Hiring your first employee in Malaysia comes with registrations most founders have not dealt with before. The moment someone starts work, your company becomes an employer in the eyes of several statutory bodies, each with its own deadline and portal.
These are the Employees Provident Fund or Kumpulan Wang Simpanan Pekerja (EPF), the Social Security Organisation or Pertubuhan Keselamatan Sosial (SOCSO), which also runs the Employment Insurance System (EIS), and the Inland Revenue Board of Malaysia or Lembaga Hasil Dalam Negeri Malaysia (LHDN). A fourth, the Human Resource Development Corporation or Perbadanan Pembangunan Sumber Manusia Berhad (HRD Corp), applies only to larger employers.
The deadlines are short and monthly payments start straight away. A missed registration usually comes back later as back-payments and late charges.
This guide sets out what to register, when each step is due, and what the first month of payroll costs.
The quick answer: In Malaysia, a company hiring its first employee must register with EPF within 7 days, and with SOCSO, which also registers you for EIS, within 30 days. It should also register an LHDN employer tax file and must report a taxable new employee on e-CP22 within 30 days. HRD Corp registration is compulsory only from 10 Malaysian employees.
1. What do you have to register when you hire your first employee in Malaysia?
When you hire your first employee in Malaysia, you register as an employer with three bodies: EPF, SOCSO and LHDN. SOCSO is also widely known by its Malay acronym, PERKESO.
Employer registration is the one-off step that gives your company a reference number with each body, so it can pay contributions and tax deductions for its staff. Statutory contributions are the amounts the law requires you to pay, and in some cases deduct from wages, every month for each employee.
In practice, the registrations people search for as "daftar majikan KWSP PERKESO" are:
- EPF, the national retirement savings scheme.
- SOCSO, which covers employees for work injuries and invalidity.
- EIS, which supports employees who lose their jobs. You register for it through SOCSO, alongside SOCSO itself.
- LHDN employer tax file, known as the E number, which you need to pay PCB (monthly tax deduction) for your staff.
Your starting point is the company's own registration with the Companies Commission of Malaysia or Suruhanjaya Syarikat Malaysia (SSM). EPF's online employer registration is open only to businesses registered with SSM.
2. When is each registration due?
In Malaysia, you must register with EPF within 7 days of hiring your first employee and with SOCSO within 30 days. LHDN has its own steps, and HRD Corp registration does not apply to a first hire.
Under the EPF rules, an employer becomes liable to contribute as soon as an employee is employed, and must register within 7 days of that date. PERKESO requires a new employer and employee to be registered within 30 days of hiring, using Form 1 for the employer and Form 2 for the employee.
The table below shows each registration, its deadline and the monthly payment that follows.
| Body | What you register | Deadline | Where | Monthly payment due |
|---|---|---|---|---|
| EPF | The company as employer | Within 7 days of hiring your first employee | Online for SSM-registered businesses | 15th of the following month |
| EPF | Each employee who is not yet an EPF member | Before the first contribution | EPF employer portal | Included above |
| SOCSO (SOCSO and EIS) | The company (Form 1) and each employee (Form 2) | Within 30 days of hiring | ASSIST portal | 15th of the following month |
| LHDN | Employer tax file (E number) | When you first become an employer | e-Daftar on MyTax | PCB by the 15th of the following month |
| LHDN | Each new taxable employee (Form CP22) | Within 30 days of the start date | e-CP22 on MyTax | Not applicable |
| HRD Corp | The company, only once it has 10 or more Malaysian employees | Not applicable to a first hire | HRD Corp | Monthly levy |
The e-CP22 is a separate notice: you must report each new employee who is taxable or eligible to be taxed within 30 days of the start date.
3. What does the first month of payroll cost you for one employee?
For a Malaysian employee under 60 earning RM3,000 a month, your employer EPF, SOCSO and EIS contributions add about RM447.55 on top of salary, or about 15%.
The example below assumes a Malaysian employee aged between 18 and 60, on a monthly salary of RM3,000. It uses these rates:
- EPF: 13% from the employer and 11% from the employee, for wages of RM5,000 and below.
- SOCSO first category: the Employment Injury Scheme, paid by the employer only, and the Invalidity Scheme, paid by both. Together they come to 1.75% from the employer and 0.5% from the employee.
- Lindung 24 Jam, SOCSO's Non-Employment Injury Scheme, which covers accidents outside work: 0.75% from the employee only, unless a local employee opts out. There is no employer share.
- EIS: 0.2% from the employer and 0.2% from the employee.
