Understanding Employer of Record (EOR) Services in Malaysia
Expanding a business into a new country often comes with logistical and regulatory challenges. For companies looking to hire talent in Malaysia without setting up a local entity, Employer of Record (EOR) services offer a practical alternative.
EOR services, like the one offered by firms like Amaze Advisory, are particularly useful for organisations that are testing the Malaysian market, managing short-term projects, or hiring remote staff locally. Rather than investing time and resources into incorporation, businesses can operate more flexibly by partnering with a local EOR provider.
What Is an Employer of Record (EOR)?
An Employer of Record (EOR) is a third-party organisation that formally employs staff on behalf of another company. While the EOR handles the legal and administrative responsibilities tied to employment, the client company maintains full control over the employee’s role, responsibilities, and daily work.
Typical responsibilities managed by the EOR include:
- Drafting and issuing local employment contracts
- Managing monthly payroll and disbursing salaries
- Calculating statutory contributions such as EPF, SOCSO, EIS, and monthly tax deductions (PCB)
- Preparing Form EA for annual employee tax filing
- Supporting onboarding and offboarding processes
It’s important to note that while EORs assist with compliance, the client company remains ultimately responsible for its operations and workforce decisions.
Who Uses EOR Services in Malaysia?
EOR services are commonly used by:
- Foreign companies hiring employees in Malaysia without registering a local business
- Organisations undertaking temporary or pilot projects
- Firms employing remote workers or local representatives
- Businesses seeking quicker market entry without the long-term commitment of incorporation
This model is often favoured by startups, small and medium-sized enterprises (SMEs), and multinational corporations that require operational flexibility.
Comparing EOR to Company Incorporation
| Feature | EOR | Local Company Setup |
|---|---|---|
| Legal entity required | ❌ No | ✅ Yes |
| Hiring timeline | ✅ Faster (1–2 weeks) | ❌ Slower (4–6 weeks) |
| Compliance responsibility | ✅ Shared | ❌ Entirely on the company |
| Admin & payroll duties | ✅ Managed by the EOR | ❌ Managed internally |
EOR solutions are well-suited for short- to medium-term hiring plans or for companies exploring opportunities in Malaysia without making a full legal commitment upfront.
How the EOR Process Works
The process typically follows these steps:
- The client identifies and selects a candidate for the role.
- The EOR engages the employee under its local structure.
- The EOR manages payroll, statutory filings, and HR documentation.
- The client oversees the employee’s day-to-day tasks and performance.
- The EOR supports the overall employee lifecycle, including onboarding and exit processes.
This structure allows companies to operate compliantly in Malaysia while focusing on their core business objectives.
Estimated Costs of EOR Services in Malaysia
EOR pricing usually depends on factors such as salary level, role complexity, and the extent of support required. While costs vary by provider, indicative pricing may start around RM300 per month per employee, covering:
- Payroll administration
- Statutory compliance
- Standard HR support
Additional services, such as medical insurance or expense claim handling, may incur separate charges. Customised packages are often available for companies hiring multiple staff or bundling services.
Conclusion
Employer of Record services present a flexible hiring solution for companies looking to operate in Malaysia without the need for full incorporation. By handling the regulatory and administrative aspects of employment, EORs enable organisations to focus on building their team and achieving project goals.
Businesses considering expansion into Malaysia may find the EOR model a suitable option during the initial stages, especially when time, cost, or commitment levels are key concerns.
If you’re not ready to commit to setting up a company but still want to build your team in Malaysia, Amaze Advisory’s Employer of Record (EOR) service is a flexible, low-commitment option to consider.
📩 Or email us at salesteam@amazeadvisory.com to discuss your expansion plans.
