A recruitment agency finds, screens and presents candidates for an employer’s vacancies, and the employer makes the final choice. In Malaysia, anyone carrying out recruitment activities must hold a licence from the Department of Labour (JTKSM) under the Private Employment Agencies Act 1981.
An agency is most useful when a role is specialist, senior or confidential, or when it has been open long enough to cost the business money.
This guide explains what an agency actually does, the two main ways agencies work, how to check a licence, and how to decide whether you need one.
What does a recruitment agency do?
The work varies by agency, but a professional search usually follows the same stages:
- Understanding the role. The agency meets the hiring manager to understand the organisation, the team and what the person must achieve. A good brief covers why the role exists and what would make someone fail in it, as well as the job description.
- Finding candidates. This includes people who are not actively looking. For specialist and senior roles, the best candidates are often employed and not reading job adverts, so the agency approaches them directly.
- Assessing them. The agency interviews candidates and checks their experience against the brief. It also tests fit with your organisation, not only qualifications on paper.
- Presenting a shortlist. Each candidate on it is someone the agency can explain and stand behind.
- Managing the offer. The agency handles salary expectations, notice periods and counteroffers, and keeps the candidate engaged until they start.
The employer stays in control throughout: it decides who to interview and who to hire.
Retained or contingency: what is the difference?
Agencies mainly work in one of two ways:
| Contingency recruitment | Retained search | |
|---|---|---|
| How the agency is paid | Only if a candidate it introduced is hired | Engaged for the search itself, usually exclusively |
| Exclusivity | Often not exclusive; several agencies may work the same role | One firm runs the whole search |
| Typical use | Specialist and professional roles | Senior, board-level and confidential appointments |
| What you get | Speed and a wide net | A structured search with a defined process and regular reporting |
Neither is better in every case. A mid-level specialist role with a reasonable candidate pool often suits contingency. A CEO, CFO or board appointment, or a search that must not become public, usually suits retained search. Bell Ward runs executive search for C-suite and board roles as a confidential, retained search.
Whichever model you use, ask for the fee terms in writing before the search starts. Make sure you understand what you pay, when, and what happens if a hire leaves early.
What licence does a recruitment agency in Malaysia need?
The Private Employment Agencies Act 1981 requires anyone carrying out recruiting activities to be licensed by JTKSM. There are three licence types (JTKSM):
- Licence A covers job placement within Malaysia.
- Licence B covers placement within and outside Malaysia, and foreign domestic workers within Malaysia.
- Licence C covers placement within and outside Malaysia, and non-citizen employees within Malaysia.
The 2017 amendments to the Act increased the penalty for operating without a licence to a fine of up to RM200,000, up to three years in prison, or both (Donovan & Ho).
Before you sign anything, ask for the agency’s licence number and check it against JTKSM’s published list of licensed agencies. A legitimate agency will give you its number without hesitation. Bell Ward’s is JTKSM licence 427.
When is a recruitment agency worth using?
Most employers fill some roles themselves and use an agency for others. A simple test:
| Hire it yourself when | Consider an agency when |
|---|---|
| Good candidates respond to your adverts | The right people are employed and not applying |
| The role is common and easy to assess | The role is specialist and hard to assess without market knowledge |
| There is no need for discretion | The search must stay confidential |
| Your managers have time to screen and interview | The role has been open long enough to cost the business |
The cost of an agency should be weighed against the cost of a vacancy that stays open and the cost of a hire that fails.
How do you choose the right recruitment agency?
Ask any agency you are considering these questions:
- Do you specialise in this kind of role? A recruiter who works only in finance, or only in technology, will understand the role and the candidate market better than one who covers everything.
- What is your licence number? Then check it with JTKSM.
- How will you find candidates? Listen for direct approach to people who are not job hunting, not just database searches and adverts.
- How do you assess candidates? Ask what happens between receiving a CV and sending it to you.
- What are your fees and terms? Get them in writing, including what happens if the hire leaves early.
- How do you handle candidate data? CVs are personal data under the Personal Data Protection Act, and the agency should be able to explain how it stores and shares them.
Frequently asked questions
Does a recruitment agency in Malaysia need a licence?
Yes. The Private Employment Agencies Act 1981 requires anyone carrying out recruiting activities to hold a licence from JTKSM. Operating without one can lead to a fine of up to RM200,000, up to three years in prison, or both.
What is the difference between a recruitment agency and executive search?
Executive search is a type of recruitment focused on senior and board-level roles. It is usually run as a retained, confidential search, with candidates approached directly rather than through adverts.
Who chooses the candidate, the agency or the employer?
The employer. The agency finds, screens and presents candidates, but the employer decides who to interview and who to hire.
Working with Bell Ward
Bell Ward is a boutique recruitment and executive search firm in Kuala Lumpur, founded in 2014 and licensed by JTKSM (licence 427). We recruit specialist, professional and senior roles in Finance & Accounting, IT, Sales & Marketing, HR, Supply Chain & Procurement, Shared Services and Legal, for permanent, contract and temporary roles. Every search is led by a consultant who specialises in that discipline, and you will know what the engagement involves and what it costs from the outset.
See our recruitment services, or book a free consultation to discuss a role. If you are a candidate, our Job Seekers page explains how we work with you.
