In today’s competitive business world, hiring the right employees can make all the difference between success and failure.
However, finding the right talent for your business is not always easy, especially when you are hiring in a foreign country like Malaysia.
That’s why we have put together this quick reference guide to help you navigate the hiring process in Malaysia and ensure that you find the best candidates for your business.
Malaysia is a vibrant and dynamic country that offers many opportunities for businesses to grow and expand.
However, hiring employees in Malaysia can be a daunting task, especially if you are not familiar with the local laws and regulations.
This guide will walk you through the entire process of hiring employees in Malaysia, from understanding the legal requirements to creating effective job descriptions, attracting and sourcing candidates, negotiating compensation packages, and onboarding and training new employees.
Whether you are a multinational corporation or a small business owner, this guide will provide you with the information and resources you need to hire the best employees for your organization.
Before we venture further into this article, we like to share who we are and what we do.
9cv9 is a business tech startup based in Singapore and Malaysia with a strong presence all over the world.
With over six years of startup and business experience, and being highly involved in connecting with thousands of companies and startups, the 9cv9 team has listed some important learning points in this overview of how to hire employees in Malaysia.
If your company needs recruitment and headhunting services, you can use 9cv9 headhunting and recruitment services to hire top talents and candidates. Find out more here, or send over an email to [email protected].
Why Hire Talents in Malaysia?
Malaysia is a popular destination for companies looking to hire talented employees for a number of reasons.
Here are some of the key factors that make Malaysia an attractive location for talent acquisition:
- Skilled workforce: Malaysia has a well-educated and skilled workforce, with a strong emphasis on science, technology, engineering, and mathematics (STEM) fields. This makes it an ideal location for companies looking to hire employees with specialized skills and knowledge.
- Language proficiency: English is widely spoken in Malaysia, which makes it easier for foreign companies to conduct business and communicate with employees. In addition, many Malaysians are bilingual or multilingual, which can be a valuable asset for companies looking to expand into international markets.
- Competitive wages: Despite being a lower-cost-of-living country, Malaysia offers competitive wages and benefits to employees. This allows companies to hire talented employees without having to pay exorbitant salaries.
- Favorable business environment: Malaysia has a business-friendly environment with strong government support for foreign investment. The country has a stable political system, a strong legal framework, and a transparent regulatory environment, which makes it an attractive location for companies looking to establish or expand their operations.
- Cultural diversity: Malaysia is a multicultural country with a diverse population, which can provide companies with a wider range of perspectives and ideas. This can be particularly beneficial for companies looking to expand into international markets or develop products and services for diverse audiences.
Overall, Malaysia offers a favorable business environment, a skilled workforce, and competitive wages, making it an attractive location for companies looking to hire talented employees.
With its emphasis on STEM fields, multilingual population, and strong government support for foreign investment, Malaysia is well-positioned to attract top talent from around the world.
How To Hire Employees In Malaysia – A Quick Reference Guide
- Understand the Legal Requirements for Hiring Employees in Malaysia
- Determine the Job Requirements and Skills Needed
- Attracting and Sourcing Candidates
- Employment Contracts and Agreements
- Compensation and Benefits
- Onboarding and Training
Understand the Legal Requirements for Hiring Employees in Malaysia
Before hiring employees in Malaysia, it is important to understand the legal requirements for doing so.
Failure to comply with these requirements can result in penalties, fines, and legal action, which can harm your business’s reputation and bottom line.
In this section, we will discuss the legal requirements for hiring employees in Malaysia and provide you with the information you need to comply with Malaysian laws and regulations.
1. Work Permits and Visas
If you are planning to hire foreign employees in Malaysia, you will need to obtain the appropriate work permits and visas.
There are several types of work permits and visas available in Malaysia, depending on the type of employment and the duration of stay.
The most common types of work permits and visas include the Employment Pass, Professional Visit Pass, and Social Visit Pass.
To obtain these permits and visas, you will need to provide documentation, such as a job offer letter, passport, and medical examination report, among others.
