Malaysia Payslip Requirements: Complete LHDN & Employment Act Guide for 2026

Understanding Malaysian payslip requirements is essential for employers and employees to ensure compliance with the Inland Revenue Board (LHDN), Employees Provident Fund (EPF), Social Security Organisation (SOCSO), and Employment Insurance System (EIS). This comprehensive guide covers everything you need to know about payslip obligations in Malaysia for 2026.

Legal Framework

Employment Act 1955

The Employment Act governs employment relationships for employees earning RM 4,000 or less (and certain categories of workers):

• Section 21: Payment of wages
• Section 22: Time and mode of payment
• Section 24: Pay slips must be provided

Coverage:

• Employees earning RM 4,000 or less per month
• Manual laborers (regardless of salary)
• Certain supervisory employees
• Domestic servants

Income Tax Act 1967

Administered by LHDN (Lembaga Hasil Dalam Negeri Malaysia):

• Monthly Tax Deductions (PCB - Potongan Cukai Berjadual)
• Annual tax filing requirements
• Record-keeping obligations

EPF Act 1991

Governs mandatory retirement savings:

• Employee contribution: 11% (or 9%)
• Employer contribution: 13% (or 12%)
• Managed by KWSP (Kumpulan Wang Simpanan Pekerja)

Employees' Social Security Act 1969

Governs SOCSO (PERKESO) contributions:

• Employment Injury Scheme
• Invalidity Pension Scheme
• Covers Malaysian citizens and permanent residents

Employment Insurance System Act 2017

Governs EIS (SIP - Skim Insurans Pekerjaan):

• Job loss protection
• Employee: 0.2%
• Employer: 0.2%
• Managed by SOCSO/PERKESO

What Must Be Included on a Malaysian Payslip

Mandatory Information

Employer Details:

• Employer name
• Employer registration number
• Company address

Employee Details:

• Employee full name
• Employee ID/number
• Identity card number (NRIC) / Passport number
• EPF number
• SOCSO number (if applicable)
• Income tax number (if applicable)

Pay Period:

• Payment date
• Pay period (from - to dates)
• Number of working days

Earnings:

• Basic salary
• Allowances (transport, meal, housing, etc.)
• Overtime pay
• Bonuses/incentives
• Commissions
• Other payments
• Gross salary (total before deductions)

Deductions:

• EPF contribution (employee portion)
• SOCSO contribution (employee portion)
• EIS contribution (employee portion)
• PCB (monthly tax deduction)
• Zakat (if applicable)
• Other deductions (loan repayments, advance salary, etc.)

Net Salary:

• Total deductions
• Net pay (take-home salary)

Employer Contributions (Recommended):

• EPF employer contribution
• SOCSO employer contribution
• EIS employer contribution

Leave Balance:

• Annual leave balance
• Medical leave balance
• Other leave (optional)

2026 Tax Rates and Contribution Rates

Income Tax (PCB) Rates - 2026 Assessment Year

Resident Individual Tax Rates:

Chargeable Income (RM)	Tax Rate	Tax Amount (RM)
0 - 5,000	0%	0
5,001 - 20,000	1%	0 - 150
20,001 - 35,000	3%	150 - 600
35,001 - 50,000	6%	600 - 1,500
50,001 - 70,000	11%	1,500 - 3,700
70,001 - 100,000	19%	3,700 - 9,400
100,001 - 250,000	25%	9,400 - 46,900
250,001 - 400,000	26%	46,900 - 85,900
400,001 - 600,000	28%	85,900 - 141,900
600,001 - 1,000,000	28%	141,900 - 253,900
Over 1,000,000	30%	253,900 + 30% above

Tax Reliefs (Personal):

• Individual relief: RM 9,000
• Spouse relief: RM 4,000
• Child relief: RM 2,000 per child (max 6 children)
• Disabled child: Additional RM 6,000 per child
• EPF/life insurance: Max RM 7,000
• Education (self): Max RM 7,000
• Medical treatment (parents): Max RM 8,000
• Many more specific reliefs available

EPF Contribution Rates (2026)

For Malaysian Citizens:

Monthly Wages	Employee	Employer	Total
All levels	11%	13%	24%

For Employees Age 60+:

• Employee: 4%
• Employer: 4%

Optional Reduced Rate (for employees earning RM 5,000 or below):

• Employee: 9%
• Employer: 13%
• Total: 22%

Foreign Workers:

• Not mandatory
• Can opt-in voluntarily

Example Calculation:

