EPF (Amendment) Act 2025 : Mandatory EPF Contributions for Non-Malaysian Employees
As announced in Budget 2025, Malaysia will make EPF contributions mandatory for non-Malaysian employees starting with October’s salary (contributions made in November 2025). So here’s a how it’s taking effect and how it will affect employers, businesses. Effective Date & Legal Requirement Starting with October 2025 payroll, EPF contributions become mandatory for all foreign workers (except domestic helpers). Contribution rate is 2% from the employer and 2% from the foreign worker’s wages. This is under the amended Employees Provident Fund Act 1991, passed in March 2025. Employer Requirements Must register with EPF if not already done. Must enrol all eligible foreign workers with valid work permits with EPF. Payroll systems must be updated to automatically deduct and remit contributions. Employers must submit Form A monthly (detailing employee contributions) including foreign workers. Remittance according to the EPF deadlines every month, just like the current EPF process. Contribution must be paid in Ringgit Malaysia. Foreign Worker Eligibility Criteria Must be non-Malaysian, with a valid passport and active work permit/visa. Applies across all sectors: manufacturing, construction, plantation, services, and others. Applies to all non-Malaysian workers with valid passports and work passes, except domestic helpers Domestic helpers are excluded under this ruling. Taken from the EPF website, “According to Section 3 of the Workmen’s Compensation Act 1952, ‘domestic servants’ are individuals who work as, among others: Maids, Cooks, Gardeners, Cleaners, Babysitters, Drivers and others.” What Happens If You Don’t Comply? Treated as non-compliance under EPF Act, subject to penalties, fines, or imprisonment. Consequences of Non-Payment: Failure to pay EPF contributions on time can lead to further penalties, including potential travel restrictions for company directors or partners according to KWSP Malaysia. Potential Risk of future audits or complications. Operational Impact to Employers Even though it’s 2%, the cost accumulates with large foreign workforces. Employers need to revise HR and payroll systems, possibly involving vendor support. Added workload for HR/payroll teams during onboarding and monthly submissions. Contract terms and payslip formats may need updating. For companies with tight margins, this introduces an additional cost pressure. Financial Impact Example: A company with 100 foreign workers at RM2,000/month salary 2% employer EPF per worker = RM40 Total new cost = RM4,000/month or RM48,000/year Not massive, but still meaningful especially in high-volume labour industries. Strategic Considerations Some companies may consider re-evaluating workforce mix (local vs foreign). Others may need to renegotiate contracts or pricing with clients due to increased costs. It’s important to engage early with EPF, especially for bulk registration processes. Companies should consider briefing sessions for both HR and line managers to ensure understanding and smooth rollout. What Employers Should Do Now Start checking if your company and foreign workers are already registered with EPF. Get in touch with your payroll provider to prepare for the 2% implementation. Communicate with foreign staff clearly about the deduction and the benefit. Keep track of EPF’s upcoming FAQ, training, and support materials. Budget ahead — don’t wait until October to feel the pinch. Final Thought The earlier businesses prepare, the less disruption they’ll face. While it adds cost, it also adds compliance, legitimacy, protection, and clarity for everyone in the employment chain. Refer here for the EPF news : https://www.kwsp.gov.my/en/w/news/epf-expands-mandatory-contribution-to-non-malaysians
Small Business Owners (SBO) and the SIX biggest challenges?
SBOs face unique challenges particularly in tough economic times. As every SBO knows, the reality is that there are there are numerous issues to overcome in order to sustain a business on daily basis. However, the SIX key challenges consistently affecting SBOs and where definite action can be taken to conquer these challenges are:- Overcoming Cash Flow Challenges Delayed payments from clients, high overheads and unexpected expenses, such as non-compliance penalties and hefty litigation costs often causing huge financial strain to cashflow. Besides managing cash flow by using financial management apps to track expenses, create budgets, automate payments, set up automatic invoicing and reminders to reduce the risk of delayed payment, measures taken to ensure Compliance with the relevant laws and regulation to save on penalties will also help ease cashflow for small businesses. Managing Owner Fatigue SBOs often burnout due to taking on too much burden upon themselves resulting in low productivity. Outsourcing time-consuming mundane activities is key to overcoming fatigue. By identifying non-revenue generating back office processes such as Human Resources, Legal, Finance and Contact Center Services, business owners can focus on productivity whilst taking regular breaks and establishing a balanced schedule which is essential to maintain work-life balance. Finding and Retaining Profitable Customers Attracting and retaining profitable customers is crucial for small business success. By outsourcing back room processes, SBOs have more time to analyze their current customer base, identify profitable segments, engage in marketing efforts and tailor their business offerings to suit customer needs as well as engage with existing customers through feedback and personalized services to maintain strong relationships for repeat business. Motivating Employees In today’s fast-paced business environment, managing HR responsibilities in-house can be daunting task to SBOs. Employee engagement is vital for small businesses, where every employee’s contribution is significant. By outsourcing HR processes, small businesses can be assured to maintain clear communication with employees and foster a positive work environment that can boost staff morale. Reducing Overheads High overhead costs can quickly drain a small business’s resources. Outsourcing back-office functions, especially to regions with lower labor costs, can significantly reduce operational expenses. SBOs can save on salaries, benefits, and overhead costs associated with maintaining in-house teams. Outsourcing also eliminates the needs to invest in expensive software, equipment and office space for back-office operations. Staying Current in Your Industry SBOs are often so busy with day-to-day operations that they neglect to stay informed about industry trends and competitors. Outsourcing enables SBOs to focus on research industry developments, read relevant blogs, networking, attend conferences which can help to keep business owners ahead of the curve. In conclusion, overcoming the challenges faced by small businesses requires strategic action, delegation, and the use of modern tools and outsourcing time consuming chores. By outsourcing their backroom processes SBOs can keep overheads low and stay focused on high-value customers, motivating employees, cutting unnecessary costs and they can also keep up with industry trends to navigate tough times and achieve sustained success.