Employing Foreign Workers in Malaysia in 2026: Your Complete Statutory Checklist

If you employ even one foreign worker in Malaysia, your statutory obligations have changed more in the past twelve months than in the previous five years combined.

Since October 2025, EPF contributions for non-Malaysian employees are no longer voluntary. Since June 2026, the new SKBBK scheme (Lindung 24 Jam) applies to foreign workers with no opt-out. And these sit on top of SOCSO coverage that has been expanding since 2019. An employer who set up their foreign worker payroll two years ago and has not revisited it since is almost certainly non-compliant today.

This guide walks through every statutory contribution that applies to foreign workers in 2026, what changed, and what you need to check in your payroll this month.

Who counts as a foreign worker for statutory purposes?

For the schemes covered here, the rules generally apply to non-Malaysian citizens holding a valid passport and a work pass issued by the Immigration Department of Malaysia. This includes holders of the Visitor's Pass (Temporary Employment), commonly used for low and semi-skilled workers, as well as Employment Pass holders such as expatriate professionals.

One consistent exclusion to note: domestic servants, as defined under the Workmen's Compensation Act 1952 (maids, cooks, gardeners, cleaners, babysitters and drivers, among others), are excluded from mandatory EPF. They fall under separate PERKESO arrangements for domestic workers instead.

If you employ expatriates on Employment Passes, do not assume these rules only apply to blue-collar workers. Your RM15,000-a-month engineering manager from overseas is covered by mandatory EPF just as much as a production worker.

1. EPF: mandatory since October 2025 at 2% + 2%

This is the biggest change. Under the EPF (Amendment) Act 2025, EPF contributions became mandatory for non-Malaysian citizen employees starting with October 2025 wages, corresponding to the November 2025 contribution month.

The key facts:

• Rate: 2% of monthly wages from the employer and 2% from the employee. This is deliberately lower than the standard Malaysian rates of 11% (employee) and 12% to 13% (employer).

• Who is covered: Non-Malaysian citizen employees under age 75 holding a valid work pass, excluding domestic servants. This spans the Visitor's Pass (Temporary Employment), Employment Pass, Professional Visitor Pass, Student Pass, Residence Pass and Long-Term Social Visit Pass.

• How it is calculated: Contributions follow the new Third Schedule Part F, which uses a direct calculation method (wages multiplied by 2%), with each share rounded up to the next whole ringgit. Unlike the banded schedule for Malaysian employees, there is no upper salary cap.

• Registration: EPF has automatically registered most Visitor's Pass (Temporary Employment) and Employment Pass holders as members. Employers can verify registration through i-Akaun (Employer). Employers not yet registered with EPF must register before contributing.

• Deadline: Contributions are due by the 15th of the following month, the same as for local employees.

  
  

A quick worked example: a foreign worker earning RM1,751 a month attracts an employer share of RM36 and an employee share of RM36 (RM1,751 x 2% = RM35.02, rounded up to the next ringgit).

The compliance risk: if your payroll has been running foreign workers with no EPF deduction since October 2025, you are already in arrears, and EPF late payment charges apply. This is not a future deadline. It is a backlog.

2. SOCSO: two schemes, and the coverage keeps growing

Foreign worker SOCSO coverage has expanded in stages, and many employers are still working off outdated rates.

• Employment Injury Scheme (since 1 January 2019): Covers workplace accidents, occupational diseases and commuting accidents. Employer-only contribution at 1.25% of monthly wages. Employees contribute nothing under this scheme.

• Invalidity Scheme (since 1 July 2024): Extended to foreign workers who first register under age 55. This adds roughly 0.5% from the employer and 0.5% from the employee, bringing first-category foreign workers in line with local employees: approximately 1.75% employer and 0.5% employee in total.

  
  

Contributions are read from PERKESO's banded contribution schedule rather than calculated as an exact percentage, and are capped at the RM6,000 monthly wage ceiling that took effect in October 2024. Foreign workers must be registered through the PERKESO ASSIST portal, which generates a Social Security Foreign Worker number.

Note that foreign workers remain outside the Employment Insurance System (EIS), which covers Malaysian citizens and permanent residents only.

3. SKBBK (Lindung 24 Jam): mandatory for foreign workers, no opt-out

From June 2026, PERKESO's new Non-Employment Injury Scheme, known as SKBBK or Lindung 24 Jam, extends protection to accidents that happen outside working hours.

