Thinking about growing your team in Southeast Asia? Malaysia is a smart choice, offering a skilled, educated workforce, a strategic GMT+8 timezone, and a business-friendly environment, all at competitive costs. The challenge? Navigating local employment laws, payroll requirements, and employee benefits can get complicated. That’s where an Employer of Record (EOR) like FastLaneRecruit steps in.
In this article, we’ll walk you through the process of hiring in Malaysia, whether you’re setting up a local entity or using an EOR, so your expansion is smooth, compliant, and built to scale.
Also Read: What Is Employee Outsourcing and How Does It Work?
Content Outline
Key Summary
Malaysia is a prime destination for global hiring in 2025.
With a skilled workforce, competitive salaries 30–50% lower than Singapore, and a stable job market, Malaysia offers an excellent opportunity to grow your team in Southeast Asia.
Hiring in Malaysia involves complex compliance and payroll management.
You must navigate local labor laws, register for EPF, SOCSO, and EIS, and handle monthly tax deductions (PCB), which can be time-consuming without local expertise.
Employer of Record (EOR) services simplify your hiring process.
FastLaneRecruit acts as the legal employer, managing contracts, payroll, taxes, benefits, and work permits letting you onboard staff quickly without setting up a local entity.
Hiring foreign employees requires special permits.
Work passes like Employment Pass (EP) or Temporary Employment Pass (TEP) are necessary, and EORs handle immigration sponsorship and paperwork on your behalf.
Benefits and flexible work options matter for talent retention.
Besides mandatory contributions, offering perks like health insurance or hybrid work models helps attract and keep top Malaysian professionals.
An EOR offers flexibility and scalability.
Whether you’re testing the market or scaling up, an EOR enables quick hiring without long-term commitments or administrative hurdles.
Choosing the right hiring strategy saves time and cost.
For many companies, partnering with an EOR like FastLaneRecruit offers a low-risk, compliant, and efficient path to build your Malaysian team in 2025.
Hiring Trends in Malaysia, 2025
If Malaysia is on your radar for team expansion, 2025 offers a steady yet promising environment for employers. Following a few years of rapid hiring, driven in part by the shared services sector, the market is now settling into a more balanced, sustainable pace.
- High-tech sectors are on the rise – the country is witnessing an influx of semiconductor plants, manufacturing hubs, and large-scale data centers, resulting in strong demand for technical and operational talent.
- Government initiatives are paying off – Programs like the Malaysia Techlympics are shaping a new generation of professionals skilled in AI, robotics, and electronics.
- Kuala Lumpur is emerging as a tech magnet – The city’s growing startup ecosystem and international connectivity make it a prime location for digital and IT professionals.
- Job market stability remains strong – With an unemployment rate steady at around 3.1%, Malaysia maintains a healthy balance between job seekers and opportunities.
- Workplace flexibility is in demand – Over half of Malaysian employees prefer a hybrid work model, making remote-friendly employers especially attractive.
- Competitive compensation is key – Rising living costs mean attractive salaries and benefits packages are increasingly important to retain top talent.
Why Global Companies Choose Malaysia for Hiring
Malaysia has become a go-to destination for companies looking to build cost-effective, high-quality teams in Southeast Asia. Its strategic location, skilled workforce, and business-friendly ecosystem make it a compelling choice for both startups and multinationals.
Here’s why it stands out:
- Strong English proficiency – Malaysia ranks high in English literacy, removing language barriers for onboarding and collaboration.
- Skilled and educated talent pool – With a 95% adult literacy rate and over 16.6 million active professionals, the local workforce is equipped for roles in tech, finance, customer service, and beyond.
- Thriving talent initiatives – Cross-border recruitment programs in Special Economic Zones (SEZs) open access to diverse, specialized talent.
- Attractive time zone – Operating in GMT+8, Malaysian teams overlap easily with APAC, Middle East, and parts of Europe business hours.
- Competitive labor costs – Salaries in Malaysia can be 30–50% lower than Singapore for similar roles, allowing you to reduce expenses without sacrificing quality.
- Political and economic stability – Compared to some neighboring markets, Malaysia offers a relatively stable environment for building remote and offshore teams.
In short, Malaysia is an excellent choice for building offshore, remote, or hybrid teams, particularly in technology, tech support, finance, and customer service. Labor laws are relatively employer-friendly compared to stricter regions like Europe. However, setting up your own entity can still be costly and time-consuming, which is why many global businesses turn to an Employer of Record (EOR) to simplify their hiring process.
Also Read: How to Establish an Offshore Company in Malaysia
What is an EOR, and How Does it Simplify Recruitment?
