First-Time Employer Payroll Checklist Malaysia
Everything you need to set up when hiring your first employee in Malaysia
Congratulations — you have just hired your first employee. This is a major milestone for your business. But alongside the excitement comes a real question: what do I actually need to do to pay them legally?
If you are feeling overwhelmed, you are not alone. Malaysian employment law requires employers to register with multiple government agencies, make monthly statutory contributions, and file regular reports — all with strict deadlines. Missing any of these can result in fines, back-payments, and even prosecution.
This guide walks you through every step, from the day you hire your first employee to running your first payroll. Follow this checklist and you will be fully compliant and confident.
Time-sensitive: Most registrations must be completed within 7 days of hiring your first employee. Start immediately — do not wait until your first payroll date.
Step 1: Register as an Employer with EPF (KWSP)
EPF Employer Registration
Deadline
Within 7 days of hiring your first employee
How to Register
- Online via i-Akaun (Employer) at kwsp.gov.my
- In person at any KWSP branch office
Documents Needed
- KWSP 1 form (Employer Registration)
- Business registration certificate (SSM)
- Copy of owner/director MyKad
What You Get
An EPF employer number — you will use this for all future EPF contributions and Borang A submissions.
EPF contributions are mandatory for all Malaysian employees and permanent residents. The current employer contribution rate is 13% for employees earning RM5,000 and below, and 12% for those earning above RM5,000. Employees contribute 11% of their monthly wages.
Step 2: Register with SOCSO (PERKESO)
SOCSO Employer Registration
Deadline
Within 30 days of hiring your first employee
How to Register
- Online via the PERKESO ASSIST Portal at assist.perkeso.gov.my
- In person at any PERKESO branch office
Forms Required
- Borang 1 (Form 1) — Employer registration form
- Borang 2 (Form 2) — Employee registration form (one per employee)
Coverage
- Employment Injury Scheme — covers work-related accidents, occupational diseases, and commuting accidents
- Invalidity Scheme — covers invalidity or death not related to employment
SOCSO contributions are based on the employee's monthly wages and follow a fixed contribution schedule. The employer pays 1.75% and the employee pays 0.5% of insured wages for employees under the Employment Injury Scheme and Invalidity Scheme. Employees aged 60 and above are covered under the Employment Injury Scheme only, with the employer contributing 1.25%.
Step 3: Register with EIS (SIP)
Employment Insurance System Registration
Good News
EIS registration is typically handled simultaneously with SOCSO through the PERKESO ASSIST Portal. If you have registered for SOCSO, your EIS registration is usually processed at the same time.
Contribution Rate
Employer: 0.2% of employee monthly wages
Employee: 0.2% of employee monthly wages
What It Covers
Provides temporary financial assistance to retrenched employees, job search allowance, training allowance, early re-employment allowance, and reduced income allowance.
Step 4: Register with LHDN as an Employer
LHDN Employer Registration
Why You Need This
As an employer, you are responsible for deducting PCB (Potongan Cukai Bulanan) — Monthly Tax Deduction — from your employees' salaries and remitting it to LHDN.
How to Register
- Online via e-Daftar at edaftar.hasil.gov.my
- In person at any LHDN branch
What You Get
An employer E number (e.g., E1234567890) used for PCB remittance, CP39 submissions, and all employer-related tax correspondence.
Documents Needed
- Business registration certificate (SSM)
- Company directors' details
- Business address proof
Step 5: Understand Your Monthly Obligations
Once registered, you have recurring monthly obligations. Every single month, without exception, you must calculate, deduct, and remit the following contributions.
Monthly Payroll Calendar
| Contribution | Deadline | Submission Method |
|---|---|---|
| EPF (KWSP) | 15th of the following month | i-Akaun (Employer) / Borang A |
| SOCSO (PERKESO) | 15th of the following month | PERKESO ASSIST Portal |
| EIS (SIP) | 15th of the following month | PERKESO ASSIST Portal |
| PCB (Income Tax) | 15th of the following month | e-PCB / CP39 online |
The 15th is not flexible. If the 15th falls on a weekend or public holiday, payment must be made on the last working day before the 15th. Late payments attract penalties across all agencies.
