Background Checks

Employers must obtain written consent from candidates before conducting background checks to comply with privacy laws.

• Employers must issue a personal data protection notice, outlining the purpose and method of data collection and processing.
• Background checks should be conducted fairly and without discrimination, adhering to anti-discrimination laws

Types of Background Checks

• Criminal Records Check: Verifies any criminal convictions, arrest records, and pending charges.
• Employment Reference Check: Confirms previous employment history and references.
• Education Verification: Validates academic qualifications and certifications.
• Credit Report Check: Assesses financial stability and credit history.
• Social Media Check: Reviews online presence and behavior.

Verification and New Hire Reporting

Employee Verification: Employers may conduct background checks but must comply with PDPA by obtaining consent and issuing a data protection notice.

New Hire Reporting: While Malaysia does not have a centralized “new hire report” system like some countries, employers must:

• Register employees with EPF, SOCSO, and EIS
• Notify the Immigration Department for foreign hires
• Maintain employee records as required under the Employment Act 1955

Onboarding Process & Documentation

Collecting Required Documentation

Employers must collect and maintain the following:

• Signed Employment Contract (mandatory for contracts over 1 month under the Employment Act 1955)
• Copy of NRIC or Passport (for identity verification)
• Work Permit or Visa (for foreign employees, issued by the Immigration Department)
• Tax File Number (TPN) and EPF/SOCSO/EIS registration details
• Bank account information for salary payments
• Medical certificate (if required for the role)

All personal data collected must comply with the Personal Data Protection Act (PDPA) 2010, including obtaining explicit consent and issuing a privacy notice.

Providing Employee Rights and Obligations

Employers are legally required to inform employees of their rights and duties, including:

• Working hours, rest days, and overtime entitlements
• Leave entitlements (annual, sick, maternity/paternity, public holidays)
• Wages and payment schedule
• Termination procedures and notice periods
• Health and safety obligations
• Right to join trade unions

These must be clearly outlined in the employment contract and explained during onboarding.

Healthcare

In Malaysia, while employers are not legally required to provide private health insurance—since employees are covered under SOCSO for work-related injuries and have access to public healthcare—offering group medical insurance has become a common and highly valued employment benefit.

Most employers purchase group policies from private insurers, customizing them to include a range of coverage options such as:

• Inpatient care (e.g. hospital stays and surgeries)
• Outpatient treatment (e.g. general practitioners and specialists)
• Maternity benefits
• Dental and optical coverage

The cost of these plans varies based on several factors, including:

• The age and health profile of the employee group
• The group’s claims history
• The selected coverage level, such as annual limits and room types
• The network of panel hospitals and clinics

Premium plans typically offer higher annual limits, broader inpatient/outpatient benefits, and access to well-established healthcare networks. In today’s competitive talent market, comprehensive medical coverage is not just a perk—it can be a deciding factor for attracting and retaining employees.

Retirement

Minimum Retirement Age is set at 60 years for private-sector employees. Premature Retirement is prohibited before the age of 60, with certain exceptions. Employees can file complaints if forced into premature retirement.

Malaysia’s primary retirement savings mechanism is the Employees Provident Fund (EPF)—a mandatory scheme that requires contributions from both employers and employees. A fixed percentage of an employee’s monthly wages is deposited into their personal EPF account, which is professionally managed and invested by the EPF. Employees can access their savings upon retirement, or under specific conditions such as home purchase, education, or medical expenses.

The contribution structure is periodically revised by EPF, but current standard rates are:

For monthly wages up to RM 5,000:

• Employee: 11%
• Employer (under 60): 13%
• Employer (60 and above): 4%

For monthly wages above RM 5,000:

• Employee: 11%
• Employer (under 60): 12%
• Employer (60 and above): 4%

Employees may also opt for a lower contribution rate of 7% under specific circumstances.

While EPF is the core retirement fund, some employers, especially large multinationals—offer supplementary retirement or pension schemes, often in the form of defined contribution plans funded solely by the employer. Though less common, these additional benefits are attractive for senior professionals seeking long-term financial security.

Social Security

At this time, Vensure does not have social security details available.

Employment Contract Details

Conracts form the employment relationship’s legal foundation:

• Provide a written contract to every new hire, detailing job responsibilities, salary, benefits, and termination conditions.
• Both parties should sign two copies of the contract, one for the employee and one for the employer.

Probation Period

3 to 6 months, unless waived based on prior experience.

Visas

Overview of Visa Categories

• Tourist Visa: For tourism or personal visits.
• Business Visa: For business-related trips.
• Employment Visa (Employment Pass): For expatriates taking up employment.
• Student Visa: For educational purposes.
• Social Visit Pass: For visiting relatives or medical treatment.

