Malaysia has introduced several important labour reforms that will transform employer obligations and workers’ rights from late 2025 onwards. Among the most significant is the new requirement for non-Malaysian citizen employees and their employers to contribute to the Employees Provident Fund. This marks a notable shift in Malaysia’s efforts to strengthen social protection, regulate flexible labour markets, and align employment practices with long-term workforce policy.

Alongside this changes, the Gig Workers Bill 2025 and a nationwide rise in the minimum wage point to a wider reform agenda focused on income stability, fair treatment, and clearer employment relationships.

A new obligation for foreign employees and employers

Effective from 1 October 2025, all non-Malaysian citizen employees holding a valid passport and Employment Pass (excluding domestic workers) will be required to contribute to the Employees Provident Fund. Employers must also make matching contributions. This new obligation, set out under the Employees Provident Fund (Amendment) Act 2025, introduces a compulsory contribution rate of 2% of the employee’s monthly wages from both parties.

Previously, EPF participation for foreign workers was voluntary and varied according to internal company policy or individual preference. Mandatory contributions now bring foreign employees closer to the protection offered to Malaysian citizens and provide a more uniform system for employers managing a diverse workforce. Businesses that employ significant numbers of expatriates or international workers – particularly in manufacturing, services, technology, and hospitality – will need to update payroll systems and employment contracts to fully comply with the new requirements.

Minimum wage rises nationwide

Malaysia has also implemented a nationwide minimum wage increase. Under the Minimum Wages Order 2024, the national minimum wage rose from MYR 1,500 to MYR 1,700 per month, or from MYR 7.21 to MYR 8.72 per hour, effective from 1 August 2025. The aim is to improve living standards, strengthen income security, and ensure that wages remain aligned with inflation and rising household costs.

This wage increase applies across the country and affects all sectors. Employers should review wage structures, allowances, overtime calculations, and cost projections to ensure full compliance. Industries that rely heavily on entry-level or hourly labour are expected to experience the greatest immediate impact.

Minimum wage protections extended to apprentices

A further reform modernises apprenticeship conditions. The National Wages Consultative Council (Amendment) Act 2025 extends minimum wage protections to apprentices for the first time. Previously, apprentices were excluded from statutory minimum wage rules, creating inconsistencies and leaving younger workers with limited guarantees.

Under the Employment Act 1955, an apprentice is someone who enters into a formal contract of apprenticeship lasting between six and 24 months and undertakes systematic training with an employer. With the new legislation, apprentices are now entitled to receive at least the minimum wage throughout their training period. The reform aims to encourage fairer treatment of young talent, promote skill development, and ensure apprenticeship procedures remain financially viable.

Stronger rights and protections for gig workers

The Gig Workers Bill 2025, recently passed by Parliament and awaiting Royal Assent, introduces a clearer and more protective framework for individuals engaged in gig work. Importantly, it is not limited to digital platforms; it also applies to companies engaging individuals for defined project-based services such as translation, performing arts, journalism, photography, videography, and caregiving.

Once enacted, companies will be required to issue formal service agreements that meet statutory standards. Gig workers will gain protection against termination without just cause and will be able to bring disputes before a special Gig Workers Tribunal. A new Consultative Council will oversee implementation, ensuring consistent standards and ongoing worker protection. These measures address long-standing gaps in gig economy regulation and provide greater legal certainty for both organisations and contractors.

A more structured employment landscape ahead

Malaysia’s 2025 reforms demonstrate a clear move towards a more protective and transparent employment system. From mandatory EPF contributions for foreign workers to minimum wage guarantees and stronger gig worker rights, the new measures will transform workforce management and raise employment standards across sectors.

For employers, early preparation is essential. Reviewing employment contracts, updating payroll processes, training HR teams, and strengthening compliance systems will help organisations to adapt smoothly and maintain confidence in an increasingly regulated labour environment.

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