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MALAYSIA PAYROLL

The norm of pay frequency in Malaysia is monthly paid. There is no statutory minimum wages.

Benefits

Mandatory Benefits

  • Annual Leave.
  • Gazette Public Holidays.
  • Maternity Leave.
  • Medical Leave.
  • Termination & Lay-Off Benefits.


Optional Benefits

  • Long Service Payment.
  • Housing allowances.
  • Car allowances.
  • Medical insurances.
  • Bonus.
  • Commission.
  • Retirement benefits.




Mandatory Contributions and Deductions


Employees Provident Fund (EPF)

It is compulsory for the employer and employees to contribute toward EPF and that such contributions are payable to the employees in full on reaching the age of 55 years. Effective from 2008, the employer is liable to contribute to EPF for employees who have attained the age of 55 years and above at revised rate.

The employer & employee have to contribute at the prevailing rates set out in the Third Schedule of the
EPF Act 1991.

The current rates of contribution are as follow:-

Share Division
Until 55 Year
After 55 years until 75 years
Employer Share
12%
6%
Employee's Share
11%
5.5%
Total 23% 11.5%


Both the employer and employee, or either of them, can elect to pay contributions in excess of the statutory
rate stipulated under the Third Schedule, EPF Act 1991.

For more details, you may visit the website of EPF @ http://www.kwsp.gov.my/




Employees’ Social Security Scheme (SOCSO)


SOCSO is a social security scheme for employees. Under the scheme, employees are protected against industrial accident including accident occurred while working, occupational diseases, invalidity or death
due to any cause.

It is the employer’s responsibility to ensure that the monthly contribution is made.

For more details, you may visit the website of SOCSO @ http://www.perkeso.gov.my/


Schedular Tax Deduction (STD)

STD is an income tax deduction mechanism from employee’s current monthly salary according to the
Schedular Monthly Tax Deduction Schedule issued by the Inland Revenue Board Malaysia.

These deductions are intended to reduce the employee’s burden to pay in one lump sum when the actual tax is ascertained when the employees submitting their income return by 30th April in the following year.

The tax year for individuals is 31st December following calendar year.

For more details, you may visit the website of Inland Revenue Board @ http:// www.hasil.gov.my



Statement of Wages

All employees must be given a statement showing details of wages earned, deductions made during the wage period.

It is commonly known as ‘Pay Slip’.



Employee Records

1) Maintain employee register with full information of the employees.

2) Open individual personnel file for all staff.



Payroll Procedures

1) Determine the pay day – monthly paid staff must be paid not later than 7th day in the following month.

2) Mode of payment – cash, cheque or credit to specific bank account.

3) Calculating of salary (including overtime, unpaid leave & etc) – by software or manually.

4) Generating pay slips – by software or manually. Distribute to all employees for record.

5) Prepare cash, cheque or letter with diskette to the specific bank to process payment.

6) Prepare all statutory contributions & deductions – EPF, SOCSO & STD using the correct forms.

EPF - Borang A

SOCSO - Borang 8A

STD - Borang 39


7) Remit the payment to the respective authorities within the deadline.

EPF - before 15th of each month.
Remittance can be made at any KWSP branches or via Public Bank Bhd.

SOCSO - before 30th of each month.
Remittance can be made at any Perkeso branches or via Public Bank Bhd.

STD - before 10th of each month.
Remittance can be made at IRB office at Jalan Duta, Kuala Lumpur or via Public Bank Bhd.


8) Keep all the forms and official receipts in the respective file.


Year End – Optional Services

  1. Preparation of EA form for the employees to submit their tax return on or before 30th April the following year.
    EA form is a prescribed form issued by the Inland Revenue Board to be completed by employer in reporting the total remuneration paid to each and every employee for each year of assessment.

  2. Preparation of E form to disclose the number of employees and their income for the entire year up to 31st December which is to be submitted to Inland Revenue Board on or before 31st March of the following year.



Flowchart

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