Payroll Calculation:
“Wait, why is my salary lower this month?”
If you’ve ever asked that question—or if you’re an employer trying to make sure your payroll stays 100% compliant with Malaysian laws—this guide is for you. Payroll in Malaysia isn’t just about basic salary. It’s a combination of statutory contributions like EPF, SOCSO, and PCB (MTD), each with its own complex set of formulas, thresholds, and exemptions.
In this guide, we’ll walk you through how payroll is really calculated in Malaysia in 2025, complete with real examples, accurate contribution percentages, and links to official references. If you’re managing your payroll manually, prepare to get your calculator out. Or better yet, discover how Info-Tech’s HR & Payroll Software can do it all for you—accurately and effortlessly.
What Makes Up Payroll Calculation in Malaysia?
Your worker’s monthly take-home pay isn’t just their gross salary minus taxes. The main statutory deductions that employers need to calculate, and remit are:
- EPF (Employees Provident Fund) – retirement savings
- SOCSO (Social Security Organisation) – social security for work-related injuries and disabilities
- PCB (Potongan Cukai Bulanan) – monthly tax deduction
- Optional: EIS (Employment Insurance System) and HRDF for certain employers
Each of these has a specific formula. Let’s break them down in detail.
1. EPF Formula in Payroll Calculation(2025)
The Employees Provident Fund (EPF) applies to all Malaysian citizens and PRs who work in the private sector. Both employer and employee share the contribution.
EPF Rates for 2025
| Employee Age Group | Employee Contribution | Employer Contribution |
| Below 60 | 11% | 12% (13% if salary < RM5,000) |
| 60 and above | 5.5% | 6% |
Update (2025): Starting Q4 2025, Foreign employees must contribute 2% employee + 2% employer.
EPF Formula
EPF = Total Wages x Contribution %
“Wages” include basic salary, overtime, allowances, commissions, incentives, etc.
Example (Employee under 60, RM6,000 salary):
Employee EPF: 11% of RM6,000 = RM660
Employer EPF: 12% of RM6,000 = RM720
Total EPF = RM1,380
2. SOCSO + EIS Formula (2025)
SOCSO (PERKESO) provides social security protection for employees in case of injury, disability, or death. From October 1, 2024, the wage limit has gone up to RM6,000 each month.
EIS (Employment Insurance System) forms part of SOCSO and covers employees under 60.
SOCSO + EIS Rates
| Category | Employer Rate | Employee Rate |
| SOCSO (Age < 60) | 1.75% | 0.5% |
| EIS (Age < 60) | 0.2% | 0.2% |
| SOCSO (Age ≥ 60) | 1.25% | Exempt |
Example (RM6,000 monthly salary, employee under 60):
SOCSO: Employer: RM105.15 | Employee: RM30.30
EIS: Employer: RM12.00 | Employee: RM12.00
Total Deduction: RM42.30 (employee side)
3. PCB (Monthly Tax Deduction) Formula
PCB, or Potongan Cukai Bulanan, is the monthly tax deduction scheme by LHDN (Lembaga Hasil Dalam Negeri). This is not a fixed %—it’s calculated based on:
- Chargeable income
- Marital status
- Number of children
- EPF contributions
- Zakat payments
- Tax rebates & reliefs
PCB Formula (Simplified)
There’s no single formula that works for everyone. Employers need to:
- Identify total monthly income.
- Subtract allowable reliefs and deductions (e.g. EPF, spouse relief, etc.).
- Use LHDN’s PCB table or PCB calculator 2025 to find monthly deduction.
Example (Single employee, RM6,000/month):
Assuming:
RM6,000 salary
RM660 EPF
No kids/spouse
No additional reliefs
Approximate PCB: RM310/month
Full Payroll Calculation Example (2025)
| Item | Amount (RM) |
| Gross Salary | 6,000 |
| EPF (Employee) | -660 |
| SOCSO | -30.30 |
| EIS | -12.00 |
| PCB | -310 |
| Net Salary | 4,987.70 |
Why Getting Payroll Calculation Right Matters
Messing up payroll calculation doesn’t just make employees unhappy— they can result in serious legal consequences for your business. Companies that don’t submit EPF or PCB might face:
- Fines of up to RM10,000 per employee
- Additional late payment charges
- Reputation damage
Steer clear of these risks by using reliable software. Info-Tech’s Payroll Software handles all calculations and makes sure you’re up to date with new EPF, SOCSO, and PCB rules.
Conclusion:
Malaysian payroll calculation isn’t simple. EPF, SOCSO, EIS, and PCB all play a part in determining your employees’ final pay. With the 2025 updates (especially EPF changes for foreign employees and higher SOCSO ceilings), it’s more important than ever to get your formulas right.
But don’t worry—you don’t have to do this alone.
Our cloud-based system calculates everything automatically, ensures compliance, and keeps detailed audit trails. Whether you’re just starting out or have over 100 employees, Info-Tech’s program adapts to your company’s requirements.
Contact us to schedule a Demo!