• Gross Salary: RM 5,000
• Employee EPF: RM 5,000 × 11% = RM 550
• Employer EPF: RM 5,000 × 13% = RM 650
• Total EPF: RM 1,200

SOCSO Contribution Rates (2026)

Employment Insurance Scheme (Category A) + Invalidity Pension Scheme:

Rates based on wage brackets (from RM 30 to RM 4,000+):

Example Rates:

Monthly Wages (RM)	Employee (RM)	Employer (RM)	Total (RM)
3,000 - 3,999.99	17.25	54.40	71.65
4,000 - 4,999.99	19.75	63.15	82.90
5,000+	19.75	69.05	88.80

Employment Injury Scheme Only (for employees 60+):

• Employee: RM 0
• Employer pays full amount

Foreign Workers:

• Not covered by SOCSO
• Employer provides insurance or bond

EIS Contribution Rates (2026)

Employment Insurance System:

Monthly Wages	Employee	Employer	Total
Up to RM 4,000	0.2%	0.2%	0.4%

Maximum contribution: RM 8.00 per month (employee) + RM 8.00 (employer)

Example:

• Gross Salary: RM 3,500
• Employee EIS: RM 3,500 × 0.2% = RM 7.00
• Employer EIS: RM 3,500 × 0.2% = RM 7.00

Not applicable to:

• Foreign workers
• Domestic servants
• Self-employed

PCB (Monthly Tax Deduction) System

How PCB Works

Potongan Cukai Berjadual (Scheduled Tax Deduction):

• Monthly tax withholding system
• Based on LHDN PCB calculation method
• Uses computerized calculation (e-PCB)

PCB Calculation Method

Two Schedules:

1. Schedule for Monthly Payment - Most common
2. Schedule for Daily/Hourly Payment

Factors Affecting PCB:

• Monthly remuneration
• EPF contributions (deductible)
• Zakat payments (deductible)
• Number of dependents
• Tax reliefs claimed via TP1 form

Example:

• Monthly gross: RM 6,000
• EPF employee: RM 660 (11%)
• Chargeable income: RM 6,000 - RM 660 = RM 5,340
• PCB based on tax tables: Approximately RM 200-300/month

TP1 Form

Tax Relief Declaration Form:

• Submitted to employer
• Updated annually or when circumstances change
• Includes:
  • Marital status
  • Number of children
  • Insurance premiums
  • Other reliefs claimed

Payslip Components Explained

Allowances (Common Types)

Fixed Allowances:

• Travel allowance
• Meal allowance
• Housing allowance
• Phone allowance
• Parking allowance

Variable Allowances:

• Shift allowance
• On-call allowance
• Attendance bonus
• Performance incentive

Tax Treatment:

• Most allowances are taxable
• Some perquisites may be partially exempt
• Check LHDN guidelines for specifics

Overtime Pay Calculation

Employment Act Formula:

Ordinary Working Days:

• First hour: 1.5× hourly rate
• Subsequent hours: 2× hourly rate

Rest Days:

• First 8 hours: 2× hourly rate
• Subsequent hours: 3× hourly rate

Public Holidays:

• First 8 hours: 3× hourly rate
• Subsequent hours: 3× hourly rate

Example:

• Basic monthly: RM 3,000
• Hourly rate: RM 3,000 ÷ 26 days ÷ 8 hours = RM 14.42
• 2 hours OT on weekday: (RM 14.42 × 1.5 × 1) + (RM 14.42 × 2 × 1) = RM 50.47

Leave Entitlements

Annual Leave

Minimum Entitlement (Employment Act):

• 0-2 years service: 8 days
• 2-5 years service: 12 days
• 5+ years service: 16 days

Must Show:

• Days accrued
• Days taken
• Current balance

Sick Leave

Minimum Entitlement:

• 0-2 years service: 14 days
• 2-5 years service: 18 days
• 5+ years service: 22 days

Hospitalization Leave:

• 60 days per year (in addition to sick leave)

Dental/Outpatient:

• Counted within sick leave entitlement

Public Holidays

Federal Public Holidays: 11 days (gazetted annually)

• National Day
• Hari Raya Aidilfitri
• Chinese New Year
• Deepavali
• Christmas
• Etc.

