Budget 2025 announcements: Raise in Minimum Wage and Mandatory EPF contributions for foreign workers:
In tabling Budget 2025, the Prime Minister Datuk Seri Anwar Ibrahim had notably announced the following:
(a) Raise in Minimum Wage
Effective 1 February 2025, the minimum wage for all employment sectors in Malaysia will be increased from RM1,500 to RM1,700. This change will impact employers who hire workers on monthly, daily and hourly arrangements.
Employers with less than 5 workers will reportedly be granted a deferment, with the raised minimum wage only being effective from 1 August 2025.
Employers are advised that the minimum wage in Malaysia applies to all employees, with the exception of apprentices, and based on prior changes, domestic servants.
(b) EPF contributions for foreign workers
While no timeline or details has been announced, the Government has also announced their intention to make Employees Provident Fund ("EPF") contributions mandatory for all foreign workers.
In response to the above, the Malaysian Employers Federation had reportedly urged the Government to clarify whether employers of foreign workers will also be required to contribute to EPF for the foreign workers.
The 2 above steps, when implemented, may have material cost implications to employers, particularly those with a large workforce, and with current employees who are on minimum wages.
As the Government has yet to release further details with respect to the above, we will provide updates on the same in due course, once additional information becomes available.
Employment Insurance System ("EIS") and Social Security Organization Contributions ("SOCSO")
Effective 1 October 2024, the salary ceiling for EIS and SOCSO contributions has been raised from RM5,000 to RM6,000. Accordingly, contributions will take into account the increase in the salary ceiling.
Employers are given a transitionary period of 6 months until 31 March 2025 to comply with the changes, and will not be penalized for non-compliance during the transitionary period.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
