Hiring Foreign Talent in Malaysia: Employment Pass vs. Employer of Record (EOR)

Malaysia is a growing hub for business expansion in Southeast Asia. With its strategic location, multilingual workforce, and attractive investment policies, it’s no surprise that many companies are looking to bring in skilled foreign talent.

But here’s the big question:

👉 Should you hire directly and sponsor an Employment Pass (EP), or use an Employer of Record (EOR) to handle everything for you?

Let’s break it down.

Option 1: Employment Pass (EP)

The Employment Pass is Malaysia’s official work visa for expatriates. It allows skilled professionals to legally live and work in Malaysia.

When You Should Use the EP Route

• You already have a registered Malaysian company

• You’re hiring long-term, senior-level talent

• You want full control over the employee’s benefits, payroll, and management

• You plan to build a permanent presence in Malaysia

Key Things to Know About the EP

• Sponsorship: Your Malaysian entity must sponsor the visa

• Categories:

  • Category I (RM 10,000+/month) – up to 5 years, family allowed

  • Category II (RM 5,000–9,999/month) – up to 2 years, family allowed

  • Category III (RM 3,000–4,999/month) – 1 year, no dependents

• Compliance: You’re responsible for immigration, payroll taxes, SOCSO, EPF, and renewals

• Costs: Visa fees start at RM 2,000 per Employment Pass + Dependent Pass fees if applicable

Best for: Companies committed to hiring in Malaysia long-term.

Option 2: Employer of Record (EOR)

An Employer of Record is a service provider that legally employs staff on your behalf in Malaysia. The EOR becomes the official employer on paper, while you manage the employee’s work directly.

When EOR Makes More Sense

• You don’t have a Malaysian entity yet but want to hire quickly

• You’re testing the Malaysian market before setting up a full company

• You need to hire short-term or project-based talent

• You want to reduce compliance risks

How an EOR Works

• The EOR already has a registered Malaysian entity

• They sponsor the visa, manage payroll, taxes, and benefits

• You simply pay a monthly fee, and they take care of local legal requirements

• The employee works for you operationally, but is employed legally by the EOR

Best for: Companies that want fast, low-risk hiring without immediate entity setup.

Which One Should You Choose?

• If you’re planning long-term operations in Malaysia, it makes sense to set up your own entity and sponsor Employment Passes.

• If you’re testing the market or need immediate hiring without a local entity, an EOR is the smarter choice.

Some companies even start with an EOR to hire quickly, then transition to direct Employment Pass sponsorship once they establish their Malaysian entity.