Last updated: February 2026
7 Payroll Mistakes That Cost Malaysian SMEs Money
Are You Making These Common Errors? Check Your Process Now.
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Learn More About Payroll Mistakes
The most common payroll mistakes in Malaysia include: 1) Using flat 11% EPF calculation instead of the Third Schedule. 2) Failing to categorize SOCSO correctly (Injury vs Invalidity). 3) Incorrectly calculating PCB on bonuses. 4) Miscalculating overtime on Rest Days vs Public Holidays. 5) Prorating salary incorrectly for new hires.
Deep dive into specific payroll calculation errors. Learn the correct formulas and rules to ensure your employees are paid correctly and your company remains compliant.
Frequently Asked Questions
How do I calculate salary for an incomplete month?
You must use the "Ordinary Rate of Pay" formula to prorate the salary based on days worked vs days in the month (or wage period). Common mistake is dividing by 26 fixed days for everything.
Is bonus subject to PCB?
Yes, and it uses a special "Additional Remuneration" formula. Simply adding it to monthly salary and using the table is often incorrect and leads to under-deduction.
Do I pay EPF on unpaid leave?
No, EPF is based on wages paid. If wages are deducted for unpaid leave, the EPF contribution is based on the reduced amount.
What if I over-deducted PCB?
It will be refunded to the employee by LHDN after they file their tax return. However, consistent errors reflect poorly on the employer.