A payslip is not just a wage record — it is a legally required document in Malaysia that must be provided to every employee for each pay period. Under Section 25A of the Employment Act 1955, employers are required to provide employees with a written record of their wages. Failing to issue proper payslips or issuing ones with incorrect fields can result in complaints to the Department of Labour and penalties under the Act.

For employers, understanding every field on a payslip is also essential for ensuring statutory contributions are correct — errors in EPF, SOCSO, or PCB calculations compound over time and create significant liabilities when discovered during audits.

The Two Main Sections of a Malaysian Payslip

A Malaysian payslip is divided into two main sections: earnings (what the employee is paid) and deductions (what is withheld). The difference between total earnings and total deductions is the net pay — the amount actually transferred to the employee's bank account.

Earnings Fields Explained

Basic Salary

The contractual monthly salary agreed in the employment contract. For employees covered by the Employment Act, the basic salary determines the calculation basis for overtime pay, maternity leave pay, and other statutory entitlements. Basic salary does not include allowances, bonuses, or commissions.

Allowances

Various allowances may be paid on top of basic salary, including transport allowances, meal allowances, housing allowances, and phone allowances. The key distinction for payroll purposes is whether an allowance is included in the definition of "wages" under the Employment Act — this affects EPF and SOCSO calculations. Refer to the EPF and SOCSO guidelines for the treatment of specific allowance types.

Overtime Pay

For employees covered by the Employment Act (generally those earning up to RM4,000/month in certain roles), overtime rates are legally specified:

  • Work on rest day: 2× the hourly rate
  • Work on public holiday: 3× the hourly rate
  • Overtime on a working day: 1.5× the hourly rate

Overtime must be calculated based on the employee's ordinary rate of pay (basic salary divided by the number of working days in a month, divided by the hours per working day).

Commission and Incentives

Variable pay components like sales commissions and performance incentives must be listed separately from basic salary. These are subject to EPF contributions if they are part of the employee's regular remuneration.

Gross Salary

The total of all earnings before any deductions. This is the figure from which statutory contribution amounts are calculated.

Deduction Fields Explained

EPF (Employees Provident Fund) — Employee Contribution

Employees contribute 11% of their wages to EPF (for employees below age 60). Employers contribute an additional 12% or 13% (depending on the employee's monthly salary). Only the employee's share appears as a deduction on the payslip — the employer's share is a cost the employer bears separately. EPF contributions apply to wages up to RM5,000/month for the standard employee rate calculation.

SOCSO (Social Security Organisation) — Employee Contribution

SOCSO has two schemes:

  • Employment Injury Scheme — paid by employer only
  • Invalidity Pension Scheme — contributions from both employer and employee

Employees below 60 who have never reached 60 contribute to both schemes. Employees 60 and above contribute only to the Employment Injury Scheme, at a lower combined rate. SOCSO contributions are subject to a maximum monthly wage ceiling of RM5,000.

EIS (Employment Insurance System)

The EIS is jointly contributed by employer and employee at 0.2% each, up to a monthly wage ceiling of RM5,000. EIS contributions provide unemployment benefits if the employee loses their job involuntarily. Both the employee and employer contributions are based on the same contribution table as SOCSO.

PCB / MTD (Potongan Cukai Berjadual — Monthly Tax Deduction)

PCB is income tax withheld by the employer on behalf of the employee and remitted to the Inland Revenue Board (LHDN). The amount is calculated based on the employee's estimated annual income, tax reliefs, and deductions. Employers use the PCB calculator provided by LHDN or approved payroll software to determine the correct monthly deduction. Employees who do not want PCB deducted (because they prefer to pay lump-sum taxes themselves) must complete a CP38 form.

Zakat Deductions (Optional)

Muslim employees may authorise their employer to deduct zakat contributions from their salary. These deductions are voluntary and require written authorisation from the employee. Zakat deducted through payroll is eligible for tax relief.

Other Deductions

Any other authorised deductions — such as loan repayments, union dues, or advances against salary — must be shown separately and must be authorised in writing by the employee. The Employment Act limits the total deductions an employer can make from an employee's wages without court order.

Net Pay

Gross Salary minus all deductions equals the Net Pay — the amount the employee actually receives. This should match the amount transferred to the employee's bank account. Any discrepancy between the payslip net pay and the bank transfer amount requires immediate investigation.

What the Employment Act Requires on a Payslip

Under the Employment (Amendment) Act 2022 and Employment Regulations, a payslip must include at minimum:

  • The name of the employer
  • The name of the employee
  • The pay period covered
  • The gross wages earned
  • All deductions itemised
  • The net wages paid

Best practice — and what most payroll systems produce — includes all the fields described above, along with the employee's identification details, the date of payment, and the employer's EPF, SOCSO, and EIS registration numbers.

How to Generate Payslips with Popupnote

The Payslip Builder on Popupnote generates formatted Malaysian payslips in your browser, including all standard fields — basic salary, allowances, EPF, SOCSO, EIS, and PCB deductions. Enter the employee and employer details, input the earnings and deductions for the pay period, and export a clean, print-ready payslip as a PDF. The tool supports both Bahasa Malaysia and English formats and includes all fields required under the Employment Act. No account required.