It is important to note that work permits and visas have specific requirements and restrictions, so it is important to consult with a legal expert or a relevant government agency to ensure compliance.
2. Business Registration
Before hiring employees in Malaysia, you will need to register your business with the relevant authorities.
There are several types of business entities in Malaysia, including sole proprietorships, partnerships, and limited liability companies, each with its own registration requirements.
The Companies Commission of Malaysia (CCM) is the primary regulatory agency responsible for the registration and incorporation of businesses in Malaysia.
To register your business, you will need to provide documentation, such as a business plan, memorandum and articles of association, and proof of identity and address, among others.
3. Employment Law
Malaysia has several employment laws and regulations that employers must comply with.
The primary law governing employment in Malaysia is the Employment Act 1955, which sets out the minimum requirements for employment contracts, working hours, rest periods, and other conditions of employment.
Other important laws include the Industrial Relations Act 1967, which regulates the relationship between employers and employees, and the Trade Unions Act 1959, which governs the formation and registration of trade unions.
Employers must also comply with minimum wage requirements, social security contributions, and other regulations.
Failure to comply with these laws and regulations can result in penalties, fines, and legal action.
Employers and employees in Malaysia are subject to various taxes, including income tax, social security contributions, and value-added tax.
Employers must register with the Inland Revenue Board of Malaysia (IRBM) and obtain a tax identification number (TIN) to comply with Malaysian tax laws and regulations.
Employers are also required to deduct income tax and social security contributions from employee salaries and remit them to the relevant authorities.
It is important to keep accurate records of all tax-related transactions and to comply with reporting and payment deadlines to avoid penalties and fines.
5. Immigration Checkpoints
Employers must comply with immigration laws and regulations when hiring foreign employees in Malaysia.
Foreign employees must obtain the appropriate work permits and visas and comply with immigration checkpoints when entering and exiting Malaysia.
Employers must also ensure that foreign employees have valid travel documents and comply with immigration regulations.
Failure to comply with immigration laws and regulations can result in penalties, fines, and legal action.
Understanding the legal requirements for hiring employees in Malaysia is critical for compliance and success in doing business in Malaysia.
Employers must comply with work permits and visa requirements, business registration requirements, employment laws and regulations, taxation requirements, and immigration checkpoints.
Failure to comply with these requirements can result in penalties, fines, and legal action, which can harm your business
Determine the Job Requirements and Skills Needed
Once you have a clear understanding of the legal requirements for hiring employees in Malaysia, the next step is to determine the job requirements and skills needed for the position you are looking to fill.
This involves identifying the knowledge, skills, and abilities required for the job and developing a job description that clearly outlines the job responsibilities and requirements.
To determine the job requirements, start by analyzing the job and identifying the specific tasks, duties, and responsibilities associated with the position.
This can be done through job analysis, which involves examining the job and gathering information about the knowledge, skills, and abilities required to perform the job effectively.
You can use a variety of methods to gather this information, including interviews, surveys, and observation.
Once you have identified the job requirements, the next step is to develop a job description that clearly outlines the job responsibilities and requirements.
A job description is a written document that provides a detailed overview of the job and the qualifications required for the position.
It should include information such as job title, job summary, duties and responsibilities, qualifications and skills required, and any other relevant information.
To ensure that you are hiring the right candidate for the job, it is important to identify the skills and competencies needed for the position.
This involves identifying the technical skills, knowledge, and experience required to perform the job, as well as the soft skills and personal qualities that are necessary for success in the role.
Soft skills may include communication, teamwork, problem-solving, adaptability, and leadership skills, among others.
In addition to identifying the job requirements and skills needed, it is important to develop a recruitment strategy that is targeted to attract the right candidates.
This may involve advertising the job on relevant job boards and social media platforms, reaching out to industry associations or relevant networks, and leveraging employee referrals.
Determining the job requirements and skills needed is a critical step in the hiring process.
It involves analyzing the job, identifying the knowledge, skills, and abilities required, and developing a job description that clearly outlines the job responsibilities and requirements.
