The government changes Malaysian HR teams most need to act on are the minimum wage rising from RM1,700 to RM2,000 a month in June 2027, compulsory EPF contributions for foreign employees since October 2025, and the Employment Act amendments in force since 2023. HRD Corp levy rules, the wider reach of occupational safety law and new data protection duties also change how training, safety and candidate data are handled, so HR policies written before 2023 should be checked against all six.
This guide covers what each change requires, when it took effect and what to update. It reflects the position as of October 2026. Check the linked official sources before acting, because rules and dates do change.
What has changed, at a glance
| Change | In force | What to update |
|---|---|---|
| Minimum wage RM1,700 | 1 Feb 2025 (all employers from 1 Aug 2025) | Payroll, entry-level salary bands |
| Minimum wage RM2,000 | June 2027 (MSMEs with revenue below RM50 million exempt) | Salary bands, 2027 budgets |
| EPF for foreign employees, 2% employer and 2% employee | October 2025 wages | Payroll for every non-citizen on a work pass |
| Employment Act amendments | 1 Jan 2023 | Leave policy, working hours, flexible work and harassment procedures |
| OSH Act extended to all workplaces | 1 Jun 2024 | Risk assessments for offices, not just factories |
| PDPA amendments: DPO and breach notification | 1 Jun 2025 | Candidate and employee data handling |
What is changing with Malaysia’s minimum wage?
The minimum wage has been RM1,700 a month since 1 February 2025. Employers with fewer than five workers had a six-month deferment, and all employers have had to pay it since 1 August 2025 (NST, July 2025).
Budget 2027, tabled on 9 October 2026, raises it to RM2,000 a month from June 2027. Micro, small and medium enterprises with annual sales revenue below RM50 million are exempt from the higher rate (Bernama, 9 Oct 2026). The same budget announced a starting salary of RM2,500 a month for semi-skilled roles and graduates as a first step in reforming the wage framework. The Human Resources Ministry says it will publish starting salary guidelines alongside the June 2027 Minimum Wage Order (Bernama).
For HR, the bigger task is usually the ripple effect, not the floor itself. If your most junior roles move up to RM2,000, the gap to the next grade narrows. Review the whole salary band before June 2027, not only the lowest line. If you plan to rely on the MSME exemption, check how eligibility will be defined when the order is gazetted. The Malaysian Employers Federation has already asked for clear criteria (Bernama).
What did the Employment Act amendments change?
The Employment (Amendment) Act 2022 came into force on 1 January 2023, after a deferment from September 2022 (Malay Mail, Dec 2022). The changes HR teams deal with most often are:
- Maternity leave rose from 60 to 98 days of paid leave.
- Paternity leave of 7 paid days became law for married male employees. The employee must have worked for the same employer for at least 12 months and given notice at least 30 days before the expected birth, or as early as possible after it. The leave is capped at five confinements.
- Maximum working hours fell from 48 to 45 hours a week.
- Flexible working. Employees can apply in writing to change their hours, days or place of work. The employer must reply within 60 days and give reasons if it refuses.
- Discrimination disputes. Under section 69F, the Director General of Labour can inquire into and decide discrimination disputes between an employee and employer.
- Sexual harassment notice. Section 81H requires employers to display a notice on sexual harassment at the workplace at all times.
Source for the list above: Azmi & Associates and the JTKSM summary%202022%20.pdf).
For hiring, flexible working is the change with the most practical effect. Candidates now ask about it at offer stage. A written policy that says how requests are assessed is easier to explain in an interview than case-by-case answers. Offer letters and handbooks drafted before 2023 should also be checked for the old 48-hour week and 60-day maternity figures.
Do employers have to pay EPF for foreign employees?
Yes. Since October 2025 wages, employers must contribute 2% to EPF for non-Malaysian employees, and the employee contributes 2%. This covers foreign workers with a valid passport and work pass, but not domestic workers. Contributions are due by the 15th of the following month (KWSP).
Employment Insurance System (EIS) contributions are also compulsory. Under the Employment Insurance System Act 2017, employees aged 18 to 60 contribute, with 0.2% paid by the employer and 0.2% deducted from the employee’s wages. Some exemptions apply, for example employees aged 57 and above with no earlier contributions (PERKESO). EIS pays benefits and job search support to people who lose their jobs. Registering eligible employees is a legal requirement, not an optional extra.
Is HRD Corp registration compulsory?
It depends on headcount. Employers with 10 or more Malaysian employees must register with HRD Corp and pay a levy of 1% of employees’ monthly wages. Employers with 5 to 9 Malaysian employees may choose to register, at 0.5% (HRD Corp).
The levy is the main reason HRD Corp shapes HR policy. Registered employers can use it towards approved training, so a training budget that ignores the levy may be paying twice. Note that the old name “HRDF” and the 2020 Penjana reskilling programme belong to the pandemic period. Check HRD Corp’s current schemes rather than older articles.
What do the OSH and data protection changes mean for HR?
The Occupational Safety and Health (Amendment) Act 2022 came into force on 1 June 2024. It extends the Act from a list of industries to almost all places of work, and requires employers to carry out risk assessments for people who may be affected by their work (Malay Mail, April 2024). Office-based companies that once assumed OSH law was a factory matter now need their own assessment.
The Personal Data Protection (Amendment) Act 2024 added a duty to appoint a data protection officer and to notify the Commissioner of data breaches, both from 1 June 2025 (Baker McKenzie). HR holds some of the most sensitive personal data in any company: CVs, identity numbers, salary history and medical records. Agree with your DPO who can see candidate files, how long unsuccessful applications are kept, and what happens if a recruitment inbox is compromised.
Do these rules affect senior and board hiring?
Yes, for listed companies. Bursa Malaysia’s Listing Requirements gave every listed company until 1 June 2023 to have at least one woman director (The Edge, 2022). The Malaysian Code on Corporate Governance 2021 sets a 30% target for women on boards. Companies that fall short must disclose what they are doing about it (Conventus Law). Board and senior searches therefore need a candidate list that reflects these expectations from the start, not as an afterthought.
Frequently asked questions
When does the RM2,000 minimum wage start?
June 2027, as announced in Budget 2027 on 9 October 2026. Micro, small and medium enterprises with annual sales revenue below RM50 million are exempt from the higher rate. Until then the minimum wage is RM1,700 a month for all employers.
Can an employer refuse a flexible working request?
Yes. Under the amended Employment Act, the employer must reply in writing within 60 days. If it refuses, it must give the grounds for refusing.
Do foreign employees pay EPF?
Yes, since October 2025 wages. The employer and the employee each contribute 2% of wages. Domestic workers are excluded.
Planning a hire under the new rules?
Several of these changes land on the hiring process itself: flexible working questions at offer stage, salary bands that move in 2027, and candidate data that now falls under a data protection officer. If a policy change has left you with a role to fill, Bell Ward, a JTKSM-licensed recruitment firm in Kuala Lumpur, can help. See how our recruitment services work or book a free consultation. For the people side of these changes, read our guide to talent management in Malaysia.
