Compliance Checklist for the Hiring of Migrant Workers (Foreign Workers) in Malaysia

Migrant workers, more commonly known in Malaysia as foreign workers, typically refer to general workers from neighboring source countries such as Indonesia, Bangladesh, the Philippines, and Nepal. 

Here are some of the compliance requirements that new employers should be aware of:  

1. Approved source countries 

2. Approved industries 

3. Applicant requirements 

4. Housing compliance 

5. Labour Quotas & Immigration Permits 

6. Recruitment and Processing costs - who pays? 

7. Employment requirements 

8. Termination and Repatriation Procedures 

Approved source countries 

The approved source countries for Malaysia are Indonesia, Philippines, Bangladesh, Nepal, India, Sri Lanka, China, Myanmar, Cambodia, Vietnam, and Laos. East Malaysian states have additional restrictions. For example, in Sarawak, the only approved source country is Indonesia. 

Approved industries 

The approved industries are plantation, manufacturing, construction, agriculture, services and domestic work. 

Applicant requirements 

The applicants must be aged between 18 and 45 years old and must be deemed medically fit to work. If hired as skilled workers, certain certificates must be presented. Some countries may have minimum age requirements of 21, especially for female applicants. Lastly, the applicant must have a clean immigration history in Malaysia. 

Housing compliance 

Employers hiring migrant workers must prepare suitable quarters to accommodate migrant workers. Without proper compliance with decent housing requirements in compliance with Akta 446 (or the EMPLOYEES' MINIMUM STANDARDS OF HOUSING,. ACCOMMODATIONS AND AMENITIES ACT 1990), a labour quota may be refused or revoked. 

Labour quotas and immigration permits 

Hiring migrant workers involves strict regulations pertaining to labour quotas and immigration permits. In Malaysia, the company must first obtain an approved labour quota from the nearest labour department. After identifying the appropriate source country to hire from, the company must also apply for a job order or labour quota with the respective embassies of source countries in Malaysia. 

Typically, only after the labour quotas are approved, the company may start the applicant selection stage. Once the job offer is accepted by the applicants, then the company may start applying for the immigration permits of their chosen workers, or appoint an immigration agent to do so. All migrant workers entering Malaysia must hold the appropriate calling visa for work entry. Entry on tourist passes are not allowed. 

Recruitment and Processing cost - who pays? 

If your company is recruiting via a recruitment agency, whether in the source country or in Malaysia, it is very important to understand the cost involved and who pays for which costs. Generally, all the Malaysia side costs are borne by employers. These may include airport transfers, government levies, medical insurance and so on. Employers may require workers to pay for their own transport to Malaysia and cover their own training and recruitment fees in source countries. There are no fixed guidelines on this. Nonetheless, it is important to discuss this clearly with your recruitment agent to prevent miscommunication and mismanagement of expectations prior to the start of employment. 

Certain employers, especially foreign direct investors, or suppliers to multinational companies may subscribe to the “employer pays” model. This requires the company to ensure that all costs related to recruitment are covered by the company. If this is a compliance standard that is required of your company, then it is even more important for your procurement to understand the true cost involved in hiring migrant workers. Labour audits are frequently conducted by the overseas client, or independent auditors appointed by them. It is a good practice for your company to engage fair recruitment providers and conduct arrival interviews to ensure proper compliance with such labour recruitment standards. 

Employment requirements 

Employers of migrant workers should also be mindful of the local laws that apply to the employment of migrant workers. This includes employee protections under the Employment Act 1955, or the Labour Ordinances of the East Malaysian states. This encompasses annual leave, sick leave, maternity leave, minimum wage compliance, social security payments, and termination procedures. Employers must also ensure income tax compliance by employees through proper payroll systems. 

Termination and repatriation procedures 

If a migrant worker has come to the completion of contract, or is terminating early, employment procedures must be complied with. There must be a fair reason for dismissal or redundancy in accordance with local laws. Immigration will also require employers to report such terminations and cancel permits accordingly through a process known as check out memo. Many employers in Malaysia miss this step, which inadvertently imposes a compound on the employer per worker, and unfairly leads to the blacklist of said worker from Malaysia as immigration treats all such cases as abscondments. 

Our website and its contents are provided for general information purposes only and nothing on this website or in its contents is intended to provide professional advice. Please contact us at info@migratesafe.org or +6082-295175 for more information.