EPF Compliance For Foreign Employees In Malaysia

A 10-Step Roadmap to EPF Compliance for Foreign Employees in Malaysia: What Employers Must Do Before 1 October 2025

From 1 October 2025 every non-Malaysian on a valid work pass must be covered by the Employees Provident Fund (EPF). The Employees Provident Fund (Amendment) Act 2025 makes a combined 4 % contribution – 2 % by the employer and 2 % by the employee – compulsory and exposes directors to fines, dividend surcharges and even travel-ban orders for late payment.

This article previews the legal changes, sets out the critical dates and penalties, and then walks you through a practical 10-step roadmap for smooth implementation. A quick-start checklist and a glance at five upcoming deep-dive pieces round out the guidance.

The legal backdrop to the new EPF rules

Parliament re-tooled Part VIIA of the Employees Provident Fund Act 1991 through the EPF (Amendment) Act 2025, passed by the Dewan Rakyat on 6 March 2025, gazetted on 14 May 2025 and will come into force on 1 October 2025. Notably:

1. Scope. The new section 70A provides that the Part applies to "an employee who is not a Malaysian citizen" who enters and remains in Malaysia on a temporary immigration pass.
2. ‍Rate. Part F of the Third Schedule fixes the compulsory rate at 2% of monthly wages by the employer and 2% by the employee, rounded to the next ringgit.
3. Withdrawal rights. Foreign employees may withdraw their entire balance on death, permanent incapacity, permanent departure or at age 55.
4. Transitional rule. Non-citizens who voluntarily contributed on or after 1 August 1998 automatically transition to the 2% + 2% rate.
5. Exemptions. Domestic servants, genuine independent contractors and legacy contributors who opted in before 1 August 1998 remain exempt; Permanent Residents keep the local rates.
6. Policy rationale. The Malaysian Government reduced the originally proposed 12% rate to 2% after business-chamber feedback; aim is to equalise labour terms with Malaysians and curb undocumented employment.

Key dates to ensure EPF compliance and penalties

The clock starts on 1 October 2025, when foreign hires must already have EPF numbers. 15 November 2025 is the first payment deadline for October wages, with Form A and the combined 4 % due at that time. Late remittances attract dividend surcharges plus fines that can reach RM 10,000 and three years' imprisonment. Section 39 of the EPF Act also permits departure-prohibition orders on directors until arrears are settled.

Aqran Vijandran's 10-step roadmap to compliance

Below is our recommended 10-step roadmap to ensure compliance with the new law:

Assess & Plan

1. Map your foreign workforce: Build a live list of passport numbers, work-permit types and wage data so you know exactly who falls under the new regime.
2. Confirm exemptions: Verify whether any individuals qualify as domestic servants, contractors or legacy contributors to avoid unnecessary registration.
3. Activate or update your EPF i-Akaun: Make sure the employer portal is live, and grant the right access levels to payroll and finance staff before bulk on-boarding begins.

Implement

4. On-board employees. Collect personal data, open EPF accounts and supply the optional higher-rate form to senior expatriates who want extra savings.
5. Reconfigure payroll. Add a 2% employee deduction line, mirror a 2% employer expense and test the XML output that feeds Form A.
6. Amend contracts and policies. Insert an EPF deduction clause in every expatriate agreement and update staff handbooks so future deductions cannot be challenged.
7. Brief HR and finance teams. Circulate a concise SOP that sets cut-off dates, approval flow and the monthly filing sequence to eliminate blame-shifting later on.

Communicate & Monitor

8. Educate employees. Issue a plain-English FAQ covering contribution rates, withdrawal on permanent departure and Malaysian tax treatment to head off disputes.
9. Update budgets. Build the extra 2% employer cost into Q4 2025 forecasts and 2026 salary reviews, noting the cash-flow impact for high-volume workforces.
10. Set monthly compliance checks. Reconcile payroll to EPF receipts, monitor pass-expiry dates and track EPF circulars for any new guidance.

Quick-start checklist

• Register or refresh your i-Akaun Employer access this month.
• Prepare a clean spreadsheet of foreign workers, including passport numbers and wages.
• Slot the 2% employer cost into the next board finance pack.
• Draft an addendum clause for existing expatriate contracts.
• Schedule an October payroll test run in September to catch calculation errors early.

What's next in the series

Over the coming weeks we will unpack five specialist topics that often require external counsel:

1. Re-drafting expatriate contracts – model clauses for EPF deductions, tax gross-ups and exit terms.
2. Shielding directors – board-level frameworks that neutralise personal liability for EPF breaches.
3. PDPA meets EPF – handling sensitive passport and salary data without tripping the new PDPA penalties.
4. Termination, repatriation and EPF withdrawal – a legal checklist for clean exits.
5. High-volume foreign workforces – compliance playbooks for manufacturing, construction and plantations.

Each article will include practical templates and case insights that you can apply immediately.

Your EPF compliance

If your organisation would like a rapid contract audit, a board briefing or hands-on support with bulk employee registration, our Employment & Benefits team is ready to help. Contact us today to book a complimentary 15-minute scoping call and ensure your October payroll proceeds without a hitch.

The original article was published on Aqran Vijandran's website at [link].

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.