Most Malaysian SMB founders treat hiring as a sales event: you find someone capable, agree on a salary, they start Monday. Then come the forms. Then come the penalties. The hiring process in Malaysia is not optional paperwork—it is statutory obligation. EPF, SOCSO, EIS, employment contracts, tax withholding, and statutory deductions have hard deadlines, real penalties for non-compliance, and cascading effects on your payroll and accounting. Get it wrong at hire number one, and you compound the error across five staff. This is what your accountant assumes you already know, and what most online guides gloss over. Here is what actually matters. The four statutory deductions you will make every month When you pay an employee in Malaysia, you are not simply transferring salary to their bank account. You are withholding and remitting four separate statutory amounts. Miss one and you are personally liable. EPF (Employees Provident Fund) EPF is the mandatory pension scheme. Both employer and employee contribute a percentage of gross salary. Current rates (2025, but always verify with EPF Malaysia): Employee contribution: 11% of gross salary Employer contribution: 12% of gross salary For an employee earning RM3,000 per month: You withhold RM330 from their pay (employee contribution) You pay RM360 from your own budget (employer contribution) Total monthly EPF outflow: RM690 Most founders forget that EPF is not just a deduction from salary—it is an additional cost to you. That RM3,000 salary actually costs you RM3,360 in EPF alone. EPF is remitted monthly, by the 10th of the following month. Late payment carries penalties and compound interest. SOCSO (Employees' Social Security Organisation) SOCSO covers work-related injury, disability, and death benefits. Only the employer contributes. Current rate (2025, always verify): Employer contribution: 0.5% to 1.25% of gross salary (depends on wage band and industry risk class) For most office and service work, assume 0.5%. For an employee earning RM3,000: You pay RM15 to RM37.50 per month (depending on risk class) SOCSO is remitted monthly, by the 10th of the following month. EIS (Employment Insurance Scheme) EIS provides unemployment and temporary disability benefits. Both employer and employee contribute. Current rate (2025, verify with SOCSO): Employee contribution: 0.4% of gross salary Employer contribution: 0.8% of gross salary For an employee earning RM3,000: You withhold RM12 (employee contribution) You pay RM24 (employer contribution) EIS is remitted together with SOCSO, monthly by the 10th. Income tax (PCB) You withhold income tax monthly under the Pay-As-You-Earn (PAYE) system via PCB (Potongan Cukai Bulanan). The amount depends on the employee's individual relief claim and is non-linear. To calculate PCB, you need: The employee's completed Form CP 8A (Personal Relief Claim Form) Their annual salary Their personal status (single, married, dependents) You withhold monthly and remit to the Inland Revenue Board by the 14th of the following month. Action: Do not assume. Use the official PCB calculator on the IRB website or ask your accountant for the exact deduction table for the year. Your total cost of hire—the real budget A RM3,000-per-month salary costs you significantly more. Here is the full picture: Item Monthly Cost Employee salary RM3,000 Employer EPF (12%) RM360 SOCSO (0.5%) RM15 EIS (0.8%) RM24 Total monthly cost to you RM3,399 That RM3,000 salary is actually RM3,399 in real cost. Most founders budget only the salary number and then panic when payroll hits their bank account on the 25th. Before they start: the statutory employment contract An employment contract in Malaysia must comply with the Employment Act 1955. You cannot skip this or use a generic template from another country. Non-compliance is enforceable against you, not against the employee, in a labor dispute. A valid contract must cover: Names of both parties Job title and main duties Place of work Date of engagement and duration (fixed-term or permanent) Gross salary and payment frequency Notice period for termination (minimum 4 weeks for either party; 8 weeks if 2+ years service) Annual leave entitlement (minimum 8 days for first year; 12 days after; 16 days after 5+ years) Medical benefits (if offered) Probation period (if any; max 6 months) Disciplinary and grievance procedures Confidentiality and IP assignment clauses (if relevant) You can use an e-signature tool like Orin's contract module to execute this, but the content must be legally compliant. Many founders use free templates from government websites or hire a lawyer for RM500–RM1,500. That is cheaper than a wrongful termination claim later. Key point: The contract must be signed before the employee's first day. Not during orientation. Not after a probation period. Before day one. Registration and notification deadlines You do not simply hire someone and start deducting. There are hard registration and notification deadlines. EPF regist