Velocity Global’s Malaysia PEO (Professional Employer Organization) solution enables a quick, efficient, and compliant expansion—without first setting up an entity. Through expedited employee hiring and onboarding, International PEO helps you take advantage of time-sensitive opportunities in Malaysia with none of the downtime traditional entity establishment imparts.
International PEO makes it possible by designating Velocity Global as your Employer of Record. We then hire on your behalf and complete a compliant hiring and onboarding process, sparing you the time and headaches. Your organization benefits from international PEO whether you hire a single supported employee or build a brand new team—all while you retain complete employee oversight.
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Malaysia Fast Facts
Currency: Ringgit (MYR, RM)
Population: 32.73 million
Economy: US $364.7 billion
Top Sectors: Services, manufacturing, electrical components, and agriculture
Malaysia has dozens of regional holidays. The following are national holidays:
- Chinese New Year
- Chinese New Year National Holiday (day after the Chinese New Year)
- Labour Day
- Wesak Day
- Hari Raya Aidilfitri
- Hari Raya Aidilfitri Holiday (Day after Hari Raya Aidilfitri)
- Birthday of SPB Yang di Pertuan Agong
- Hari Raya Haji
- National Day
- Maulidur Rasul
- Christmas Day
Hiring Considerations in Malaysia
Benefits of hiring in Malayasia:
- Malaysia remains one of Asia’s most rapidly developing and emerging countries, offering sounder financial, governmental, and physical infrastructure than many other markets in the region.
- The World Bank’s 2020 Ease of Doing Business Report ranks Malaysia 12th, eclipsing all but three other countries in the region.
- Malaysia is a gateway to the rest of the region, especially in terms of logistics services and information and communications technology. Its geographic location and relative ease of trading across borders gives businesses ample trade opportunity within the region and further afield.
Challenges when expanding into Malaysia:
- Like other regional markets, the COVID-19 pandemic delivered unprecedented economic challenges. Until August 2020, Malaysia evaded its first contraction since the 2009 global financial crisis. Businesses must consider further contraction and how it may impact their operations.
- While Malaysia boasts strong exports, its top export market, China, faces significant setbacks due to both the pandemic and strained relations with the United States. Malaysia will inevitably suffer downstream consequences of U.S.-China tensions and tariffs.
- Businesses must remain aware of Malaysia’s ongoing political swings and coalition collapses. As Malaysia battles pandemic-fueled economic challenges, businesses may expect little legislation that affords more favorable conditions in the near term.
Cultural nuances and must-knows for doing business in Malaysia:
- Expect a highly multinational makeup. Malaysia’s diverse population means you will likely interact with Malaysian, Chinese, Indian, and other nationalities during your time in the country. Bear in mind that appropriate interaction with one group may not be appropriate with others.
- Remember that Malaysia is a Muslim country, and that physical touch between men and women my not be appropriate in many cases. Men should wait for Malay women to extend their hand to shake; bow if she does not attempt a handshake. The same goes for Chinese women.
- Dress conservatively. Men most often wear suits with a long-sleeved shirt and tie, while women may dress traditionally, in skirts, or pants. Do not wear revealing clothing.
- Do not schedule meetings on Friday, as Fridays are Muslims’ day of prayer. Once you schedule your meeting, arrive on time—but expect to wait. Deal-making takes time.
Employment Contracts in Malaysia
Minimum wages and salaries:
- The minimum wage is RM1,200 per month for all employees within any of Malaysia’s 16 City Council or 40 Municipal Council areas, and RM1,100 for employees outside these areas.
- Malaysian employment law does not specify any probation period requirements. However, probation periods of three to six months remain common among most employers.
- While no legal mandate exists, employees often expect 13th-month pay and discretionary bonuses. Employers may also spread the “bonus” across 12 months of pay, so it does not appear as a bonus, but rather a part of their annual salary.
Termination and Severance Considerations:
- Employers must give a termination notice or pay in lieu of notice under just cause dismissal. However, there is no legal definition of ‘just case.’ They may dismiss employees without notice if the dismissal is a result of misconduct.
Paid Time Off & Benefits
- Expectant mothers with no fewer than 90 days’ service with her employer in the aggregate and employed at any time in the four months prior to confinement receive no fewer than 60 consecutive days of fully paid maternity leave.
- No laws stipulate guaranteed paternity leave for private sector fathers, though many companies offer this benefit, though with many fewer days than for mothers.
Vacation and annual leave:
- Employees with fewer than two years’ service receive a minimum of eight days’ paid leave; employees with two to five years’ service receive a minimum of 12 days’ paid leave per year; and employees with more than five years receive a minimum of 16 days’ paid leave annually.
- All employees receive paid sick leave when no hospitalization becomes necessary. Employees with fewer than two years receive 14 days in the aggregate each year; 18 days for employees between two and five years’ employment; 22 days for more than five years’ employment; and 60 days for necessary hospitalization. A registered medical professional or officer must certify the need.
Average workweek hours:
- Employees may not work more than eight hours per day within a six-day workweek, or more than nine hours per day during a five-day workweek.
- Malaysia’s Employment Act 1955 limits overtime hours at 104 hours per month. The Department of Labour must issue a permit for any overtime above 104 hours per month.
Choose Velocity Global
Expanding into new global territory is an exciting time in your company’s history—but it can come with a number of challenges and complex considerations. Velocity Global and its International PEO solution help you navigate the Malaysian employment landscape to ensure a simplified and elevated global expansion experience.
Our International PEO solution offers the quickest compliant global expansion method available, and saves you up to 60% when compared to traditional, cumbersome entity establishment. We’re able to deliver this expedited service by taking on all hiring, onboarding, payroll, risk mitigation, and compliance considerations so you can keep your operation running without interruption.
Ready to establish your presence in Malaysia up to 90% faster than entity establishment and grow your brand abroad? Let’s make it happen.