HR, PEO & Employer of Record (EOR) Services in Malaysia

Introduction

Malaysia offers a dynamic business environment, blending a strategic location in Southeast Asia with a strong infrastructure network and investor-friendly policies. Its diversified economy — spanning manufacturing, services, and technology — positions the country as a gateway to ASEAN’s fast-growing markets. With a skilled workforce, competitive operating costs, and ongoing digital transformation, Malaysia provides a compelling landscape for companies seeking regional growth and long-term stability.

EOR & PEO Solutions in Malaysia

If you’re looking to hire employees in Malaysia without setting up a legal entity, using an Employer of Record (EOR) like Empleyo is the simplest and most compliant path forward. An EOR in Malaysia acts as the official legal employer on your behalf, managing everything from payroll and HR administration to employment contracts and statutory employee benefits.

This model allows you to expand into Malaysia quickly, while remaining fully compliant with local labor laws without the complexity or cost of registering a local entity.

What Is an Employer of Record in Malaysia?

An Employer of Record Malaysia (also known as an EOR provider) enables businesses to hire and onboard Malaysia employees without having to incorporate in-country. The EOR manages:

You continue to oversee your team’s day-to-day tasks, while the EOR service handles legal obligations as the official employer on paper.

What’s the Difference Between EOR and PEO?

A Professional Employer Organization (PEO) typically supports businesses that already have a registered entity in Malaysia, offering co-employment solutions for HR, payroll, and benefits. An EOR, however, is ideal when you don’t have a legal presence in Malaysia but still want to hire full-time staff.

Whether you choose an EOR or PEO depends on your Malaysia hiring strategy, budget, and long-term plans for the market.

Benefits of Using an EOR Service in Malaysia

By using an EOR solution, companies can confidently build their team in Malaysia, access top talent in Malaysia, and stay focused on business growth — without getting tangled in bureaucracy.

Hiring in Malaysia

Malaysia is a thriving market with a growing pool of skilled professionals, making it an ideal destination for businesses looking to expand globally. But to hire in Malaysia successfully, it’s important to understand your options especially when you don’t have a legal entity in Malaysia.

That’s where using an Employer of Record in Malaysia makes all the difference.

Your Hiring Options in Malaysia

Businesses have two main paths to hire employees in Malaysia:

The second option is faster, lower-risk, and ideal for companies that want to test the Malaysian market, launch quickly, or hire remote employees without permanent infrastructure.

Why Use an EOR to Hire in Malaysia?

This approach is especially useful for startups, global teams, and growing businesses that need to hire quickly and remain fully compliant.

Employment in Malaysia

Understanding how employment in Malaysia works is key to managing your team successfully and staying compliant. Whether you’re hiring directly or using an Employer of Record (EOR), companies must follow Malaysian labor laws closely especially when it comes to employment contracts, payroll, and employee benefits.

That’s why many growing businesses choose to use an EOR in Malaysia to handle these responsibilities with confidence.

Employment Contracts in Malaysia

All employees in Malaysia must be hired under a written employment contract, clearly outlining the job role, salary, benefits, working hours, and duration of employment. Contracts must comply with the Labor Code of Malaysia, and are usually signed before or on the first day of work.

By working with a Malaysia employer of record, you can ensure that all employment contracts in Malaysia are properly structured, compliant, and aligned with local requirements without having to hire a full in-house HR team.

Payroll & Employer Contributions

Payroll in Malaysia involves more than just paying a monthly salary. Employers are required to withhold income tax and make contributions to:

These deductions and employer contributions are calculated based on the employee’s gross monthly salary, and must be submitted on time to remain compliant. An EOR in Malaysia handles this for you, managing all payroll, tax filings, and reporting on your behalf.

Employee Benefits and Leave

Malaysian labor law mandates several employee benefits, including:

Using an employer of record service ensures your team in Malaysia receives all required benefits and that your business remains fully compliant with Malaysian employment law.

Termination & Notice Periods

Ending an employment contract in Malaysia requires adherence to statutory notice periods and fair termination practices under the Employment Act. Notice periods generally range from 4 to 8 weeks, depending on length of service, and employers must provide valid grounds or compensation in lieu of notice. Partnering with an Employer of Record helps businesses navigate these regulations smoothly, ensuring compliance while minimizing legal and operational risks.

Visas & Permits in Malaysia

If you’re planning to hire employees in Malaysia or bring in foreign talent, understanding Malaysia’s visa and permit requirements is critical. Navigating these processes can be complex, but working with a trusted Employer of Record (EOR) in Malaysia makes it much easier.

An experienced EOR provider will ensure all permits are handled legally, so you can focus on building your team in Malaysia with confidence.

Work Permits for Foreign Employees in Malaysia

“Foreign nationals who plan to work in Malaysia must secure the appropriate Employment Pass or related work authorization, which is tied to a sponsoring local employer. Navigating the process involves strict eligibility requirements, documentation, and government approvals that can be complex for foreign businesses.

An Employer of Record simplifies this by acting as the local sponsor, managing compliance and permits so companies can seamlessly onboard international talent.

Types of Visas for Foreign Talent

There are several types of visas used to work or do business in Malaysia, including:

Each visa type has specific use cases, duration limits, and documentation requirements. If you’re looking to hire in Malaysia or send international staff temporarily, an EOR Malaysia solution helps you identify the right visa and manage the application process end-to-end.

Business Permits for Foreign Companies

To operate directly in Malaysia, foreign companies typically need to register a legal entity in Malaysia and apply for a business license. This can be a time-consuming process that includes office registration, investment approvals, and compliance with Malaysian labor laws.

Alternatively, you can use an EOR in Malaysia to bypass the need for a local entity. The Malaysia employer of record is already registered and authorized to employ staff and manage payroll, contracts, and local compliance making it easier and faster to hire employees in Malaysia.

Why Visas & Permits Matter for Global Hiring

If you’re hiring foreign employees in Malaysia, or placing international staff in-country, it’s essential to stay compliant with immigration laws. The right employer of record service helps you:

Common Questions on EOR in Malaysia

Is using an EOR a legal and recognized practice in Malaysia?

Yes, it is. The EOR model, while not explicitly defined by a single law, operates legally under existing labor and business frameworks. The EOR acts as the legal employer, ensuring full compliance with the Employment Act of 1955 and other statutory requirements.

What types of employees can be hired under an EOR arrangement in Malaysia?

An EOR can engage both Malaysian nationals and eligible foreign employees, provided proper work permits are obtained. This flexibility allows businesses to build local teams quickly and compliantly.

How long does it take to hire an employee through an EOR in Malaysia?

Hiring through an EOR is significantly faster than establishing a new legal entity. For local Malaysian hires, the process can often be completed in as little as a few days to a week. For foreign employees, the timeline is dependent on the government's processing time for the Employment Pass or other relevant work passes.

How does an EOR ensure compliance with Malaysian labor laws?

The EOR manages employment contracts, payroll, statutory contributions, and terminations in accordance with the Employment Act and other labor regulations, ensuring full compliance and minimizing risks of penalties or disputes.

Does the EOR handle taxes for the employee?

Yes, the EOR is responsible for all payroll and tax administration. They calculate and withhold the monthly income tax (PCB) from the employee's salary and remit it to the Inland Revenue Board of Malaysia (LHDN), ensuring the company remains fully compliant with Malaysian tax laws.