Complete Guide to Employer Statutory Costs in Malaysia (2025)

EPF is Malaysia's primary retirement savings scheme. The employer contributes 13% for employees earning MYR 5,000 or below, and 12% for those earning above MYR 5,000. Employees contribute 11%. There is no salary cap. Employer contributions are tax-deductible. EPF covers retirement, home purchase, education, and medical withdrawals.

SOCSO consists of two schemes: Employment Injury (1.75% employer, capped at MYR 5,000/month insured salary) covering work-related injuries, and the Invalidity Scheme (0.5% employer + 0.5% employee, capped at MYR 5,000/month) covering non-work invalidity and death. EIS is 0.4% of salary (0.2% employer + 0.2% employee, capped at MYR 5,000/month) and provides job loss insurance, training, and re-employment support.

Employers with 10 or more employees in manufacturing and certain other sectors must pay a 1% skills development levy on payroll to HRD Corp. This levy is 100% employer-funded and can be reclaimed through approved employee training programmes. Employers with 5-9 employees may register voluntarily.

Total employer statutory costs in Malaysia typically range from 15-17% of gross salary. This includes EPF 12-13%, SOCSO EI 1.75%, SOCSO Invalidity 0.5%, EIS 0.2%, and HRDF 1%, totalling approximately 15.45-16.45%. Malaysia's statutory costs are moderate within ASEAN. Employers should also account for annual leave, public holidays (11 gazetted), and termination/retrenchment benefits under the Employment Act.