By taking the time to identify the right job requirements and skills, you can ensure that you are hiring the right candidate for the job and setting your business up for success.
Attracting and Sourcing Candidates
Once you have identified the job requirements and skills needed, the next step in the hiring process is to attract and source candidates for the position.
This involves developing a recruitment strategy that targets the right candidates and utilizing a variety of sourcing methods to reach potential candidates.
One effective way to attract candidates is to advertise the job on relevant job boards and social media platforms. There are several job boards in Malaysia that specialize in different industries, such as 9cv9 Malaysia, JobStreet, Monster, and Indeed.
These job boards allow you to post job ads and reach a large pool of potential candidates.
Social media platforms, such as LinkedIn, Facebook, and Twitter, can also be effective for reaching candidates in Malaysia.
Another effective sourcing method is to leverage employee referrals.
Platforms such as Jobsrefer enable companies to tap into employee referrals easily to get top-quality candidates.
Encouraging current employees to refer qualified candidates for open positions can help you identify potential candidates who may not have seen the job advertisement otherwise.
Employee referrals can also be a cost-effective sourcing method, as you may be able to offer incentives or bonuses to employees who refer successful candidates.
In addition to job boards and employee referrals, you can also reach potential candidates through networking and industry associations.
Attending industry events and networking with professionals in your field can help you identify potential candidates and build relationships with them.
Joining industry associations and participating in their events can also help you connect with potential candidates and stay up-to-date on industry trends.
Finally, it is important to have an effective application and screening process in place to ensure that you are able to identify the most qualified candidates for the position.
This may involve reviewing resumes and cover letters, conducting phone or video interviews, and conducting in-person interviews with the most qualified candidates.
Attracting and sourcing candidates is a critical step in the hiring process.
By developing a recruitment strategy that targets the right candidates and utilizing a variety of sourcing methods, you can reach a large pool of potential candidates and identify the most qualified candidates for the position.
Employment Contracts and Agreements
Once you have identified and sourced the right candidate for the job, the next step is to finalize the employment relationship with a contract or agreement.
Employment contracts and agreements are legal documents that outline the terms and conditions of the employment relationship between the employer and employee.
In Malaysia, employment contracts and agreements are regulated by the Employment Act 1955, which sets out the minimum terms and conditions of employment that must be provided to all employees.
The Act applies to all employees who earn less than RM2,000 per month, and certain provisions also apply to employees who earn more than this amount.
Employment contracts and agreements typically include information such as job title, job responsibilities, salary, benefits, working hours, leave entitlements, and termination clauses.
It is important to ensure that the terms and conditions included in the contract or agreement comply with the Employment Act 1955, as well as any other relevant laws and regulations.
Employment contracts and agreements may also include clauses that address issues such as confidentiality, non-compete agreements, and intellectual property rights.
These clauses are designed to protect the interests of both the employer and employee and ensure that confidential information and intellectual property are not disclosed or misused.
It is important to ensure that both parties fully understand the terms and conditions of the employment contract or agreement before signing it.
This may involve providing a copy of the contract or agreement to the employee before they start work, and allowing them time to review and seek legal advice if necessary.
In conclusion, employment contracts and agreements are an essential component of the employment relationship in Malaysia.
They provide clarity and certainty for both the employer and employee and help to ensure that the employment relationship is based on clear and agreed-upon terms and conditions.
By complying with the relevant laws and regulations and including appropriate clauses, employers can protect their interests and ensure that the employment relationship is mutually beneficial.
Compensation and Benefits
Compensation and benefits are an important part of the employment relationship and play a key role in attracting and retaining talented employees.
In Malaysia, employers are required to comply with minimum wage regulations, as well as provide certain benefits to employees.
The minimum wage in Malaysia is set by the government and varies depending on the location and industry of the job.
As of 2021, the minimum wage for Peninsular Malaysia is RM1,200 per month, while the minimum wage for Sabah, Sarawak, and Labuan is RM1,100 per month.
Employers are required to comply with these minimum wage regulations and ensure that all employees are paid at least the minimum wage for their location and industry.
