Quick answer: An Employer of Record (EOR) in Malaysia is a local company that legally employs staff on your behalf. The EOR issues compliant employment contracts, runs payroll and handles EPF, SOCSO, EIS, PCB and other obligations, while you direct the employees’ day-to-day work. It lets overseas companies hire in Malaysia without setting up a Sdn Bhd.
Malaysia is an attractive place to build a team, with a skilled, multilingual workforce and competitive costs. But setting up a local company just to hire a few people takes time, money and ongoing compliance work. An Employer of Record offers a faster, simpler route.
What is an Employer of Record?
An Employer of Record is a company that becomes the legal employer of workers who actually work for your business. The EOR takes on the employer’s legal and administrative responsibilities in Malaysia, while you keep control over the employee’s role, tasks, targets and performance.
How does an EOR work in Malaysia?
- You choose the candidate and agree on the role, salary and start date. If you need help finding the right person, the EOR provider can also recruit for you.
- The EOR issues a local employment contract that complies with Malaysian law, including terms on intellectual property and confidentiality in your favour.
- The EOR registers the employee with EPF, SOCSO and EIS and sets up tax deductions.
- The employee works for you, reporting to your managers and following your processes.
- Each month the EOR runs payroll, pays the salary, submits statutory contributions and invoices you for the employment cost plus a service fee.
What does the EOR handle, and what do you control?
| The EOR handles | You control |
|---|---|
| Employment contracts and onboarding documents | Day-to-day work, projects and targets |
| Monthly payroll and payslips | Performance management and feedback |
| EPF, SOCSO, EIS, PCB and HRDF submissions | Salary and benefits decisions |
| Leave records and statutory benefits | Working hours and team processes |
| Employment Act compliance and HR support | Hiring and termination decisions |
EOR vs setting up a Sdn Bhd: which is better?
| Factor | Employer of Record | Own Sdn Bhd |
|---|---|---|
| Time to hire | Days to a few weeks | Weeks to months (incorporation, bank account, registrations) |
| Upfront cost | None for setting up an entity | Incorporation, licensing, accounting and office costs |
| Ongoing compliance | Handled by the EOR | Your responsibility (payroll, tax, audit, filings) |
| Best for | Small teams, market testing, project hires | Large, long-term operations in Malaysia |
Many companies start with an EOR to test the market and later set up their own entity once the team grows.
Who should use an EOR in Malaysia?
- Overseas companies hiring their first employees in Malaysia.
- Businesses testing a new market before committing to a local entity.
- Companies with project-based or fixed-term hires.
- Startups that want to hire remote Malaysian talent quickly and compliantly.
What statutory contributions does an EOR manage?
- EPF: employer 13% (wages up to RM5,000) or 12% (above RM5,000); employee 11%. Foreign workers contribute 2% each since October 2025.
- SOCSO: employer 1.75% and employee 0.5% for most employees under 60, on wages up to RM6,000.
- EIS: 0.2% each from employer and employee, on wages up to RM6,000.
- PCB: monthly income tax deductions remitted to LHDN.
- HRDF: levy where applicable.
Contributions are due by the 15th of the following month.
Frequently asked questions
Is using an EOR legal in Malaysia?
Yes. EOR arrangements are commonly used in Malaysia. The EOR is the legal employer and must meet all the obligations of an employer under Malaysian law.
Can an EOR hire foreign nationals in Malaysia?
Foreign nationals need the right work pass, such as an Employment Pass. Eligibility depends on the role, salary and approval from the authorities, so check requirements with your EOR provider before making an offer.
Who owns the work and intellectual property?
A properly drafted EOR contract assigns intellectual property created by the employee to your company.
Hire in Malaysia with Polymorph Recruitment
Polymorph Recruitment provides Employer of Record services in Malaysia, together with recruitment, payroll and HR outsourcing, so you can find, hire and manage your Malaysian team through one partner. See our services or contact us to discuss your hiring plans.
Sources: Deel, How to Hire Using an EOR in Malaysia (2026); AJobThing, EPF SOCSO EIS Contribution 2026. Rates are correct at the time of writing; always confirm with KWSP, PERKESO and LHDN.