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You can employ almost any local citizens. A person whom you employ under a contract of service is an employee.

In Peninsular Malaysia, only employees as being defined in the Employment Act 1955 is protected under the Act. In Sabah and Sarawak, an employee is defined in the Labour Ordinance (Sabah Cap. 67) and Sarawak Labour Ordinance (Cap. 76) respectively.

An employee under the Employment Act 1955 means :

  • any person whose wages does not exceed RM1,500 per month under a contract of service with an employer
  • any person who irrespective of the wages earns in a month has entered into a contract of service with an employer and disengaged in
    • manual labour
    • engaged in the operation of mechanically propelled vehicles
  • one who supervises and oversees employees in manual labour
  • any person engaged in any capacity in any vessel registered in Malaysia with certain exception

An amendment has been made to the Act on 1st August 1998 to include employee earning between RM1,500 and RM5,000 per month. However, these persons are only covered in terms of wages, allowances or other cash benefits.

Any complaints on employment shall be made by an employee to the nearest Department of Labour Office or Jabatan Buruh.

Where there are disputes such as unfair dismissal, employees covered and not covered under these Acts or Ordinance can voice their complaint to the Industrial Relations Department.

You are not permitted to employ women to carry out underground, industrial and agricultural work between 10:00 PM to 5:00 AM without exemption from the Directory General of Department of Labour.

Subject to certain requirements, you can only employ foreign workers in the plantation and manufacturing sectors. Only nationals of Cambodia, Indonesia, Philippines, Sri Lanka, Thailand, Bangladesh and Pakistan are permitted to be employed in these sectors.

A foreign company is only permitted to employ expatriate personnel in areas where there are lack of trained local to do the job under certain requirements.

A company with foreign paid-up capital of US$2 million and above will automatically be allowed 5 expatriate posts including key posts. Where such company requires additional expatriate posts, a request has to be made and posts requested will be given when necessary.

A company with foreign paid-up capital of less than US$2 million will be considered for expatriate posts on certain basis.


There are various ways of offering an employment. Employment can be offered through advertisement, employment agencies, friends and even direct approach.

Your potential employee will apply for a position through phone, letter or personal approach. They may be solicited or unsolicited.

A job interview will normally be conducted to determine whether a short listed person is the right person for the job. The interview could be of a formal nature or simply an informal chat.

Where you decided to offer an employment, the law governing the relationship between an employee and an employer begins.

A contract of service is needed and can be oral or in writing depending on the period of employment.

The contract of service must be given to your employee on or before the commencement of an employment.

You must register your employee with the Employees Provident Fund (EPF) within 7 days of employment. There are certain person who are exempted from making the compulsory contribution.

If your employee is employed under a contract of service and earns a monthly wage of RM2,000 and below, you must also register with Social Security Organization (SOCSO) and make contributions to the organization on behalf of your employees to insure them against the contingencies of invalidity and employment injuries.

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