In addition to minimum wage, employers may offer a range of benefits to employees, such as medical insurance, retirement plans, and paid time off.
These benefits can help to attract and retain talented employees and can also improve employee morale and engagement.
Employers may also offer variable pay such as bonuses or profit sharing to employees based on individual or company performance.
This type of pay incentivizes employees to work harder and perform better, ultimately benefitting the company as a whole.
It is important to ensure that compensation and benefits packages are competitive and in line with industry standards in order to attract and retain the best talent.
Employers may conduct salary surveys to determine the average salary and benefits packages offered by other companies in the industry, and adjust their packages accordingly.
Finally, it is important to communicate the compensation and benefits packages clearly to employees.
This may involve providing an employee handbook that outlines the terms and conditions of employment, including compensation and benefits, and answering any questions that employees may have.
In conclusion, compensation and benefits are an important part of the employment relationship in Malaysia.
By complying with minimum wage regulations and offering competitive benefits packages, employers can attract and retain talented employees and improve employee morale and engagement.
Communicating these packages clearly to employees can also help to ensure that the employment relationship is based on clear and agreed-upon terms and conditions.
Onboarding and Training
Onboarding and training are critical components of the employment relationship that can help new employees become productive and effective in their roles.
Effective onboarding and training can also improve employee engagement and retention, ultimately benefiting the company as a whole.
Onboarding typically involves introducing new employees to the company and their role, as well as providing them with the tools and resources they need to be successful in their job.
This may include introducing them to key personnel, providing them with an orientation to the company culture, and explaining their job responsibilities and performance expectations.
Training is an ongoing process that helps employees acquire and develop the knowledge, skills, and abilities they need to perform their job effectively.
This may involve providing formal training sessions, such as workshops or classes, or informal training through mentoring or job shadowing.
In Malaysia, employers may be required to provide certain training to employees in order to comply with health and safety regulations or other legal requirements.
For example, employers in certain industries may be required to provide safety training or first aid training to employees.
Employers may also offer training and development opportunities as a way to retain talented employees and improve their skills and abilities.
This may include offering tuition reimbursement for courses or providing opportunities for employees to attend industry conferences or workshops.
It is important to ensure that onboarding and training programs are tailored to the specific needs of the employee and the company.
This may involve developing customized training materials or providing individualized mentoring or coaching.
Finally, it is important to monitor the effectiveness of onboarding and training programs and make adjustments as necessary.
This may involve soliciting feedback from employees or conducting assessments to determine the impact of the training on employee performance.
In conclusion, onboarding and training are critical components of the employment relationship in Malaysia.
By providing effective onboarding and training programs, employers can help new employees become productive and effective in their roles, improve employee engagement and retention, and comply with legal requirements.
Customizing these programs to the specific needs of the employee and the company, as well as monitoring their effectiveness, can help ensure that the employment relationship is based on clear and agreed-upon terms and conditions.
In conclusion, hiring employees in Malaysia can be a complex process that requires employers to navigate legal requirements, determine job requirements, attract and source candidates, negotiate employment contracts, and provide compensation and benefits.
Effective onboarding and training programs can help new employees become productive and effective in their roles, while also improving employee engagement and retention.
By following the steps outlined in this quick reference guide, employers can ensure that they are hiring and retaining talented employees who can help to drive their business forward.
From understanding legal requirements to providing competitive compensation and benefits, employers can build a strong employment relationship with their employees that is based on clear and agreed-upon terms and conditions.
In addition, employers can leverage technology and social media to attract and source candidates, as well as provide online training and development opportunities to employees.
By staying up-to-date with the latest trends and best practices in hiring and employment, employers can remain competitive in the Malaysian job market and attract and retain the best talent.
Overall, hiring employees in Malaysia requires a comprehensive approach that considers legal requirements, job requirements, compensation and benefits, and onboarding and training.
By following this quick reference guide and continuously evaluating and improving their hiring and employment practices, employers can build a strong and productive workforce that can help to drive their business forward.
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