Foreign worker payroll in Malaysia 2026: EPF 2%, SOCSO, Lindung 24 Jam, levy and digital wages
The rules for paying foreign workers changed more in 2024–2026 than in the previous decade. Here's the complete picture for payroll teams.
Foreign workers are central to manufacturing, construction, plantations and services in Malaysia — and their payroll now looks much closer to Malaysians'. Since 2024 they've joined SOCSO's Invalidity Scheme, since October 2025 they contribute to EPF, and since June 2026 they're covered by Lindung 24 Jam. This guide sets out what applies today.
Foreign worker payroll at a glance
| Item | Applies to foreign workers? | Rate (summary) |
|---|---|---|
| Minimum wage | Yes | RM1,700 a month (domestic workers excluded) |
| EPF | Yes, since October 2025 wages | 2% employee + 2% employer |
| SOCSO (Act 4) | Yes | Employment Injury + Invalidity (from 1 July 2024); First Category if first entry under 55 |
| Lindung 24 Jam | Yes — mandatory | 0.75% of wages, employee only (phase 1) |
| EIS | No | Malaysians and PRs only |
| PCB | Yes, if taxable | Residents: normal scale; non-residents: flat rate |
| HRDF levy | Not counted in headcount | Levy is based on Malaysian employees |
| Foreign worker levy | Yes — employer cost | Paid to Immigration annually per worker |
EPF: 2% + 2% since October 2025
From October 2025 wages (contributions due by 15 November 2025), EPF contributions became mandatory for non-Malaysian employees holding a valid passport and an employment pass or permit: 2% from the employee and 2% from the employer. Domestic servants are excluded. See KWSP's announcement.
SOCSO and Lindung 24 Jam
- Foreign workers have been covered by SOCSO's Employment Injury Scheme since 2019 and by the Invalidity Scheme since 1 July 2024, on the same RM6,000 wage ceiling as Malaysians. See PERKESO's foreign worker page.
- Lindung 24 Jam (non-employment injury cover) started on 1 June 2026. The worker pays 0.75% of wages up to RM6,000, deducted and remitted by the employer. When the Cabinet made the scheme optional for Malaysians in July 2026, it stayed mandatory for foreign workers.
- PERKESO lists the foreign worker's share as 0.5% Invalidity plus 0.75% Lindung 24 Jam — 1.25% in total.
- EIS does not apply to foreign workers.
Minimum wage, overtime and the Employment Act
Foreign workers are entitled to the RM1,700 minimum wage and to Employment Act protections on hours, rest days, overtime and leave like any other employee. Overtime is paid at at least 1.5× on normal days, 2× on rest days and 3× on public holidays — see how to calculate overtime. Budget 2027 announced a rise to RM2,000 from June 2027, with MSMEs below RM50 million annual sales exempted.
Workers paid daily or hourly should be paid on actual verified hours. Geofenced clock-in — where workers can only clock in on site and supervisors approve on site — reduces disputes and buddy-punching.
The foreign worker levy
The levy is an employer cost that can't be deducted from the worker's wages. The long-standing flat rates are RM1,850 a year for manufacturing, construction and services and RM640 for plantation and agriculture in Peninsular Malaysia, with lower rates in Sabah and Sarawak. A multi-tier levy has been announced for 2026 but, as at November 2026, rates had not been gazetted — check the Immigration Department's latest notice before budgeting.
Paying wages: banks and digital wallets
Wages must be paid in full, on time (by the 7th day after the wage period) and in a way the worker can actually access. Many foreign workers don't hold a Malaysian bank account, so the Department of Labour has approved digital payment instruments for wages. Merchantrade's e-wallet is approved in Peninsular Malaysia (since August 2024), Sabah (from December 2025) and Sarawak (from 1 August 2026). UnionPay-linked accounts and cards are also commonly used for workers who remit money home.
altomateHR tip
In altomateHR, choose Other bank / e-wallet as the payout method for workers paid through Merchantrade or another channel outside your payroll bank file. They're listed on a Manual Payments report, and the Payment Schedule PDF splits totals into bank file and paid manually — together equal to the run's net pay.
Work permits and records
Keep each worker's passport and work permit (PLKS) number and expiry on file. An expired permit is a compliance risk for the employer.
altomateHR stores work permit number and expiry on the employee profile and shows an Executive Overview card listing permits that have expired or expire within the next 60 days.
FAQ
Do foreign workers contribute to EPF in Malaysia?+
Yes. Since October 2025 wages, EPF is mandatory for non-Malaysian employees with a valid passport and employment pass or permit, at 2% from the employee and 2% from the employer. Domestic servants are excluded.
Do foreign workers pay EIS?+
No. EIS covers Malaysian citizens and permanent residents only.
Is Lindung 24 Jam mandatory for foreign workers?+
Yes. The scheme became optional for Malaysian and PR employees in July 2026 but remains mandatory for foreign workers, at 0.75% of wages paid by the worker in phase 1.
Does the minimum wage apply to foreign workers?+
Yes. The RM1,700 minimum wage applies to foreign workers, except domestic workers.
Can foreign workers be paid through an e-wallet?+
Yes, through approved digital payment instruments. Merchantrade's e-wallet is approved for wage payments in Peninsular Malaysia, Sabah and Sarawak.
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