Before hiring, most owners think about the salary. The real monthly cost is higher, because employers also pay statutory contributions and carry other costs that are easy to overlook. Knowing the full number helps you price your work and decide whether you can afford the hire.
What does an employer pay on top of salary?
For a Malaysian employee aged under 60, the main employer contributions are:
| Contribution | Employer's share | Notes |
|---|---|---|
| EPF (KWSP) | 13% of wages up to RM5,000; 12% above RM5,000 | Rates for Malaysian citizens and permanent residents |
| SOCSO (PERKESO) | About 1.75% of wages | Worked out from PERKESO's contribution table, on wages up to RM6,000 a month |
| EIS | 0.2% of wages | On wages up to RM6,000 a month |
| HRD Corp levy | 1% of monthly wages | Compulsory if you have 10 or more Malaysian employees (0.5% if you choose to register with 5–9) |
Different rules apply to some employees, such as non-Malaysian staff, whose EPF became mandatory at 2% from October 2025 wages, and employees aged 60 and over. Always check the current rates with each agency.
A worked example
Take a new employee on RM2,500 a month, in a business with 12 Malaysian employees:
| Item | Monthly cost (approx.) |
|---|---|
| Salary | RM2,500.00 |
| EPF (13%) | RM325.00 |
| SOCSO (about 1.75%, from PERKESO's table) | about RM44 |
| EIS (0.2%) | RM5.00 |
| HRD Corp levy (1%) | RM25.00 |
| Approximate total | about RM2,899 |
So the hire costs roughly 16% more than the salary alone, before any other costs. SOCSO is an estimate here, because PERKESO uses a contribution table rather than an exact percentage. Your payroll software or PERKESO's table gives the exact figure.
What other costs do owners forget?
- Overtime and allowances. Regular overtime can add significantly to monthly pay.
- Leave cover. Annual and sick leave are paid. Someone may need to cover the work.
- Equipment and tools: uniform, phone, laptop, software seats.
- Training and onboarding time. A new hire takes time to become fully productive.
- Bonuses, if you've promised or usually pay them. Statutory contributions may apply to these too.
- Admin time. Payroll calculations, statutory payments, payslips, EA forms and HR paperwork all take hours each month.
How to use this before you hire
- Work out the total monthly cost, not just the salary.
- Check that the role creates enough revenue or saves enough time to justify it.
- Put the agreed pay and terms in a written contract from day one. See our employment contract checklist.
Frequently asked questions
How much EPF does an employer pay in Malaysia?
For Malaysian employees under 60, the employer contributes 13% of monthly wages of RM5,000 and below, and 12% for wages above RM5,000. Different rates apply to some groups, so check KWSP's current rates.
How much does SOCSO cost an employer?
For most employees under 60, the employer's SOCSO share is about 1.75% of monthly wages, worked out from PERKESO's contribution table, on wages up to RM6,000 a month. EIS adds 0.2% on the same capped wages.
When does an employer need to pay the HRD Corp levy?
Registration is compulsory for employers with 10 or more Malaysian employees, with a levy of 1% of monthly wages. Employers with 5 to 9 Malaysian employees can choose to register, with a 0.5% levy.
Can Fitaz Corporate work out these costs for my business?
Yes. Fitaz Corporate's payroll service calculates and checks pay, EPF, SOCSO, EIS and PCB every month, and a free 10-minute consultation is a good place to start.