Published On: 30/06/2025By

In a significant move to improve labour equity and social protection, Malaysia has announced a new EPF (Employees Provident Fund) policy requiring both employers and foreign workers to contribute 2% of monthly wages starting October 2025. This initiative, aimed at aligning local labour practices with international standards, marks a shift from the previously voluntary EPF participation for non-Malaysian workers.

Here’s what HR professionals and business owners need to know.

What’s Changing?

Who’s Affected:
All foreign workers with valid passports and work permits issued by the Immigration Department, except for domestic helpers.

Contribution Details:

  • 2% from the employer

  • 2% from the foreign employee
    These contributions will be deducted based on the worker’s monthly wages and remitted to the EPF.

Effective Date:
This requirement applies to wages paid in October 2025, which corresponds to the November 2025 EPF contribution cycle.

Why This Matters

The new rule ensures foreign workers in Malaysia can:

  • Accumulate savings for retirement or future needs

  • Withdraw their EPF savings when they retire or permanently leave Malaysia

For businesses, this move:

  • Reflects Malaysia’s commitment to fairer labour practices

  • Aligns with global norms on migrant worker protection

  • Introduces a small increase in operational costs, but with long-term benefits in worker well-being

What Employers Should Do Next

✅ Register Your Foreign Workers with EPF:
Early registration is highly encouraged to avoid last-minute compliance issues.

✅ Update Payroll Systems:
Ensure your HR/payroll software is ready to calculate and deduct the new contribution amounts accurately.

✅ Educate Your Workers:
Communicate clearly with your foreign employees about the new policy, especially their rights to withdraw EPF savings upon leaving Malaysia.

✅ Plan for Cost Adjustment:
Although the 2% employer contribution is modest, companies should still update their budgets to reflect the change.

This upcoming EPF contribution requirement is more than a regulatory update—it’s a step towards a fairer, more inclusive workforce in Malaysia. Businesses that embrace this change early will not only stay compliant but also position themselves as responsible employers who care about the welfare of all their employees, regardless of nationality.

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