SOCSO and EIS are charged by wage band from official contribution schedules, on wages up to RM6,000 a month, so the amounts are not exact percentages of salary.
| Item | Paid by | Amount (RM) |
|---|---|---|
| Gross salary | Employer | 3,000.00 |
| EPF employer share (13%) | Employer | 390.00 |
| SOCSO Employment Injury Scheme | Employer | 36.90 |
| SOCSO Invalidity Scheme | Employer | 14.75 |
| EIS employer share | Employer | 5.90 |
| Total cost to the company | 3,447.55 | |
| EPF employee share (11%) | Deducted from employee | 330.00 |
| SOCSO Invalidity Scheme | Deducted from employee | 14.75 |
| SOCSO Non-Employment Injury Scheme (Lindung 24 Jam) | Deducted from employee | 22.15 |
| EIS employee share | Deducted from employee | 5.90 |
| Take-home pay before PCB | 2,627.20 |
The employer's on-cost is RM447.55, or 14.92% of salary, and the employee's deductions total RM372.80. PCB is left out of this example because it depends on each employee's own circumstances, such as reliefs and other income.
You also need to pay at least the national minimum wage, which is RM1,700 a month for all employers from 1 August 2025. Budget 2027 announced a rise to RM2,000 from June 2027, with micro, small and medium enterprises with annual revenue below RM50 million exempted. That change applies only once a new Minimum Wages Order is gazetted, so check the final order before you plan around it.
A payroll management service can run these calculations and submissions each month.
4. What should you do before the first payday?
Before your first employee's first payday in Malaysia, put the employment terms in writing, register with each body, and set up the monthly payments. Start with these three steps:
- Agree the terms in writing. The Employment Act 1955 requires a written contract for a fixed-term role longer than one month, or for a specific piece of work expected to take more than a month. For a permanent role, a written contract is not strictly required by that provision, but it is good practice for every hire.
- Stamp the contract with LHDN. An employment contract must be stamped within 30 days of signing, at a fixed duty of RM10 for each original copy, and late stamping attracts a penalty.
- Collect the employee's details that EPF, SOCSO and LHDN will ask for when you register them.
Then register with EPF, SOCSO and LHDN, run the first payroll and pay by the 15th of the following month.
The Employment Act now covers all private-sector employees in Peninsular Malaysia and Labuan, whatever they earn. Sabah and Sarawak have their own Labour Ordinances.
Working hours are capped at 45 a week. Employees earning more than RM4,000 a month, other than manual workers, cannot claim statutory overtime, rest-day or public-holiday pay under the Act, so an employee on RM3,000 is still entitled to them.
Two annual duties follow from your first payroll. You must give each employee a Form EA (their yearly statement of pay) by the last day of February, and file the company's Form E (the employer's annual return of staff pay) with LHDN by 31 March, through e-Filing.
5. What happens if you register late or not at all?
In Malaysia, registering or paying late exposes an employer to fines, interest and back-payments, and the penalties for not registering at all are criminal.
- EPF: failing to register, or failing to pay on time, can lead to a fine of up to RM10,000, up to three years' imprisonment, or both.
- SOCSO: late contributions attract interest of 6% a year for each day they are late.
- LHDN: failing to notify LHDN of a new employee on CP22 is an offence under the Income Tax Act 1967 that can lead to a fine of RM200 to RM20,000, up to six months' imprisonment, or both.
For a small company, the more likely cost is catching up: back-dated contributions, late charges and time spent correcting records.
Frequently asked questions
Do I need to register with EPF and SOCSO if I only have one employee in Malaysia?
Yes. In Malaysia, EPF registration is triggered as soon as you employ one person, and PERKESO requires a new employer to register within 30 days of hiring an employee.
How long after hiring do I have to register with EPF, SOCSO and EIS?
You must register with EPF within 7 days of hiring your first employee. SOCSO and EIS registration, done together through PERKESO, is due within 30 days of hiring.
Do I need to register with HRD Corp when I hire my first employee?
No, HRD Corp registration is not needed for a first hire. Registration with HRD Corp is compulsory only once you have 10 or more Malaysian employees, with a levy of 1% of monthly wages. With 5 to 9 Malaysian employees, registration is optional at 0.5%.
How much does it cost to employ one person in Malaysia on top of their salary?
For a Malaysian employee under 60 earning RM3,000 a month, employer EPF, SOCSO and EIS add about RM447.55, or roughly 15% of salary. The employer EPF rate drops from 13% to 12% for wages above RM5,000, so the percentage varies with pay.
Get your first hire set up correctly
Every company in Malaysia that hires even one employee must register with EPF, SOCSO and LHDN, pay contributions and PCB by the 15th of each month, and file the annual returns on time.
Get in touch with us to ensure your payroll compliance is in order.