An Employer of Record (EOR) is a third-party organization that legally employs your talent on your behalf. While you focus on finding and managing the right people, the EOR takes care of everything behind the scenes from drafting contracts to processing payroll, paying taxes, and ensuring compliance with local labor laws.
Think of it like this: You handle what the employee does every day, while the EOR handles how the employee is legally employed.
Example:
Imagine you’re a Singapore-based tech company that wants to hire a software developer in Malaysia. Without an EOR, you’d need to set up a Malaysian entity, register with SSM and LHDN, and handle EPF, SOCSO, and tax submissions. With an EOR like FastLaneRecruit, you simply tell us who you want to hire, and we take care of the rest. Your developer can start work in days, not months.
Also Read: 4 Types of Employment Contracts in Malaysia Recruitment
How to Hire Employees in Malaysia: A Step-by-Step Guide
Hiring in Malaysia can be smooth if you understand the process, from company registration to payroll compliance. Here’s how it works, with real-world examples.
1. Form a Local Entity
Before you can hire employees in Malaysia, you need to register your business with the Companies Commission of Malaysia (SSM) and the Inland Revenue Board (LHDN).
Example: If you’re a Singapore-based tech startup wanting to open a Malaysian office, you’d need to set up a Sendirian Berhad (Sdn. Bhd.) company with SSM before legally hiring.
What you handle:
- Registration fees and consultancy costs
- Paperwork submission
- Maintaining compliance with annual filings
How an EOR can help:
An Employer of Record lets you hire Malaysian talent without setting up a local entity. They become the legal employer, so you skip registration, setup costs, and months of paperwork, you can start onboarding staff within days.
2. Recruit and Screen Candidates
You can source talent through local job portals such as JobStreet, LinkedIn, Adnexio, or WOBB, or by working with recruitment agencies.
Example: A US-based e-commerce brand expanding its customer service team to Kuala Lumpur might post a bilingual Customer Support role on JobStreet, then shortlist candidates through phone interviews.
What you handle:
- Writing clear job descriptions (JD)
- Conducting interviews and skills tests
- Performing background and reference checks
How an EOR can help:
Many EOR providers have local recruitment partners or in-house teams that can source, screen, and even pre-interview candidates, saving you weeks of effort.
3. Issue Employment Contracts
Employment contracts must comply with the Employment Act 1955 and its amendments. This covers working hours, leave entitlements, termination clauses, and benefits.
Example: If you hire a marketing executive, your contract must outline working hours (e.g., 9 am – 6 pm), annual leave (minimum 8 days for employees with less than 2 years of service), and termination notice (e.g., 1 month).
What you handle:
- Drafting legally compliant contracts
- Including clauses for probation, termination, and benefits
- Ensuring both parties sign before the start date
How an EOR can help:
An EOR drafts legally compliant contracts in both English and Malay if needed, ensuring you meet local requirements while protecting your business interests.
4. Manage Payroll & Statutory Contributions
You must register for:
- EPF (Employees Provident Fund) – retirement savings
- SOCSO (Social Security Organisation) – injury and disability coverage
- EIS (Employment Insurance System) – unemployment benefits
- PCB (Potongan Cukai Bulanan) – monthly tax deductions
Example: If your employee earns RM5,000/month, you’ll need to deduct the right EPF, SOCSO, and EIS amounts from their salary, and also contribute the employer’s portion.
What you handle:
- Setting up payroll software or engaging a payroll provider
- Making monthly deductions and payments
- Filing required reports to government agencies
How an EOR can help:
EORs handle payroll processing, deductions, and filings automatically, no need to learn Malaysia’s tax codes or deadlines.
Also Read: 7 Strategic Benefits of Using an EOR for Talent Acquisition
5. Provide Benefits
By law, you must offer EPF, SOCSO, and EIS. Many companies go further to attract talent, offering medical insurance, flexible work, or training allowances.
Example: A fintech startup in Penang might provide additional perks like hybrid work options and RM1,000 annual learning budgets to stand out in the competitive talent market.
What you handle:
- Understanding mandatory vs. optional benefits
- Benchmarking against competitors
- Administering benefit programs
How an EOR can help:
EORs can set up and manage benefit plans for your employees, ensuring they match local market standards and keep you competitive.
6. Hire Foreign Employees
To hire non-Malaysian nationals, you must apply for the appropriate work permits, such as:
- Employment Pass (EP) – for skilled professionals
- Temporary Employment Pass (TEP) – for semi-skilled workers
- Professional Visit Pass (PVP) – for short-term assignments
Example: If your software company wants to bring in an Indian data scientist, you’d apply for an Employment Pass, sponsor their visa, and ensure they meet salary and qualification criteria.
