Payroll isn’t just about paying employees on time—it’s about compliance, accuracy, and efficiency. In Malaysia, payroll mistakes can easily lead to costly fines, unhappy staff, or even audits from government bodies.
With new updates under Budget 2025—including mandatory EPF contributions for foreign workers and the revised minimum wage—getting payroll right is more important than ever.
Here are the Top 5 Payroll Mistakes Malaysian Employers Must Avoid in 2025 and how to prevent them.
1. Late or Incorrect EPF, SOCSO & EIS Contributions
Failing to submit statutory contributions on time is one of the most common mistakes. For example:
-
EPF late payment can incur penalties of up to RM10,000 or imprisonment.
-
SOCSO contributions not paid on time may attract additional fines and interest.
🔑 How to avoid:
-
Always track contribution deadlines.
-
Automate monthly calculations to reduce manual errors.
💡 With Pandahrms, contributions for EPF, SOCSO, and EIS are auto-calculated and updated with the latest statutory rates—so you’ll never miss a deadline.
2. Miscalculating Overtime, Rest Day & Public Holiday Pay
Overtime rules in Malaysia can be tricky:
-
Work on normal days = 1.5x pay
-
Work on rest days = 2x pay
-
Work on public holidays = 3x pay
Many employers still miscalculate because of manual spreadsheets.
🔑 How to avoid:
-
Keep updated with the Employment Act 1955.
-
Use software that automatically applies the right multipliers.
💡 Pandahrms simplifies OT calculations by integrating attendance with payroll, ensuring accurate payout every time.
3. Wrong Salary Deductions
Not every deduction is legal. For example, employers cannot deduct wages for damages or lateness without employee consent and approval from the Director General of Labour.
🔑 How to avoid:
-
Understand what’s allowed (EPF, SOCSO, PCB, Zakat, court orders).
-
Avoid “informal” deductions without proper documentation.
💡 Pandahrms automatically handles PCB (Income Tax/MTD) deductions and provides clear payslip breakdowns for employees, ensuring full compliance.
4. Not Updating Payroll After Regulatory Changes
2025 has introduced major payroll changes that every Malaysian employer must pay attention to:
-
Minimum Wage Increase – Effective February 2025, the monthly minimum wage has been revised to RM1,700. Employers who fail to update payroll may risk non-compliance and penalties under the Employment Act.
-
EPF for Foreign Workers – Starting October 2025, employers are required to deduct 2% from foreign workers’ wages, matched by an additional 2% from the employer. These contributions are based on October payroll and must be submitted by 15 November 2025. From then onwards, the same schedule applies monthly (salary of a given month → EPF contribution due by the 15th of the following month).
🔑 How to avoid:
-
Stay updated with HR news and Budget announcements.
-
Review payroll settings whenever a policy changes.
💡 Pandahrms is constantly updated with the latest statutory changes in Malaysia, so employers don’t need to worry about missing compliance updates.
5. Inaccurate Record-Keeping & Documentation
Employers are required to keep at least 6 years of payroll records for inspection. Missing payslips, leave balances, or contribution reports can create compliance risks.
🔑 How to avoid:
-
Store payroll data digitally.
-
Make sure records are easily accessible during audits.
💡 Pandahrms provides a secure cloud-based payroll and HR system where all records, from payslips to contribution reports, are stored and retrievable anytime.
Final Thoughts: Payroll Accuracy is Non-Negotiable in 2025
Payroll mistakes not only cost money but also damage employee trust. With new regulations in Malaysia, employers must be extra cautious.
The good news? These mistakes are preventable. By automating payroll with Pandahrms, you can:
✔ Ensure compliance with EPF, SOCSO, EIS & PCB
✔ Automate overtime & leave calculations
✔ Generate accurate payslips instantly
✔ Keep secure payroll records for audits
