of rest for 30 minutes or more than 8 hours a day. 

Holidays in Malaysia

For employees that are qualified, there are a minimum of 11 public holidays that the employer must recognize. Of these 11, the following 5 are mandatory:  

  • National Day 
  • Birthday of Yang di-Pertuan Agong 
  • Birthday of the Ruler or the Yang di-Pertua Negeri  
  • Labour Day 
  • Malaysia day 

The other 6 days are holidays that must be chosen by the employer. Once these 6 holidays have been chosen, the employer should communicate which days they have chosen to employees in an obvious way. In cases where the holiday falls on a typical rest day, the holiday will be moved to the following Monday.  

Sick/Annual Leave in Malaysia 

Under the Employment Act, the minimum required annual leave that an employee is entitled to is 8 days for less than two years, 12 days for less than 5 years, and 16 days for more than 5 years.  

Under the Employment Act, the minimum required sick leave days are 14 days for less than 2 years, 18 days for less than 5 years, and 22 days for more than 5 years. In cases where the employee will need to be hospitalized, the employee will be entitled to 60 days per year.  

Maternity/Paternity Leave in Malaysia 

There are certain conditions that must be met for a female employee to be entitled to paid maternity leave.

To meet the requirements, the employee must have worked for at least 90 days at the company and have been at the company consistently in the last 4 months. Once these conditions are met, a female employee will be entitled to no less that 60 days of maternity leave.

If an employee remains absent from her work after the end of maternity leave, she is protected from termination for 90 days following the end of her maternity leave. 

Tax Law in Malaysia

For both resident and non-resident companies operating in Malaysia, corporate income tax will be imposed on income that accrued from within Malaysia. The current corporate tax rates are as follows:  

Type of Company Chargeable Income (MYR) CIT Rate for Year of Assessment (%)

2020-2021
Resident Company (other than company described below)

24

Resident Company:

  • with paid-up capital of 2.5 million Malaysian ringgit (MYR) or less, and gross income from business of not more than MYR 50 million.
  • that does not control, directly or indirectly, another company that has paid-up capital of more than MYR 2.5 million, and
  • is not controlled, directly or indirectly, by another company that has paid-up capital of more than MYR 2.5 million.
On the first 600,000

17

In excess of 600,000

24

Non-resident company

24

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FAQs

No, it is necessary to use a local entity abroad to comply with each country labor law.

Foreign companies can either set up a local entity in each country or use the services a local PEO (Professional Employment Organization) to hire the staff on-site directly.

The employer of record is the legal entity liable for the staff employed in a specific country. In practice, a foreign company can either open a subsidiary to become the employer of record of its abroad employees or use a PEO to act as the employer of record.

Liabilities may vary from country to country and include all the staff management responsibilities: labor contract issues, payroll management, and tax compliance, social security management, expenses claim declaration, hiring and termination
procedures, etc.

In general, 1-month is necessary to have an employee based out abroad using an existing PEO as the employe of record. When incorporating a new subsidiary to be the employer of record, the delay varies from 4-12 months.

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