Malaysia Payroll Guide: A Step-by-Step Guide for Employers
Malaysia Payroll Guide: A Step-by-Step Guide for Employers
Payroll & HR Compliance · C&G Corporate Services
Malaysia Payroll Guide: A Step-by-Step Guide for Employers
Published by C&G Corporate Services · Payroll & Statutory Contributions
Running payroll in Malaysia involves more than just transferring salaries into your employees' bank accounts. As an employer, you are legally responsible for registering with the relevant government agencies, deducting the correct amounts, and remitting statutory contributions on time every month.
This guide walks you through the entire payroll process from start to finish — from registering your employer accounts for the first time, to onboarding new employees, preparing payslips, and making your monthly statutory payments.
Part 1
Register Your Employer Accounts
Before you can run payroll, you must register your company as an employer with the relevant statutory bodies. EPF, SOCSO, and EIS registrations are triggered when you hire your first employee — so you cannot register in advance. LHDN employer registration (for PCB) can be done as soon as your company is incorporated.
1A · Employees Provident Fund (EPF / KWSP)
EPF is a mandatory retirement savings scheme. Both employer and employee contribute a percentage of the employee's monthly wages. Note that EPF employer registration is not done in advance — it is only required once you hire your first employee.
You must register as an EPF employer within 7 days of hiring your first employee (Section 41(1), EPF Act 1991).
Register online via the KWSP i-Akaun Employer portal (for SSM-registered companies) or visit your nearest EPF branch.
Submit Form KWSP 1 together with your company's SSM registration documents and director's NRIC/passport.
Once registered, you will receive an EPF Employer Reference Number — keep this for all future submissions.
Activate your i-Akaun (Employer) within 30 days of registration to manage and pay contributions online.
1B · SOCSO & EIS (PERKESO)
SOCSO provides employees with protection against workplace accidents and occupational diseases. EIS provides financial assistance to employees who lose their jobs. Both are administered by PERKESO and registered together.
Register via the ASSIST portal (assist.perkeso.gov.my) or at the nearest PERKESO office.
Submit company registration documents and director's identification.
You will receive a PERKESO Employer Code for all future submissions.
1C · Income Tax & PCB (LHDN / IRB)
As an employer, you are required to deduct Monthly Tax Deduction (MTD/PCB) from your employees' salaries and remit it to the Inland Revenue Board (LHDN) on their behalf.
Register your company as an employer via MyTax (mytax.hasil.gov.my).
Obtain your Employer Tax File Number (E Number).
Register for e-PCB Plus on MyTax to submit monthly PCB contributions online.
Tip: EPF, SOCSO, and EIS registrations must be done within 7–30 days of hiring your first employee — not before. However, you can register with LHDN (for PCB/e-PCB Plus) as soon as your company is set up, so it is ready when needed. Have all your SSM documents and director NRIC/passport copies ready to speed up the process.
Part 2
Register New Employees
Each time you hire a new employee, you must register them with EPF, PERKESO, and LHDN before their first salary is processed.
2A · Register with EPF
Log in to KWSP i-Akaun Employer and add the new employee under your employer account.
Input the employee's NRIC/passport number, name, and date of commencement.
EPF will automatically link the employee's existing EPF account (or create a new one if they don't have one).
2B · Register with PERKESO (SOCSO & EIS)
Log in to ASSIST portal and register the new employee under your employer account.
New employees must be registered within 30 days of their commencement date.
2C · Notify LHDN via CP22
When a new employee joins your company, you are required to notify LHDN by submitting Form CP22 within 30 days of their commencement date.
Submit CP22 via MyTax (mytax.hasil.gov.my) under the e-CP22 section.
Provide the employee's personal details, job designation, commencement date, and monthly salary.
Please note: Failure to submit CP22 within 30 days may result in a penalty. Always notify LHDN promptly when a new employee joins. Refer to the official LHDN CP22 manual for detailed submission steps.
2D · Stamp duty on the employment contract
Under the Stamp Act 1949, all employment contracts signed in Malaysia must be stamped within 30 days of signing. This applies to all types of employment — full-time, part-time, fixed-term, and contract staff — regardless of the employee's nationality.
Stamp duty is RM10 per original copy of the employment contract.
Stamping must be done within 30 days of the date both parties sign the contract.
Submit and pay via MyTax (mytax.hasil.gov.my) under e-Duti Setem (effective 1 January 2026 — the old STAMPS portal has migrated to MyTax).
A digital stamp certificate will be issued upon payment — keep this on record as proof of stamping.
This step should be part of your employee onboarding checklist — do not treat it as optional.