State-specific holidays: Additional days vary by state

Maternity Leave

Duration: 98 consecutive days (for eligible employees) Eligibility:

• Worked for employer 4 months before confinement
• Maximum 5 surviving children

Pay: Full pay for entire maternity leave period

Paternity Leave

Duration: 7 consecutive days Eligibility: Married employees First 5 children only

Record Keeping Requirements

Employer Obligations

LHDN Requirements:

• Keep payroll records for 7 years
• EA forms (annual salary statement)
• CP8D (employee tax file)

EPF Requirements:

• Monthly contribution records
• Submit via i-Akaun portal
• Borang A (annual statement)

SOCSO Requirements:

• Monthly contribution records
• Submit via ASSIST portal
• Borang 8A (annual statement)

Employment Act:

• Employee register
• Wage records
• Attendance records
• Leave records

Electronic Records

Acceptable if:

• Secure and backed up
• Easily retrievable
• Can be printed when required
• Meet data protection standards

Electronic Payslips

Legal Acceptance

Generally Accepted:

• Electronic payslips are legally recognized
• Must be accessible to employees
• Should be secure and private

Best Practices:

• Email with PDF attachment
• Secure employee portal
• Download/print capability
• Historical access

Data Protection

Personal Data Protection Act 2010 (PDPA):

• Protect employee personal information
• Secure transmission
• Limited access
• Consent for processing
• Data breach notification procedures

Common Deductions

Statutory Deductions

EPF (Employees Provident Fund):

• Mandatory retirement savings
• Employee: 11% or 9%
• Withdrawal at age 55 (with some exceptions)

SOCSO (PERKESO):

• Social security protection
• Employment injury coverage
• Invalidity pension
• Survivors' pension

EIS (Employment Insurance System):

• Job loss protection
• Maximum 6 months benefits
• Re-employment assistance

PCB (Income Tax):

• Monthly tax withholding
• Credited against annual tax liability
• Can result in refund or balance owing

Voluntary Deductions

Zakat:

• Islamic religious obligation
• Tax-deductible
• Can reduce PCB

Insurance:

• Group life insurance
• Medical insurance
• Critical illness coverage

Savings Schemes:

• Company savings plan
• Cooperative contributions
• Share ownership schemes

Loan Repayments:

• Personal loans
• Salary advances
• Housing loans (if company-provided)

Others:

• Union dues
• Meal deductions
• Transport deductions

Penalties for Non-Compliance

LHDN Penalties

Late/Non-Payment of PCB:

• 10% penalty on outstanding amount
• Prosecution possible

Late Submission of Forms:

• CP39 (annual return): Fine up to RM 20,000 or imprisonment up to 6 months
• EA forms: Penalties for late submission

Incorrect Returns:

• Penalties for negligence
• Interest on underpaid amounts

EPF Penalties

Late Contribution:

• 6% per annum dividend rate plus
• Additional 18% per annum penalty

Non-Compliance:

• Fine up to RM 10,000 or imprisonment up to 3 years
• Continuing offense: Additional RM 50 per day

SOCSO Penalties

Late Contribution:

• Fine up to RM 10,000 or imprisonment up to 2 years
• Additional charges and interest

False Information:

• Fine up to RM 10,000 or imprisonment up to 2 years

Employment Act Penalties

Failure to Pay Wages:

• Fine up to RM 10,000 for each offense

Failure to Provide Payslip:

• Fine up to RM 10,000

Other Violations:

• Fines range from RM 5,000 to RM 50,000 depending on offense

Special Situations

Foreign Workers

EPF: Not mandatory (can opt-in) SOCSO: Not covered EIS: Not applicable PCB: Taxed as non-resident if in Malaysia less than 182 days

Non-Resident Tax Rates:

• Employment income: Flat 30%
• No reliefs or deductions
• Special categories (e.g., expatriates in certain sectors)

Part-Time Employees

EPF: Mandatory if earning RM 30 or more per month SOCSO: Mandatory if earning RM 30 or more per month EIS: Applicable if earnings exceed minimum PCB: Based on actual monthly remuneration

Contract/Freelance Workers

EPF: Generally not applicable (unless specified in contract) SOCSO: Generally not applicable PCB: May require income tax registration Self-Employment: Different tax filing requirements

Industry-Specific Considerations

Manufacturing

Shift Allowances:

• Must be clearly stated
• Subject to EPF/SOCSO/tax

Productivity Bonuses:

• Taxable income
• Included in EPF calculation

Services/Retail

Commission-Based Pay:

• Subject to all statutory deductions
• Variable PCB calculations

Tips/Service Charge:

• May be taxable depending on distribution method
• Check LHDN guidelines

Construction

Site Allowances:

• Common in construction
• Subject to statutory deductions

Project-Based Pay:

• Special PCB considerations
• End-of-project bonuses

Technology and Payroll Software

Essential Features

Statutory Compliance:

• EPF calculation (11% and 13%)
• SOCSO rate tables
• EIS calculation (0.2% each)
• PCB calculation (e-PCB method)

Integration:

• EPF i-Akaun portal
• SOCSO ASSIST portal
• EIS submission
• e-PCB system

Reporting:

• EA forms generation
• Borang A (EPF)
• Borang 8A (SOCSO)
• Monthly summaries

Popular Malaysian Payroll Systems

Cloud-Based:

• SQL Payroll
• HRD Corp approved systems
• Million Software
• AutoCount
• Talenox
• PayrollPanda

Features to Look For:

• LHDN e-PCB integration
• EPF/SOCSO auto-calculation
• Multi-language support (BM/English)
• Leave management
• Mobile access

How to Generate LHDN-Compliant Payslips

Need professional Malaysian payslips with accurate LHDN, EPF, SOCSO, and EIS calculations?

Our Malaysia Payslip Generator includes:

✅ LHDN-compliant PCB calculations - Accurate monthly tax withholding ✅ EPF contributions - 11% employee, 13% employer (2026 rates) ✅ SOCSO rates - Correct contribution tables ✅ EIS deductions - 0.2% employee and employer ✅ 2026 tax rates - Current income tax brackets ✅ Bilingual support - English and Bahasa Malaysia ✅ Unlimited generation - RM 12.50 (≈$2.99) for 24-hour access ✅ Instant PDF download - Professional templates

Generate Malaysia Payslip for $2.99 →

Frequently Asked Questions

Q: Are payslips mandatory in Malaysia?

A: Yes, under the Employment Act 1955, employers must provide payslips to employees. Failure to do so can result in fines up to RM 10,000.

Q: Can payslips be electronic?

A: Yes, electronic payslips are acceptable if employees can readily access, view, and print them securely.

Q: How long should I keep my payslips?

A: Keep them for at least 7 years to match LHDN's audit period and for personal financial records.

Q: What's the difference between EPF and SOCSO?

A: EPF is a retirement savings scheme (11% employee + 13% employer). SOCSO is social security insurance covering employment injury and invalidity (contribution rates vary by wage level).

Q: Is PCB the same as my annual tax?

A: No. PCB is a monthly tax estimate withheld by your employer. You still need to file annual tax returns (Form BE/B), which may result in a refund or balance owing.

Q: Can I claim back EPF before retirement?

A: Limited withdrawals are allowed for specific purposes: housing, education, medical, hajj. Full withdrawal at age 55 or under specific conditions.

Q: What if my employer doesn't contribute EPF/SOCSO?

A: This is illegal. Report to EPF/SOCSO immediately. Employers face penalties and must backpay all contributions plus interest.

Q: How do I verify my EPF contributions?

A: Log into EPF i-Akaun (https://secure.kwsp.gov.my/member/member/login) to check your contributions history.

Verification: Compare payslip EPF amount with actual deposits in your i-Akaun.

Q: Are bonuses subject to EPF/SOCSO/PCB?

A: Yes, most bonuses are considered wages and subject to all statutory deductions.

Conclusion

Malaysian payslip requirements for 2026 involve compliance with Employment Act, LHDN, EPF, SOCSO, and EIS regulations. Employers must provide detailed payslips showing earnings, statutory deductions (EPF, SOCSO, EIS, PCB), and leave balances.

Key Takeaways:

1. Payslips mandatory under Employment Act 1955
2. EPF: 11% employee + 13% employer (24% total)
3. SOCSO: Variable rates based on wage level
4. EIS: 0.2% employee + 0.2% employer
5. PCB: Monthly tax withholding using LHDN schedules
6. Keep records for 7 years (LHDN requirement)
7. Electronic payslips acceptable with proper access
8. Penalties up to RM 10,000 for non-compliance

Stay compliant with Malaysian payroll regulations using proper systems and processes. For complex situations, consult LHDN, EPF, SOCSO, or a payroll professional.

Need LHDN-compliant payslips? Try our Malaysia Payslip Generator - $2.99 for 24-hour unlimited access!

---

Last updated: January 29, 2026 - Based on 2026 EPF, SOCSO, EIS, and income tax rates. Regulations may change. Always verify with LHDN.gov.my, KWSP.gov.my, or PERKESO.gov.my.