In the Malaysian business landscape, a strict framework of legal and statutory obligations governs the relationship of the responsibility of the employer and employee.Every employer in Malaysia has the responsibility in ensuring that their organisation remains compliant with the Inland Revenue Board (HASiL), the Employment Act 1955, and the Occupational Safety and Health Act (OSHA) 1994.
Fulfilling an employer’s responsibilities is not just about payroll; it is about creating a safe and healthy work environment while meeting the remuneration and tax requirements set by law.
Core Registration and Monthly Obligations (MTD/PCB)
An employer’s primary responsibility begins with identifying the entity and systematically deducting taxes from employees.
- Registration of Employer Number (E File): Every employer must register for an employer’s tax reference number (prefixed with “E”) through the IRBM’s official channels.
- Monthly Tax Deductions (MTD/PCB): Employers are required to deduct tax from employees’ monthly remuneration.
- Calculation: Deductions must be based on the Schedule of MTD or the IRBM’s computerised calculation method.
- Remittance: Payment must be remitted to the IRBM on or before the 15th day of the subsequent month.
- Submission Method: Employers must use the e-PCB, e-Data PCB, or e-CP39 applications provided via the MyTax/IRBM portal.
Annual Reporting and Remuneration Statements
Year-end compliance is critical to ensure that employees can file their personal income taxes accurately and on time.
- Form EA / EC (Remuneration Statement): Employers must prepare and provide this statement to every employee on or before the last day of February of the following year.
- Form E & C.P.8D (Employer Return Form):
- Deadline: Must be submitted by 31 March of the following year.
- Mandatory e-Filing: Submission of Form E is compulsory via e-Filing (e-E).
- Completion: Form E is only considered “complete” once the C.P.8D (employee data) is furnished. Note: If you have already submitted via e-Data Praisi, C.P.8D is not required.
- Form CP58 (Incentive Payments): For businesses involving agents, dealers, or distributors, a statement of monetary and non-monetary incentives must be provided to them by 31 March.
Notification of Changes: New Hires and Cessations
As of 1 September 2024, the IRBM has mandated online submissions for most personnel changes to streamline monitoring.
| Form | Purpose | Deadline | Submission Method |
| CP22 | Notification of New Employee | Within 30 days of commencement | Mandatory online via e-CP22(MyTax). |
| CP22A / CP22B | Cessation of Employment / Death | Not less than 30 days before cessation | Mandatory online via e-SPC. |
| CP21 | Employee Leaving Malaysia (>3 months) | Not less than 30 days before departure | Mandatory online via e-SPC. |
Tax Clearance and Money Withholding
When an employee leaves the company, passes away, or intends to leave Malaysia for more than three months, the employer has a “withholding” obligation.
Employers must withhold all payments to the employee—including salary and gratuity—for 90 days or until they receive a Tax Clearance Letter (TCL). This process ensures the individual settles all outstanding tax liabilities before the employer releases the final funds.
Record Keeping and Compliance
Under Malaysian tax law, employers must retain records for 7 years. These records must be kept in an orderly manner and made readily accessible for IRBM audits. Employers should not fail to maintain these records or comply with the deadlines mentioned above. It can result in fines ranging from RM200 to RM20,000, or even imprisonment.
Pro Tip: Compliant payroll software can automate MTD and Form E filing. Handling a high volume of employees or complex incentive structures (CP58) can challenge your team. In that case, ensure you back up your digital records and align them with the IRBM’s e-Data specifications.
Occupational Safety and Health (OSHA 1994)
Under the Occupational Safety and Health Act 1994, an employer must take proactive steps to provide a safe and productive workplace. The rights and responsibilities related to health and safety are paramount in preventing occupational hazards.
- Safe Working Environment: It is the responsibility to provide a safe workplace and a safe work environment. It minimises risks to employees’ health.
- Workplace Environment: The employer is responsible for maintaining a safe and healthy workplace, ensuring that all equipment is secure and thatstaff are properly trained.
- Occupational Health and Safety: Every employer must ensure that the workplace does not pose a threat.
Employment Act 1955 and Employee Rights
The Employment Act 1955 (and its subsequent amendments) defines the contract of service and the employment contract between the employee and the employer.
- Remuneration & Wage Period: Employers must pay employees within the stipulated wage period (no later than the 7th day after the last day of the wage period).
- Leave Entitlements: The law provides for mandatory annual leave, sick leave, and public holiday entitlements.
- Fair Treatment: To avoid claims of unfair dismissal or discrimination in the workplace, employers must clearly set out employment details and terms in a written contract.
- Employment Discrimination: It is a core responsibility as an employer to prevent employment discrimination and ensure job satisfaction by adhering to the agreed-upon work schedule, salary, and benefits.
Understanding Responsibilities of an Employer at the Workplace in Malaysia
Navigating the transition to mandatory e-Filing for CP22 and e-SPC can be tricky if you have not yet fully configured your MyTax profile.If you need assistance with employer registration or annual filing, reach out to our support team or consult with a tax specialist.
Source: Responsibility of Employer
