Minimum wage RM2,000 from June 2027: what it costs and how to prepare payroll
The RM300 rise is only part of the cost. Here's what a minimum-wage employee will cost from June 2027 once statutory contributions are added.
Budget 2027 confirmed that Malaysia's minimum wage will rise from RM1,700 to RM2,000 a month from June 2027, an increase of about 17.6%. MSMEs with annual sales below RM50 million are exempted. The gazette order, start day and MSME definition are still to come, but employers outside the exemption should start budgeting now. Sources: Bernama, The Star.
Who is affected
- Employees earning below RM2,000 a month at companies not covered by the MSME exemption.
- Foreign workers — the minimum wage applies to them too (domestic workers excluded).
- Daily, hourly and piece-rated employees, whose minimum daily and hourly rates rise in proportion under the new order.
- Employees just above RM2,000, if you want to keep pay differentials between grades.
The real cost per employee
Moving a Malaysian employee aged under 60 from RM1,700 to RM2,000 adds more than RM300 to monthly employment cost, because employer contributions are wage-based. Approximate employer cost per month:
| Employer cost item | At RM1,700 | At RM2,000 |
|---|---|---|
| Basic wage | RM1,700.00 | RM2,000.00 |
| EPF (13%) | about RM221 | about RM260 |
| SOCSO (about 1.75%) | about RM30 | about RM35 |
| EIS (0.2%) | about RM3.40 | about RM4.00 |
| HRDF (1%, if registered) | RM17.00 | RM20.00 |
| Approximate total | about RM1,971 | about RM2,319 |
That's roughly RM348 more per employee per month, or about RM4,200 a year — before any knock-on increases for staff just above the minimum. Figures are illustrative; actual EPF and SOCSO amounts follow the official contribution schedules.
For a foreign worker, EPF is 2% employer instead of 13%, and there's no EIS, so the increase is smaller per head — but the levy is unchanged.
How to prepare payroll
- List affected staff by company. In a group, the exemption may apply to one Sdn Bhd and not another.
- Model the cost including EPF, SOCSO, EIS, HRDF and overtime — overtime rates rise with the base wage.
- Check daily- and hourly-rated workers against the new minimum rates once the order is gazetted.
- Plan the effective date in payroll: the first affected run is June 2027 wages, paid by 7 July 2027.
- Issue salary revision letters in advance.
altomateHR tip
Use altomateHR's salary adjustments import to load the new wages with an effective date in one Excel file, and generate salary revision letters from a template — with AI help in English or Bahasa Melayu.
FAQ
What will the minimum wage in Malaysia be in 2027?+
RM2,000 a month from June 2027, up from RM1,700, as announced in Budget 2027. MSMEs with annual sales below RM50 million are exempted.
Does the RM2,000 minimum wage apply to foreign workers?+
The current minimum wage applies to foreign workers other than domestic workers, and the same is expected for RM2,000. Confirm against the new Minimum Wages Order once gazetted.
How much more will a minimum-wage employee cost?+
For a Malaysian under 60 at a non-exempt employer, roughly RM348 more a month once EPF, SOCSO, EIS and HRDF are included, based on the illustrative figures above.
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