Malaysian payroll compliance isn’t one rule, it’s a stack of them: EPF, SOCSO, EIS, minimum wage, tax deductions, all with their own rates, deadlines, and penalties, and all updated on different schedules. Most SME owners don’t have time to track every gazette change across four different statutory bodies. This checklist pulls it all into one place.
1. Register for Statutory Accounts Before Your First Employee Starts
Before your first hire’s start date, register your company with EPF, SOCSO/EIS, and set up income tax deduction (PCB/MTD) with LHDN. A common mistake is registering late, thinking there’s a grace period. There isn’t. EPF will expect a contribution for that month the moment you register, whether or not the employee has begun work.
2. Know What Counts as “Wages” for Each Scheme
This is where most payroll errors happen. EPF, SOCSO, and EIS don’t all define “wages” the same way. A payment that’s subject to EPF might be exempt from SOCSO, or vice versa. Before running payroll, check which payments are subject to or exempt from EPF contribution. Bonuses, allowances, and leave payments are frequent sources of miscalculation.
3. Current Statutory Rates at a Glance (2026)
| Scheme | Employee Rate | Employer Rate | Wage Ceiling |
|---|---|---|---|
| EPF | 11% | 13% (≤RM5,000) / 12% (>RM5,000) | None |
| SOCSO | ~0.5% | ~1.75% | RM6,000 |
| EIS | 0.2% | 0.2% | RM6,000 |
Foreign workers now also require EPF contributions (2% employer + 2% employee) as of 1 October 2025, a change many payroll systems still haven’t been updated for.
4. Minimum Wage Compliance
Every employer, regardless of company size, must pay at least RM1,700 a month (RM8.72/hour) in basic salary. The small-business exemption ended in August 2025. See the full minimum wage breakdown, including the rule most employers get wrong: allowances and bonuses don’t count toward the RM1,700 minimum, only basic salary does.
5. Monthly Payroll Deadlines
- EPF, SOCSO, EIS contributions: by the 15th of the following month
- PCB/MTD tax deductions: by the 15th of the following month to LHDN
- Payslips: issued to employees each pay cycle
Missing the 15th isn’t a small slip. EPF late payment charges are calculated at the dividend rate plus 1% per annum (minimum RM10), and SOCSO/EIS late charges run at 6% per annum for each day overdue. These compound fast on a missed month, let alone several.
6. When an Employee Leaves
Offboarding has its own compliance checklist, separate from monthly payroll. If the exit is a retrenchment or termination, notice periods and severance pay apply. On the employee’s side, if they lose their job involuntarily, they may be eligible for EIS benefits, but only if you’ve submitted the required loss-of-employment record to PERKESO. Skipping that step is one of the most common reasons an otherwise-eligible employee’s claim gets delayed.
Frequently Asked Questions
Do minimum wage and statutory contribution rules apply to small businesses too?
Yes. Minimum wage and statutory contribution obligations apply regardless of company size, including micro-SMEs with fewer than 5 employees.
What happens if I miss a statutory contribution deadline?
Each scheme charges its own late payment penalty. EPF at the dividend rate plus 1% (minimum RM10), and SOCSO/EIS at 6% per annum per day overdue.
Is EPF now mandatory for foreign employees?
Yes, since 1 October 2025, at 2% employer and 2% employee contribution.
Related Reading
One Checklist, Handled Every Month
Keeping every rate, deadline, and wage definition current across EPF, SOCSO, EIS, and minimum wage is a full-time job on its own, and getting any one of them wrong carries real financial and legal risk. If you’d rather have this checklist actively managed instead of manually tracked, talk to Righthouse’s payroll outsourcing team. We keep your contributions, deadlines, and compliance aligned with the latest Malaysian statutory requirements, every cycle.