Here is where foreign workers differ sharply from locals. For Malaysian employees, the scheme is voluntary, and those who do not wish to participate can opt out by 31 August 2026 through the LINDUNG Faedah Portal. For foreign workers, participation is mandatory, with no opt-out available.

The contribution is employee-funded and phases in by tenure: 0.75% of wages in the initial phase, rising to 1.0% and then 1.25%, subject to the RM6,000 wage ceiling and read from a banded schedule. The employer's role is administrative: deduct the correct amount from the employee's wages each month and remit it alongside existing SOCSO contributions.

For a fuller breakdown of SKBBK, including the banded contribution table and the opt-out process for local employees, see our SKBBK guide series.

4. The obligations that have not changed, but still catch employers out

• Minimum wage: The RM1,700 monthly minimum applies to foreign workers exactly as it does to locals, and it must be met in basic salary. Allowances and in-kind benefits do not count towards the floor.

• PCB/MTD: Foreign workers earning above the threshold are subject to monthly tax deductions. Tax residency status (generally 182 days in Malaysia) determines whether resident rates or the non-resident flat rate applies, so the correct setup matters from the first payslip.

• Payslips and records: All statutory deductions, including the employee's EPF and SKBBK shares, must be itemised on the payslip. Verbal notification does not comply.

• Levy and permit costs: The annual PLKS levy and permit renewals sit outside payroll contributions but belong in your total cost planning, especially with foreign worker policy under ongoing review.

  
  

Your foreign worker statutory stack at a glance

• EPF: Employer 2%, employee 2%. No wage cap, calculated under Third Schedule Part F. Mandatory since October 2025.

• SOCSO Employment Injury Scheme: Employer 1.25%, no employee share. RM6,000 ceiling, banded schedule. Mandatory since 2019.

• SOCSO Invalidity Scheme: Approximately 0.5% employer and 0.5% employee. RM6,000 ceiling, banded schedule. Mandatory since July 2024.

• SKBBK (Lindung 24 Jam): Employee-funded at 0.75% to 1.25% phased by tenure; the employer administers the deduction. RM6,000 ceiling, banded schedule. Mandatory from June 2026 with no opt-out.

• EIS: Not applicable. Foreign workers are excluded.

  
  

All monthly contributions above are due by the 15th of the following month.

Five things to check in your payroll this week

1. Confirm EPF deductions are running for every foreign worker from October 2025 wages onwards, at 2% + 2% under Third Schedule Part F. If not, quantify the arrears now rather than waiting for an EPF query.

2. Verify EPF registration for each foreign employee through i-Akaun (Employer), especially for pass types outside the auto-registration scope.

3. Check your SOCSO category settings. Foreign workers registered before age 55 should now be under the Employment Injury and Invalidity Scheme category, not the older Employment Injury-only rate.

4. Confirm SKBBK deductions are configured for all foreign workers, that the rate applied matches the current PERKESO contribution table for each worker's applicable phase, and that the deduction appears on payslips.

5. Audit basic salaries against RM1,700, remembering that allowances cannot top up a below-minimum basic wage.

   
   

How JustLogin keeps your foreign worker payroll compliant

Tracking four agencies, three contribution schedules and a mix of percentage and banded calculations is exactly the kind of work payroll software should absorb for you.

JustLogin Payroll applies the correct statutory treatment based on each employee's residency status. Once a foreign worker's profile is classified correctly, the 2% + 2% EPF calculation runs under Third Schedule Part F with each share rounded up to the next ringgit, EIS is automatically excluded for non-Malaysian employees, and SKBBK deductions are calculated from the PERKESO contribution table and shown as a separate line on the payslip with current and year-to-date values.

Month-end submissions are covered too. The system generates EPF Form A and the i-Akaun CSV with foreign employees included using their passport numbers, and the PERKESO ASSIST-compatible file includes a dedicated SKBBK contribution column, so remitting to both agencies stays a single routine.

There is one more capability that matters specifically for foreign worker employers: work pass tracking. The People module records each employee's work pass class, number, issue date and expiry date, with an expiring work pass list, a reportable expiry date column in Custom Reports, and automated email alerts you can set at your preferred lead time, such as 30 days before expiry. Given the penalties for employing a worker on an expired permit, that alert alone can pay for itself.

See how JustLogin handles foreign worker payroll end to end. Book a free demo with our team.

This article is for general information only and does not constitute legal or tax advice. Statutory rates and rules are current as at August 2026. Always refer to KWSP, PERKESO and LHDN official sources for the latest requirements.