Late stamping penalties
How late
Penalty
Within 30 days of signing
No penalty — pay RM10 stamp duty only
31 days to 3 months late
RM50 or 10% of stamp duty — whichever is higher
More than 3 months late
RM100 or 20% of stamp duty — whichever is higher
Important: An unstamped employment contract may not be accepted as evidence in court if a dispute arises — for example, in a wrongful dismissal or salary claim. Even if the penalty amount seems small, the legal risk of having an unstamped contract far outweighs the RM10 cost. Build stamping into every hire as a non-negotiable step.
Documents to collect from new employees
Copy of NRIC (Malaysian) or passport (foreigner)
EPF member number (if already registered)
Income Tax file number (if already registered with LHDN)
Bank account details for salary payment
Completed EA form from previous employer (if applicable)
Each month, you need to calculate the gross salary for each employee, deduct the applicable statutory contributions, and arrive at the net pay to be transferred to their bank account.
3A · Statutory contribution rates
Below is a summary of the current contribution rates applicable for Malaysian employees:
Contribution
Employer Rate
Employee Rate
Wage Ceiling
EPF (below age 60)
13% (wages ≤ RM5,000)
12% (wages > RM5,000)
11%
No ceiling
SOCSO (Employment Injury)
1.25%
0.5%
RM5,000/month
EIS
0.4%
0.4%
RM5,000/month
SKBBK (Lindung 24 Jam) — from June 2026
Nil
0.75% (2026–2027)
RM6,000/month
PCB (Monthly Tax Deduction)
Nil
Based on LHDN PCB schedule
—
For the exact contribution amounts by salary band, always refer to the official contribution tables:
Unpaid leave, salary advance repayments, or other agreed deductions
STEP D
Net pay = amount to transfer
Transfer net pay to employee's bank account on or before the salary due date
Part 4
Prepare & Issue Payslips
Under the Employment Act 1955, employers are required to provide each employee with a payslip for every salary payment. A payslip must clearly show all earnings and deductions so the employee can verify what they have been paid.
What a payslip should include:
Employee's name, NRIC/passport number, and job designation
Salary period (e.g. 1 June 2026 – 30 June 2026)
Basic salary and all allowances itemised separately
Gross salary total
Employee deductions: EPF, SOCSO, EIS, SKBBK, and PCB — each listed separately
Any other deductions (e.g. unpaid leave)
Net salary payable
Employer's EPF and SOCSO/EIS contribution amounts (for transparency)
Good practice: Issue payslips digitally via email or a payroll system on the same day salaries are paid. Keep a copy of all payslips for at least 6 years for record-keeping purposes.
Part 5
Make Monthly Statutory Contribution Payments
After processing payroll, you must remit all statutory contributions to the respective government bodies. All payments must be made by the 15th of the following month.
5A · EPF Payment
Log in to KWSP i-Akaun Employer and submit your monthly contribution file.
Payment can be made via online banking (FPX), cheque, or at the EPF counter.
Ensure both the employer and employee portions are included in a single payment.
EPF contributions for June 2026 salary must be paid by 15 July 2026. Note that EPF records contributions under the following month — so June salary contributions are recorded as July 2026 in the EPF system.
Penalty reminder: All statutory contributions must be paid by the 15th of the following month. Late payment will result in penalties and interest charges imposed by the respective agencies. Do not delay — set up a monthly reminder or automate payments through your payroll software.
Summary
Monthly Payroll Checklist
Use this as your monthly reference to make sure nothing is missed:
Before salary date
Calculate gross salary, all statutory deductions (EPF, SOCSO, EIS, SKBBK, PCB), and net pay for each employee. Prepare payslips.
On salary date
Transfer net salary to all employees' bank accounts. Issue payslips on the same day.
By the 15th of the following month
Submit and pay EPF contributions via KWSP i-Akaun Employer. Submit and pay SOCSO, EIS & SKBBK via ASSIST portal. Submit and pay PCB via MyTax e-PCB Plus.
When hiring new employees
Register with EPF and PERKESO. Submit CP22 to LHDN within 30 days of commencement. Stamp the employment contract within 30 days of signing via MyTax e-Duti Setem (RM10 per copy).
End of year (by March)
Issue EA forms to all employees by 28/29 February. Submit employer's tax return (Form E) to LHDN by 31 March.
Need help managing your payroll?
Payroll compliance in Malaysia involves multiple agencies, deadlines, and regulatory updates that change from time to time. At C&G Corporate Services, we help businesses of all sizes handle their monthly payroll accurately and on time — so you can focus on running your business.
Contact us today to find out how we can assist you.
Malaysia