Mandatory EPF Contributions for Foreign Employees in Malaysia

Mandatory EPF Contributions for Foreign Employees in MalaysiaMalaysia’s new law mandating Employees Provident Fund (EPF) contributions for foreign employees comes into effect for wages earned from October 2025 onwards, with first payments due by November 15, 2025. The requirement applies to all non-Malaysian citizen employees—excluding domestic servants such as maids, cooks, drivers, and cleaners—who hold a valid employment pass or other qualifying work permit issued by Malaysia’s Immigration Department and are working in Malaysia. This development brings Malaysia further in line with global labor standards and underscores the country’s commitment to social protection for all working residents, regardless of nationality.

Highlights

  • Contribution Rate: 2% of monthly wages each from both employer and employee, significantly lower than the statutory rates for Malaysian citizens.
  • Registration: Employers must register with the EPF and register all applicable foreign workers. This process can be completed online or at any EPF branch.
  • Exclusions: Domestic servants (as defined by the Workmen’s Compensation Act) are exempt from the new requirement.
  • Cessation: EPF contributions should stop during the last two months before the expiry of the foreign employee’s work permit.

Practical Employer Considerations

  1. Payroll and Contracts
    Payroll systems and employment contracts must be updated to reflect new deduction requirements and show contribution amounts on payslips.
  2. Budgeting & Cost
    Employers will now bear additional labor costs for each eligible foreign employee, at 2% of monthly wages per employee.
  3. Registration & Compliance
    Ensure all relevant foreign employees are registered with the EPF Board and that contributions are remitted in Malaysian Ringgit (MYR), rounded to the nearest whole RM. Monitor for potential future changes to contribution rates, and use the official EPF online portal for registration and compliance tracking.
  4. Withdrawal and Employee Communication
    Foreign employees who permanently leave Malaysia may withdraw their EPF savings (including dividends) without tax implications. Communicate these rights clearly during onboarding and offboarding, and reference official EPF channels for procedures.
  5. Voluntary Higher Contributions
    Foreign employees who wish to maintain higher contributions (e.g., 11% like Malaysian employees) must submit an election form; the employer must apply via the EPF “i-Akaun.”

Access to EPF Facilities and Benefits

Foreign employees contributing to EPF gain eligibility for certain benefits, such as partial and full withdrawals under specified conditions, annual dividends, and options like the Shariah-compliant savings scheme (Simpanan Shariah).

 

If you need support with your employee benefits in Malaysia, please contact Asinta, and we will put you in touch with the local experts at UOB Kay Hian.