Employer of Record in Malaysia

How hiring through an employer of record works in Malaysia

The local employer signs the Malaysian contract, runs payroll and pays the statutory contributions, while your managers direct the daily work. Under the Employment Act 1955, a fixed-term contract longer than one month must be in writing and say how either side may end it, and wages fall due no later than the seventh day after the wage period closes.

Employer costs and contributions in Malaysia

The investment agency MIDA lists the employer shares. EPF is 13% of monthly wages up to RM5,000 and 12% above, with 11% from the employee. SOCSO's first category (injury plus invalidity) costs the employer 1.75% and the employee 0.5%, and the Employment Insurance System takes 0.2% from each side, both capped at a wage ceiling.

Together these come to roughly 14.95% of pay for a salary of RM4,000 or less. The HRD Corp levy adds 1% for employers with 10 or more Malaysian employees in covered sectors, or a voluntary 0.5% for five to nine. Foreign nationals follow different EPF and SOCSO rules.

Income tax on salary in Malaysia

For years of assessment 2023 to 2025, residents pay 0% on the first RM5,000 of chargeable income, rising to 25% from RM100,001 and 30% above RM2 million. Residence mainly means 182 days or more in Malaysia in the basis year, and non-residents pay a flat 30% on employment income.

Hours, leave and pay rules in Malaysia

• Hours: no more than 8 a day and 45 a week for every employee.
• Premiums: overtime at 1.5 times the hourly rate, rest-day work beyond normal hours at 2 times and paid-holiday overtime at 3 times. These do not apply above RM4,000 a month, except to manual workers and some other listed roles.
• Leave: 8, 12 or 16 days of annual leave and 14, 18 or 22 days of sick leave (60 if hospitalised) as service passes two and five years, plus eleven public holidays.
• Family leave: at least 98 consecutive days of maternity leave, and 7 days of paternity leave after 12 months.
• Minimum wage: RM1,700 a month, in force from 1 February 2025 for employers with five or more workers and 1 August 2025 for smaller ones. The Act sets no 13th-month pay.

Probation, notice and termination in Malaysia

The Act has no probation provision, so any probation term sits in the contract. Without a written notice term, section 12 requires four weeks for under two years of service, six weeks for two to under five years and eight weeks for five or more. Either side may end the contract at once by paying wages for the notice period.

A dismissal without just cause or excuse can be taken to the Director General within sixty days under section 20 of the Industrial Relations Act 1967. Termination benefits under section 60J regulations mainly reach employees within the RM4,000 line.

Getting paid in stablecoins, USDC, USDT, tokens and crypto in Malaysia

Short answer: No. Section 25 of the Employment Act 1955 requires wages to be paid into an account at a financial institution in the employee's name, with legal tender or a cheque only on written request and approval, so a USDC payout cannot replace ringgit pay. Contractors are different: LHDN treats digital currency received for services as income valued in ringgit.

What the law says about the form of pay

Section 25 of the Employment Act 1955 requires wages, less lawful deductions, to be paid into an account at a financial institution in the employee's name, alone or jointly. The Act defines wages as payments in cash. Section 25A allows legal tender or a cheque only on the employee's written request with the Director General's approval, and a 2024 ministerial order names six recognised payment-instrument issuers whose accounts may receive wages until 31 July 2027.

What it means for employee salary

Salary therefore stays in ringgit and goes to a bank or recognised payment account. USDC or USDT cannot replace it, and a wallet transfer does not meet section 25. Bank Negara Malaysia and the Securities Commission state that digital assets are not legal tender or a payment instrument BNM regulates, and BNM's 2026 ringgit stablecoin trials focus on wholesale payments. The Budget 2027 speech proposes that from year of assessment 2028, companies other than MSMEs deduct salary only if paid through financial institutions or cashless instruments permitted under the Employment Act. Toku confirms what applies to a specific hire.

Contractors

The Employment Act's wage rules apply to a person under a contract of service. LHDN's guidance treats digital currency received for services as income valued in ringgit when paid, with 10 Ether for IT consulting as its example.

Tax on crypto and tokens

LHDN's guidance of 5 December 2025 says pay in digital currency is taxable to the employee and deductible for the employer, and the employer's monthly tax deduction duties still apply. Whether a gain on selling digital currency is taxable business income or a capital gain depends on the badges of trade, and capital gains tax does not currently reach capital disposals of it in Malaysia.

How Toku handles it

Employee salary in Malaysia stays in local currency. Toku’s stablecoin payroll and its USDC or USDT payouts through contractor management are separate arrangements from employee salary, and token grants are administered through token grant administration. What applies to a specific hire in Malaysia is confirmed before an offer.

Reviewed November 7, 2026 against the official sources listed below. General information, not legal or tax advice. Tax on crypto or tokens received depends on local rules and where the person is resident, so confirm it with a local adviser.

How hiring through Toku works in Malaysia

1. Share the role, location, salary and start date.
2. Toku confirms coverage, the contract type and the right to work.
3. The local employer issues the contract and onboards the person.
4. Payroll, contributions and filings run each cycle.

Toku checks the role, work location and contract terms before a start date. Have identification, an account in the employee's name and the agreed salary ready. Your quote confirms the onboarding timeline for Malaysia.

What an employer of record costs in Malaysia

Where Toku supports the hire, its employer of record service starts at $599 per employee per month, with salary, employer contributions and benefit premiums itemized in your quote. Coverage in Malaysia is confirmed before an offer. See the published pricing.

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