What you handle:
- Immigration paperwork and compliance
- Sponsorship responsibilities
- Tracking visa expiry dates
How an EOR can help:
An EOR can sponsor foreign employees under their local entity and handle all visa paperwork, making cross-border hiring much simpler.
Also Read: How to Hire Using EOR in Malaysia
Important Statutory Elements
- The Employment Act 1955 (Act 265) sets standards on contracts, wages, termination, working hours, and more (Mohr, ASEAN Main Portal).
- EPF: Mandatory retirement savings managed by the federal statutory body under the Ministry of Finance
- SOCSO (PERKESO): Covers workplace injury and disability; EIS offers income replacement and employment services (PwC Tax Summaries, PERKESO).
- Example employer contributions (EPF): Employer contributes 12–13% depending on salary and citizenship status (KWSP).
Benefits of Hiring via FastLaneRecruit’s EOR Service
| Benefit | Description | Example | How EOR Helps |
| No Need to Register a Local Entity | Avoid weeks/months of company setup, fees, and compliance. | UK e-commerce brand hires 2 customer service reps in KL without incorporating. | We act as the legal employer so you can hire in under a week with no entity setup. |
| HR, Compliance, Payroll & Tax Managed | Payroll, EPF, SOCSO, EIS, and tax handled accurately. | Australian consultancy with 3 hires has payroll & deductions managed monthly. | We ensure full compliance with Malaysian labor & tax laws—no in-house HR needed. |
| Contracts, Onboarding & Benefits | Employment contracts and onboarding per local law. | US agency hires in Penang with compliant contract & onboarding. | We provide legal contracts and smooth onboarding to meet Employment Act 1955. |
| Foreign Employee Support | Work permit & visa application handled. | Japanese firm brings in specialist technician for 12 months. | We manage work permits, sponsorship, and immigration compliance. |
| Scalable & Flexible Hiring | Hire short or long term without heavy commitments. | German gaming startup hires 5 devs for 6-month project. | Easily scale team size to fit business needs, with no wind-up costs. |
Also Read: Employment Law in Malaysia
Conclusion
Hiring in Malaysia unlocks a world of opportunity, but navigating entity setup, contracts, compliance, benefits, and payroll can be overwhelming. FastLaneRecruit’s EOR solution removes these hurdles, empowering you to focus on growth and talent management from day one.
Hire and Pay Malaysian Employees with FastLaneRecruit’s EOR
Ready to simplify your expansion into Malaysia? Engage FastLaneRecruit today:
- Seamless, compliant hiring
- Payroll, tax, and benefits management
- Transparent, scalable, and low-risk approach
Contact FastLaneRecruit now to launch your Malaysian team without setting up a local entity.
FAQs
1. Can I hire employees in Malaysia without setting up a local company?
Yes. If you work with an Employer of Record (EOR) like FastLaneRecruit, you can hire Malaysian talent without registering a local entity. This means you skip weeks (or months) of paperwork and start onboarding staff in days.
2. What are the legal requirements for hiring in Malaysia?
You’ll need to comply with the Employment Act 1955, register for EPF (Employees Provident Fund), SOCSO (Social Security Organisation), EIS (Employment Insurance System), and handle PCB tax deductions. An EOR can manage all of this for you, ensuring full compliance.
3. How long does it take to hire in Malaysia?
Setting up your own entity can take several weeks or months. With an EOR, you can often hire and onboard employees within a week, as the EOR already has a legal entity in place.
4. What is the cost of hiring in Malaysia compared to other countries?
Salaries in Malaysia are generally 30–50% lower than in Singapore for similar roles, while still offering a highly skilled workforce. Using an EOR can also save you setup and compliance costs.
5. Can I hire foreign employees through an EOR in Malaysia?
Yes. An EOR can act as the local sponsor for work permits like Employment Passes or Professional Visit Passes, handling all immigration paperwork so foreign employees can work legally.
6. What benefits must I provide to employees in Malaysia?
By law, you must contribute to EPF, SOCSO, and EIS. Many employers also offer additional benefits like health insurance, hybrid work options, or training allowances. An EOR can manage both mandatory and optional benefits for you.
7. Why should I use an EOR instead of setting up my own company?
Using an EOR removes the need for local entity registration, simplifies payroll and compliance, and speeds up hiring. It’s especially useful if you want to test the Malaysian market, scale quickly, or hire short-term project teams.
