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Five Critical Labor Laws Enterprises Must Know Regarding Thailand’s Labor Legislation

However, the local provident fund and social security systems feature intricate rules and strict standards. Many business owners and HR professionals face compliance risks and extra costs due to under‑familiarity with local policies, leading to issues such as under‑payment, over‑payment, and inconsistent contribution bases.

From a clear and practical perspective, this article comprehensively breaks down Malaysia’s four statutory employment benefits: EPF (Employees Provident Fund), SOCSO (Social Security Organization), EIS (Employment Insurance System), and HRDF (Human Resource Development Fund). It helps overseas enterprises quickly master contribution standards, eligible personnel, cost calculation methods and key compliance requirements.

Core Statutory Employment Benefits in Malaysia

1. Employees Provident Fund (EPF)

Official Website:

https://www.kwsp.gov.my/en/epf-act-1991-third-schedule

The latest EPF calculation table under the EPF Act 1991 is available on the official website.

Key factors affecting EPF calculation:

i. Employee’s age in full years

ii. Employee’s citizenship status

Most employees fall under Part A, subject to the following criteria:

i. Aged below 60 years old; AND

ii. Malaysian citizen or Permanent Resident (PR); or non‑citizen/non‑PR who opted for EPF contributions before 1 August 1998.

Contribution Base

i. Rules for contribution base:

https://www.kwsp.gov.my/en/employer/introduction#Wages

ii. General contribution base = Monthly salary + bonuses + all allowances except transport and meal allowances

iii. Rounding‑up rules for contribution base:

If total ≤ MYR 5,000: round up to the nearest multiple of 20 (e.g., 4,628.57 → 4,640)
If 5,000 < total ≤ MYR 20,000: round up to the nearest hundred (e.g., 14,269.28 → 14,300)
If total > MYR 20,000: the total amount applies directly

Contribution Rate

Official Website:

https://www.kwsp.gov.my/en/employer/responsibilities/mandatory‑contribution

Contribution rates are determined by the employee’s residency status, age and monthly EPF contribution base.

2. Social Security Organization (SOCSO / PERKESO)

Official Website:

https://perkeso.gov.my/en/our‑services/employer‑employee/kadar‑caruman.html

Contribution Base

i. Excluded items: transport allowance, meal allowance, bonuses, reimbursements

ii. Included items: monthly salary, other allowances, overtime pay

iii. Current contribution base ceiling: MYR 6,000

Contribution Rate

Fixed contribution amounts apply to different salary brackets. Refer to the downloadable table Rate_of_Contribution_ACT_4 via the above‑mentioned official website.

3. Employment Insurance System (EIS)

Official Website:

https://perkeso.gov.my/en/our‑services/employer‑employee/kadar‑caruman.html

Contribution Base

i. Excluded items: transport allowance, meal allowance, bonuses, reimbursements

ii. Included items: monthly salary, other allowances, overtime pay

iii. Current contribution base ceiling: MYR 6,000

Contribution Rate

Fixed contribution amounts apply to different salary brackets. Refer to the downloadable table Rate_of_Contribution_ACT_800 via the above‑mentioned official website.

4. Human Resource Development Fund (HRDF)

Official Website: https://hrdcorp.gov.my/

Contribution Eligibility

Mandatory contribution applies if the employer has 10 or more employees in Malaysia; not required for fewer than 10 employees.

Contribution Base

Reference link: https://supportcentre.hrdcorp.gov.my/portal/en/kb/articles/hrd‑levy

i. Excluded items: transport allowance, conveyance allowance, meal allowance, bonuses, overtime pay

ii. Included items: monthly salary, contract‑stipulated allowances

Contribution Rate

1% borne solely by the employer; no employee contribution required.

Gonex – Local Social Security Service Provider in Malaysia

Gonex’s Employer of Record (EOR) service enables enterprises to conduct safe and compliant human resource management without establishing overseas legal entities. As the statutory employer, Gonex assumes all legal liabilities and employment risks on behalf of clients, effectively avoiding potential legal hazards.

Gonex’s human resource team has in‑depth knowledge of labor regulations worldwide, ensuring full compliance with local legal requirements throughout the entire employee lifecycle — including social security and provident fund contributions, payroll disbursement, expatriate management, and HR outsourcing. This allows enterprises to operate compliantly in Malaysia and avoid risks and losses caused by violations.

Gonex provides services in over 150 countries and regions globally, offering extensive support for enterprises’ overseas business expansion and helping them integrate into regional markets. Backed by localized operations across 150+ countries and a dynamic compliance engine, we keep real‑time pace with updates in labor laws and policies worldwide, proactively resolving disputes and fine‑related risks to achieve risk‑free compliant operations.

If your expanding enterprise has hiring needs in Malaysia or other regions, please fill out the form below to obtain a safe and compliant hiring solution tailored for Malaysia.

Why Gonex?

Experienced Management Team: each member in the team has 10+ years experiences in Overseas Human Resources Management, composed of seasoned HR professionals.

Powerful connection: Gonex has established over 10 entities worldwide, along with more than 30 stable partners, together offering the most comprehensive overseas human resource services to our clients.

Strict compliance with laws and regulations: At every step in our service process, Gonex strictly adheres to local laws and regulations, ensuring our clients completely avoid any legal disputes.

Competitive price: Gonex’s services are 20% more affordable compared to other companies in the industry, allowing our clients to allocate more resources to their core business.

What Gonex offer?

Employment of Record: This service helps clients legally hire employees in countries or regions where they do not have a legal entity established.

Payroll BPO service: This includes payroll project implementation plan development, project deployment, payroll calculation, payment of funds, administration of statutory and supplementary benefits, customized reporting, and other comprehensive payroll services.

Global Mobility: Based on the company’s internationalization strategy, the company assigns employees to overseas branches/subsidiaries and handles visa and tax matters in accordance with local policies, while assisting in the compliance management of employees throughout their international assignment life cycle.

GONEX One-Stop Solution: Your strategic partner

Compliance and Legal Adherence: GONEX’s Employer of Record (EOR) service ensures legal compliance in employing local staff.

Cross-Border Payroll and Tax Management: Streamlined payroll services simplify cross-border management.

Flexible Employment Solutions: Adaptable employment services cater to changing business needs.

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Digital HR Management Platform: Technology-driven solutions enhance management efficiency and cultural integration.

Who do we serve?

Gonex served 70+ clients to expand overseas. The incomes of our clients like Mengniu, Kuaishou and CHINT are up to 192.4 billion.

Let Gonex assist you and your company with handling such complex overseas hiring processes! To access more information on corporate international expansion cases, global employment guidelines, worldwide compensation management, regulations for various regional countries, and factory establishment manuals in different nations, you are welcome to visit the GONEX official website at www.letsgonex.com to download these resources or view our company’s business introduction in PDF format (https://letsgonex.com/in.pdf).

Five Critical Labor Laws Enterprises Must Know Regarding Thailand’s Labor Legislation

Core Statutory Employment Benefits in Malaysia

1. Employees Provident Fund (EPF)

Contribution Base

Contribution Rate

2. Social Security Organization (SOCSO / PERKESO)

Contribution Base

Contribution Rate

3. Employment Insurance System (EIS)

Contribution Base

Contribution Rate

4. Human Resource Development Fund (HRDF)

Contribution Eligibility

Contribution Base

Contribution Rate

Gonex – Local Social Security Service Provider in Malaysia

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