Step 6: Set Up Employment Contracts
Before (or on) your employee's first day, you should have a proper employment contract in place. A well-drafted contract protects both you and your employee, and is required under Malaysian employment law.
Your employment contract should include:
- Job title and description
- Salary and payment terms
- Working hours and rest days
- Leave entitlements (annual leave, sick leave, maternity/paternity leave)
- Probation period and notice period
- EPF, SOCSO, and EIS contribution acknowledgement
- Termination and resignation terms
Need a contract template? Use our free Employment Document Generator to create a compliant Malaysian employment contract in minutes.
Step 7: Choose a Payroll System
You have two main options for running payroll: spreadsheets or payroll software. For a first-time employer with one or two employees, a spreadsheet might seem tempting — but it comes with real risks.
Excel / Manual Payroll
- ×Must manually update EPF, SOCSO, EIS rates
- ×PCB calculation errors are common
- ×No automatic reminders for deadlines
- ×Borang EA and CP39 generated manually
- ×Data loss risk from file corruption
Cloud Payroll (HavaHR)
- Statutory rates always up to date
- PCB auto-calculated using LHDN formula
- Deadline reminders and notifications
- One-click Borang EA and report generation
- Automatic cloud backup and security
If you are starting from scratch with no payroll experience, cloud payroll software will save you from the most common and costly mistakes new employers make. Read our detailed comparison: Why Malaysian Businesses Are Moving Beyond Excel Payroll.
Penalties for Not Registering or Late Payment
Malaysian authorities take employer compliance seriously. Here is what you face if you fail to register or miss payment deadlines:
EPF Act 1991 Penalties
- Failure to register: Fine up to RM10,000 or imprisonment up to 3 years, or both
- Late contribution payment: Dividend loss charges on outstanding amount
- Failure to remit contributions: Fine up to RM10,000 or imprisonment up to 3 years, or both
SOCSO Act 1969 Penalties
- Failure to register: Fine up to RM10,000 or imprisonment up to 2 years, or both
- Late contribution: Subject to additional penalties and interest charges
- Failure to report accidents: Fine up to RM10,000
LHDN / Income Tax Act 1967 Penalties
- Failure to deduct PCB: Employer becomes personally liable for the tax amount
- Late remittance: Penalty of up to 35% of the unpaid PCB amount
- Failure to submit Borang E: Fine of RM200 to RM20,000 or imprisonment up to 6 months, or both
These penalties are not theoretical. EPF and SOCSO regularly conduct audits and enforcement actions. As a new employer, getting your registrations right from the start is far easier (and cheaper) than correcting mistakes later.
Your First Month: A Timeline
Here is a practical timeline of what to do and when, starting from the day you hire your first employee:
Day 1: Employee Starts
Collect employee documents (MyKad, bank details, tax number). Sign employment contract. Begin employer registrations.
By Day 7: Complete EPF Registration
Submit KWSP 1 form and register employee. This is the strictest deadline — do not miss it.
By Day 14: Complete SOCSO + EIS Registration
Submit Borang 1 (employer) and Borang 2 (employee) via PERKESO ASSIST Portal. EIS is processed simultaneously.
By Day 14: Register with LHDN
Register via e-Daftar to get your employer E number. Set up e-PCB access for monthly tax remittance.
By Day 21: Set Up Payroll System
Choose your payroll method. Set up employee records, salary structure, and contribution details. Run a test calculation.
End of Month: Run First Payroll
Process your first payroll. Generate payslips. Prepare statutory contributions for remittance by the 15th of next month.
How HavaHR Simplifies Payroll for First-Time Employers
Setting up payroll for the first time is daunting, especially when you are already busy running your business. HavaHR is designed to make this as painless as possible, even if you have zero payroll experience.
