Understanding market competitive salaries in Malaysia is crucial for both employers and employees. It ensures fair compensation for the employee's skills and experience while remaining financially sustainable for the company.

Industry and Experience

Salaries vary significantly across industries in Malaysia. Certain industries consistently offer higher median salaries. For instance, in corporations, the Telecommunication industry leads with a median salary of RM 5,500, followed by Insurance (RM 5,150) and Banking & Finance (RM 5,125).

Experience is another crucial factor. Entry-level and Junior Executive positions often see lower salaries, with higher growth potential. Entry-level roles witnessed the highest salary increment (16.1%) in 2023.

Location

There's a significant difference in salaries between urban and rural areas. Kuala Lumpur offers the highest median salary (RM 3,750) within Malaysia, while Kelantan has shown the highest growth (12.9%). Cities like Cyberjaya often lead with the highest median salaries due to a concentration of specific industries.

Company Size

Salary structures can differ between Small and Medium Enterprises (SMEs) and large corporations. The Insurance industry offers the highest average salary (RM 5,250) for SMEs, while the Telecommunication industry offers the highest median salary (RM 5,500) for corporations.

Additional factors

Several other factors can influence market competitive salaries in Malaysia. These include:

• Education and qualifications: Employees with higher educational qualifications and specialized certifications often command higher salaries.
• Skills and expertise: Specific skills and proven expertise in a particular field can significantly boost earning potential.
• Cost of living: Salaries may be adjusted based on the living expenses in a particular region.

Salary Surveys, Job Boards, and Recruitment Agencies are some reputable resources to research market competitive salaries in Malaysia.

In Malaysia, a national minimum wage is applicable to most private-sector employees. The regulations are outlined in the National Wages Consultative Council Act 2011 (Act 732) and the Minimum Wages Order 2022.

Minimum Wage Rates

The current minimum wage, as of May 1st, 2022, is RM1,500 per month and is applicable nationwide. This minimum wage applies to employees in the private sector with employers having five or more employees. However, employers with fewer than five employees, considered micro-enterprises, have a separate minimum wage implemented in July 2023 with varying rates depending on the work week (daily rates).

Determining Minimum Wage Rates

The National Wages Consultative Council (NWCC), established by Act 732, is responsible for recommending minimum wage rates to the government. The NWCC considers various factors when recommending minimum wage adjustments, including the cost of living, productivity growth, and socioeconomic conditions. The government has the final say on minimum wage rates, following recommendations from the NWCC. The minimum wage is reviewed by the government every two years.

In Malaysia, employees are offered a comprehensive benefits system, which includes both mandated and discretionary components. This system encompasses various bonuses and allowances.

Statutory Benefits (Guaranteed by Law)

Statutory benefits are compulsory contributions or entitlements set by the Malaysian government. These include:

• Annual Leave: Employees receive paid leave based on their service duration. The minimum ranges from 8 days for less than two years to 16 days for over five years.
• Public Holidays: Employees are entitled to full pay on public holidays, with additional compensation for those required to work.
• Maternity Leave: Maternity leave is provided for a minimum of 90 days.
• Other Mandatory Benefits: These include sick leave, hospitalization leave, and severance benefits.

In addition, both employers and employees contribute to mandatory social security schemes like the Employees Provident Fund (EPF).

Supplemental Benefits (Offered at Employer Discretion)

Many companies offer additional benefits to attract and retain talent. These can include:

• 13th-Month Bonus: A common yet non-mandatory bonus paid annually, often equivalent to one month's salary.
• Performance-Based Bonuses: Incentives based on individual or company performance.

Companies may also provide various allowances to help with specific expenses:

• Housing Allowance: To assist with accommodation costs.
• Transportation Allowance: To cover commuting expenses.
• Meal Allowance: To help with daily meal expenses.
• Cost-of-Living Allowance: To adjust for varying living costs in different regions.

In Malaysia, there are specific regulations that govern payroll practices, which are crucial for employers to understand.

Payroll Frequency and Payment Deadlines

The most prevalent payroll cycle in Malaysia is monthly, with employees legally entitled to receive their salaries by the 7th day of the subsequent month. This requirement is a part of Malaysian labor laws.

For certain industries or company structures, there is some flexibility. Bi-weekly or even weekly pay cycles may be implemented, especially for contractual or temporary employment. However, these variations must be clearly stated in employment contracts or company policies to maintain transparency with employees.

Salary Computation

The calculation of an employee's salary in Malaysia involves determining their gross pay. This is done by adding various allowances and benefits to their basic salary. The gross pay is then subject to various deductions, including statutory deductions like income tax (managed through the Monthly Tax Deduction (MTD) system) and mandatory contributions to social security schemes like the Employees Provident Fund (EPF) and the Employee Insurance Scheme (EIS).

Employers are obligated to provide employees with payslips that detail these calculations. These payslips can be issued in either paper or electronic format.

Additional Considerations

While not legally required, it is customary for employers in Malaysia to provide a 13th-month bonus at the end of the year.

Companies can either handle payroll in-house or outsource it to a licensed payroll service provider.