New Requirements for Hiring a Foreign Employee in Malaysia

Companies in Malaysia should note the change in requirements for hiring a foreign employee in the country. Employers must now seek prior approval from the country’s Director General of Labor.

Malaysia’s government implemented the amendments to the Employment Act in January 2023. One of the important changes to the Employment Act are the new requirements for hiring foreign employees who require immigration passes in Malaysia.

What are the new requirements?

Prior approval from Malaysia’s Director General of Labor

Employers in Malaysia must now seek prior approval from the country’s Director General of Labor (DGL) if they want to employ foreign employees. This requirement applies to all non-Malaysians and non-permanent residents who require an employment permit to work in the country.

Approval from the DGL is subject to the following conditions:

• The employer has not been convicted of human trafficking or forced labor crimes;
• The employer has no outstanding breaches under the Employment Act; or
• The employer has no outstanding breaches in relation to social security, minimum wages, or accommodation standards.

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The applications are done online via the official website of Malaysia’s Labor Department.

The employer will need to complete the following details related to their company:

1. The position the foreign employee is applying for;
2. The total number of employees;
3. The total number of foreign employees;
4. The company’s registration number under the Companies Commission of Malaysia;
5. Contact details and address;
6. Status of the company (active/inactive); and
7. Business sector.

In addition to the aforementioned details, employers will need to answer the following types of questions:

1. Does the company keep a register of employee details in the premises?
2. Does the company provide a copy of the employee work contract to the employee?
3. Does the company provide a payslip to the employee?
4. What are the normal working hours?
5. What is the payroll date?
6. What is the minimum number of paid holidays that employees receive per year?
7. What is the minimum number of sick leaves that employees receive per year?
8. Has the company ever been convicted under the Anti-Trafficking in Persons and Anti-Smuggling of Migrants Act 2007?
9. Does the company pay for employee social security?

The employer must inform of all these particulars within 14 days from the date of employment.

Notice requirement

Employers must notify the DGL within 30 days after the end of the foreign employee’s employment either due to termination, expiration of employment permit, the repatriation or deportation from Malaysia, or termination.

Further, Malaysian employers must notify the DGL within 14 days after the end foreign national’s employment if they submit their resignation or leave without notice.

Penalties for non-compliance

Failure to comply with the new requirements can lead to a fine of up to 100,000 ringgit (US$22,615), imprisonment of up to five years, or both.

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