Required Documentation for Visa Application

• Tourist and Social Visit Visa: Completed application form, passport-sized photographs, valid passport, return flight ticket, proof of financial means.
• Business Visa: Completed application form, invitation letter, company profile, valid passport, evidence of previous business dealings.
• Employment Visa: Completed application form, offer letter, company’s memorandum of association, passport copies, proof of qualifications, medical report.

Application Procedure

• Gather Required Documents: Compile necessary documents specific to the visa category.
• Submit Visa Application: Download and complete forms from the official embassy or consulate website, submit physically or online.
• Attend Visa Interview: Prepare for questions about the visit purpose and travel itinerary.
• Await Decision: Processing times vary, apply well in advance.

Special Considerations

• Visa-Free Entry: Check if your nationality qualifies for visa-free entry.
• Long-Term Residency (RP-T): Apply for Resident Pass-Talent for multiple-year residency.
• Renewals and Extensions: Start renewal processes well before visa expiration.

Independent Contractors

Malaysia distinguishes between employees and independent contractors, primarily through the Employment Act 1955 and court interpretations:

• An independent contractor is a self-employed individual who provides services under a contract for services, not a contract of employment.
• Contractors typically register as sole proprietors or private limited companies (Sdn Bhd) with the Companies Commission of Malaysia (SSM)
• Contractors must file their own taxes and may need to register for GST/SST depending on income level

Key Differences from Employees:

• No entitlement to EPF, SOCSO, paid leave, or minimum wage
• Responsible for own taxes and insurance
• Greater control over work schedule, tools, and clients

Legal Considerations:

• Misclassification risks can lead to penalties and backdated benefits
• Courts assess factors like control, exclusivity, financial dependence, and integration into the business

Paid Time Off

Earned leave is outlined in the employment contract and is dependent upon years of employment. Leave is accrued from January to December.

• The first two years is entitled to eight days.
• From the second to the fifth year is entitled to 12 days.
• More than five years is entitled to 16 days.
• It is common to start with 12-15 days per year and increase with seniority.

Public Holidays

• New Year’s Day
• Thaipusam – Kaula Lumpur, Putrajaya, Selangor, major states of Malaysia
• Federal Territory Day – Federal Territory – Capital City
• Chinese New Year
• Nuzul Al-Quran
• Hari Raya Aidilfitri – Tentative
• Labor Day
• Wesak Day
• Agong’s Birthday
• Hari Raya Haji
• Awal Muharram
• Merdeka Day
• Malaysia Day
• Prophet Muhammad’s Birthday
• Malaysia Day Holiday – Day Off in Lieu
• Deepavali
• Sultan Selangor’s Birthday – Selangor
• Christmas Day

Bereavement

There is no legal requirement under the Employment Act 1955 for employers to provide bereavement or compassionate leave.

• Many companies voluntarily offer 2–5 days of paid leave for the death of an immediate family member (e.g., spouse, parent, child). Terms (duration, paid/unpaid, eligible relationships) are usually defined in the employment contract or company policy.
• Employers may request a death certificate or obituary notice as proof

Maternity Leave

Employees in the private sector are entitled to 98 consecutive days (paid in full).

• Employees cannot start earlier than 30 days before the due date.
• Only applicable for the first five surviving children.

Paternity Leave

Married male employees that have been employed for 12 months are entitled to 7 consecutive days per birth. Employee must inform their employer 30 day ahead of expected due date.

Parental Leave

There is no statutory parental leave in Malaysia.

Sick Leave

Outlined in the employment contract and is dependent upon years of employment and will required the provision of a professional medical certificate.

• With less than two years of service, they are entitled to 14 days of sick leave per year.
• 2 to 5 years of service will be entitled to 18 days of sick leave per year.
• More than five years’ service are entitled to up to 22 days of sick leave per year.

Employees who are admitted to the hospital are entitled to hospitalization leave of 60 days per year in addition to the regular sick leave.

Termination Requirements

Resignation

Employees should provide written notice as per their contract terms. Both parties can mutually agree to waive this notice period.

Retrenchment

In cases of redundancy, employers must provide affected employees with adequate notice and severance pay according to statutory guidelines.

Dismissal

For dismissal on just cause, due process must be followed, including issuing a warning and giving the employee a chance to respond to allegations.

Notice Period

Employees are entitled to the following minimum notice periods:

• 4 weeks’ notice if employed for less than 2 years.
• 6 weeks’ notice if employed for 2 years or more, but less than 5 years.
• 8 weeks’ notice if employed for 5 years or more.

Severance Pay

Severance pay is mandatory, with the amount varying based on the length of service:

• 10 days of severance pay per year of service for employees within the first two years of employment.
• 15 days of severance pay per year of service for employees who have completed between two and five years.
• 20 days of severance pay per year of service for employees with five or more years of service.