Guided Setup
Step-by-step onboarding walks you through entering your company details, adding employees, and configuring statutory contributions. No payroll knowledge required.
Automatic Statutory Calculations
EPF, SOCSO, EIS, and PCB are calculated automatically based on the latest rates. You never need to look up contribution tables or tax schedules manually.
Deadline Reminders
Never miss the 15th again. HavaHR sends reminders before each statutory payment deadline so you stay compliant without tracking dates manually.
Payslips and Reports
Generate professional payslips, Borang EA, and statutory reports with one click. Your employees get access to their own payslips through the self-service portal.
Scales with You
Start with one employee today, grow to a hundred tomorrow. HavaHR scales with your business — no migration, no new software, no disruption.
First Time Doing Payroll?
HavaHR walks you through it. From setup to your first pay run, we make payroll simple for Malaysian business owners — even if you have never done it before.
Start your free trial and run your first payroll in minutes.
Related Resources
EPF/SOCSO/EIS Calculator
Calculate all statutory contributions instantly
PCB Calculator
Calculate monthly tax deduction for employees
Excel Payroll Malaysia
Why businesses are moving beyond spreadsheets
Payroll Software Malaysia
Automate your entire payroll process
EPF Employer Guide 2026
Contribution rates, registration and deadlines
EA Form (Borang EA) Guide
Complete guide to preparing EA forms
Frequently Asked Questions
When must I register as an employer with EPF (KWSP)?
You must register with EPF within 7 days of hiring your first employee. This applies to all employers in Malaysia, regardless of business size. Registration can be done online via the i-Akaun (Employer) portal or at any KWSP branch office.
Do I need to register with SOCSO even if I only have one employee?
Yes. All employers with one or more employees earning RM5,000 or below per month must register with SOCSO (PERKESO). Employees earning above RM5,000 who were not previously covered may opt out, but it is strongly recommended to register all employees for protection.
What is the difference between SOCSO and EIS?
SOCSO (Social Security Organisation) covers work-related injuries, disabilities, and death under the Employment Injury Scheme and Invalidity Scheme. EIS (Employment Insurance System) covers retrenchment, providing temporary financial assistance and re-employment services. Both are mandatory and managed by PERKESO.
What happens if I do not register as an employer with EPF?
Failure to register with EPF is an offence under the EPF Act 1991. Penalties include a fine of up to RM10,000, imprisonment of up to 3 years, or both. You will also be liable for all unpaid contributions plus dividend loss.
How do I get an E number from LHDN?
You can register as an employer with LHDN via the e-Daftar online system or by visiting a nearby LHDN branch. Once registered, you will receive an employer E number (e.g., E1234567890) which is used for all PCB remittance and reporting purposes.
What is the deadline for monthly statutory payments?
EPF contributions, SOCSO contributions, EIS contributions, and PCB (income tax) must all be remitted by the 15th of the following month. For example, January salary deductions must be submitted by 15th February.
Can I do payroll myself or do I need to hire an accountant?
You can do payroll yourself, especially with cloud payroll software like HavaHR that automates calculations and compliance. Many small business owners start with spreadsheets but quickly find that payroll software saves time and reduces the risk of costly errors.
What documents do I need from my new employee?
You need a copy of their MyKad (IC) or passport for foreign workers, bank account details for salary payment, their income tax number (if they have one), and a completed Borang TP1 if they wish to declare tax reliefs. You should also have them sign an employment contract.
Do I need to register with HRDF (HRD Corp)?
Registration with HRD Corp is mandatory for employers in certain industries with 10 or more Malaysian employees. If you have fewer than 10 employees, you may register voluntarily. The levy is 1% of monthly wages for employers with 10 or more employees.
How much does it cost to set up payroll for a small business in Malaysia?
Statutory registrations (EPF, SOCSO, EIS, LHDN) are free. Cloud payroll software like HavaHR starts at an affordable monthly subscription with no upfront costs. The main investment is your time to complete registrations and set up employee records, which typically takes a few days.