Unemployment Insurance

In Malaysia, unemployment benefits are provided through the Employment Insurance System (EIS), established under the Employment Insurance System Act 2017. Here’s how it works:

Private sector employees (excluding domestic workers, civil servants, and the self-employed) are automatically enrolled. Both employer and employee contribute 0.2% of monthly wages, totaling 0.4%.

To qualify, individuals must:

• Apply within 60 days of job loss.
• Meet the Contributions Qualifying Conditions (CQC)—i.e., a minimum number of monthly contributions.
• Have lost employment due to reasons like retrenchment, company closure, constructive dismissal, or resignation due to harassment or unsafe work conditions.

Benefits Offered:

• Job Search Allowance (JSA): Monthly income replacement for 3–6 months, depending on contribution history.
• Re-employment Incentive: A bonus for returning to work early while still eligible for JSA.
• Training Allowance: Up to RM4,000 in vocational training costs covered.
• Reduced Income Allowance (RIA): For those who lose one of multiple jobs or experience partial income loss.

Job Placement Support: Beneficiaries must register with MyFutureJobs and may receive assistance from Employment Services Officers (ESOs) to find new roles.

Anti-Discrimination Practices

Malaysia does not currently have a unified, comprehensive anti-discrimination statute that covers all protected characteristics. However, principles of equality and non-discrimination are embedded in the Federal Constitution and reinforced through various laws, including the Industrial Relations Act 1967. While the Act itself doesn’t explicitly prohibit discrimination, the Industrial Court has interpreted it to offer protection against unfair dismissal stemming from discriminatory motives.

Discrimination claims often arise in the context of termination and may be based on factors such as:

• Race
• Religion
• Gender
• Political opinion
• Place of origin
• Union membership

Employees who believe they have been dismissed on such grounds may file a representation for reinstatement with the Director General of Industrial Relations. If conciliation fails, the matter may be escalated to the Industrial Court, which has the authority to order reinstatement or compensation, depending on the circumstances of the case.

Workplace Safety Standards

The Occupational Safety and Health Act 1994 (OSHA) serves as the foundation of workplace safety regulation in Malaysia. It imposes a general duty of care on employers to safeguard, as far as is reasonably practicable, the safety, health, and welfare of their employees while at work.

Under OSHA, employers are responsible for:

• Maintaining a Safe Work Environment: Ensuring that equipment, facilities, and systems of work are secure and do not pose health risks.
• Managing Substances Safely: Overseeing the proper use, storage, handling, and transport of materials to prevent harm.
• Providing Training and Supervision: Offering adequate information, instruction, and oversight to ensure employees understand and follow safety procedures.
• Ensuring Safe Access and Egress: Keeping entry and exit routes free from hazards.
• Creating a Health-Conscious Workplace: Making the overall environment conducive to well-being, with adequate welfare facilities in place.

Employees, in turn, are expected to act responsibly by protecting their own safety and that of their colleagues, and by complying with established safety policies. Failure to meet OSHA requirements may lead to substantial legal and financial consequences.

Workers’ Compensation

Workmen’s Compensation Act 1952

Applies to: Foreign workers earning RM500/month or less (excluding domestic servants and certain government employees).

• Compensation for injuries, occupational diseases, or death arising out of and in the course of employment.
• Includes medical expenses, temporary or permanent disability compensation, and death benefits to dependents.
• Managed by the Department of Labor Malaysia. Employers must report incidents and may be liable for penalties if they fail to comply.

Employees’ Social Security Act 1969 (SOCSO/PERKESO)

Applies to: Malaysian citizens and permanent residents earning up to RM5,000/month (mandatory), and optionally above that.

• Employment Injury Scheme: Covers accidents at work, commuting accidents, and occupational diseases.
• Invalidity Scheme: Covers non-work-related disabilities and death.
• Include medical care, rehabilitation, monthly pensions, funeral benefits, and survivor’s pensions.
• Employers must register employees and contribute monthly to SOCSO. Failure to do so can result in fines or imprisonment

Labor Law Sanctions

Employment Act Sanctions: Malaysia’s Employment Act sets rules on wages, working hours, and employee rights. Violations like underpaying wages, overworking employees, or denying statutory leave can result in fines up to RM50,000 per employee. Hiring minors is also heavily penalized.

Forced Labor and Migrant Worker Protections: Malaysia enforces strict rules against forced labor, especially concerning migrant workers. Practices like withholding passports or unpaid wages can lead to fines up to RM100,000 and imprisonment. International consequences may include trade restrictions or import bans from countries like the U.S. or EU.

Occupational Safety and Health: Employers must ensure a safe workplace under the OSHA law. Failing to provide safety equipment or exposing workers to hazards can result in fines and jail time. Serious incidents, especially fatalities, trigger investigations and possible business suspension.

Statutory Contributions: Employers are legally required to contribute to employee welfare funds like EPF, SOCSO, and EIS. Non-compliance can lead to financial penalties and legal action.