What are Employee Benefits? Types and Examples for Malaysian Employers

In today’s job market, benefits can make or break an offer. Nowadays, job seekers are looking beyond salary. They want to know what else a company can offer to support their health, growth, and work-life balance.

So as employers, you need to give a good package of employee benefits. Below we share with you the employee benefits that required by law, what’s optional, and how to use them strategically to attract and retain talent.

What are Employee Benefits?

Employee benefits are part of the full compensation package that employers offer to attract, support, and retain their people. These benefits are provided in addition to the basic monthly salary and can range from statutory entitlements like paid leave to additional perks like insurance, wellness programmes, or hybrid work arrangements.

Employee benefits in Malaysia generally fall into two categories:

Statutory benefits: Required by law under the Employment Act 1955 and other labour regulations.
Non-statutory benefits: Optional and offered at the employer’s discretion.

While salary often gets the spotlight during hiring, benefits are what shape the long-term employee experience. When chosen thoughtfully, they can boost job satisfaction, reduce turnover, and even enhance company branding.

Today’s job seekers, especially younger talent, pay close attention to benefits when deciding where to work. A company that offers flexible work, mental health support, or skill-building opportunities can often stand out more than one that only offers a higher base salary.

Let’s take a closer look at what benefits are required by law in Malaysia, and what employers can offer on top of that to stay competitive.

Employee Benefits Required by Law in Malaysia

There are certain employee benefits that every employer must provide under the Employment Act 1955 of Malaysia and other related labour laws. These are the basics your employees are entitled to:

EPF (Employees Provident Fund)

EPF is a retirement savings plan, and both the employer and the employee contribute a percentage each month. EPF contribution is based on the employee’s monthly salary.

SOCSO (Social Security Organisation)

SOCSO covers employees against workplace accidents, illness, disability, or death. The contributions are made monthly by the employer and are part of the company’s legal obligations.

EIS (Employment Insurance System)

EIS supports employees who lose their jobs through retrenchment, company closure, or similar reasons. It helps them get temporary income while they look for new employment.

Annual Leave

Paid annual leave must be given based on the employee’s years of service:

8 days per year (less than 2 years of service)
12 days (2 to 5 years of service)
16 days (more than 5 years of service)

Sick Leave

Employees are entitled to paid sick leave depending on how long they’ve worked:

14 days (less than 2 years)
18 days (2 to 5 years)
22 days (more than 5 years)

If hospitalisation is needed, employees are given up to 60 extra days of paid leave per year.

Maternity Leave

Female employees are entitled to 98 days of fully paid maternity leave for each pregnancy, as long as they meet the minimum service requirement.

Public Holidays

Employees are entitled to at least 11 paid public holidays per year, including five that are compulsory (like Hari Merdeka, the King’s Birthday, and Labour Day).

Overtime Pay, Rest Days, and Meal Breaks

These are also protected under the Employment Act. Overtime work must be paid according to the law, and employees must be given rest days and meal breaks during working hours.

Common Non-Statutory Employee Benefits in Malaysia

While statutory benefits are required by law, many companies in Malaysia go beyond the basics to offer non-statutory employee benefits. These are optional, but they make a big difference, especially when you're trying to attract top talent, reduce turnover, or build a strong company culture.

Check out below the most popular types of non-statutory benefits that Malaysian employers are offering:

Medical and Health Benefits

Many companies now offer outpatient and inpatient coverage as part of their group insurance. Some go further by including dental and optical coverage, or mental health support like counselling sessions and stress management programmes.

Lifestyle and Wellness Perks

To support employee wellbeing, companies may subsidise gym memberships, fitness apps, or annual health screenings. Some also offer wellness claims that cover massages, therapy, or ergonomic office tools.

Flexible Work Arrangements

Since the pandemic, more employees value flexibility. Work-from-home policies, hybrid arrangements, flexible hours, or even shorter workweeks are now used to give staff better control over their time.

Career Development Opportunities

Offering sponsored courses, online learning access (like LinkedIn Learning), or internal mentorship programmes shows that the company invests in long-term growth. These are very attractive to younger workers and those planning their career path.

Financial Incentives

On top of monthly salaries, companies might provide transport allowances, meal subsidies, performance bonuses, or festive gift cards. Having these can ease the cost of living and keep employees motivated.

Work-Life Balance and Culture Perks

Some companies offer extra leave days for birthdays or festive eves, team outings, annual dinners, or special appreciation days.

Offering these benefits isn’t just about being generous—it’s about staying competitive. In a tight job market, non-statutory benefits often become the reason why candidates choose one company over another.

Benefits Matter to HR & Employers

Employee benefits play a big role in helping companies stay competitive, especially in industries where talent is hard to keep. Here’s how employee benefits can benefit to your company:

Attract Better Talent

In today’s job market, salary alone isn’t enough. Many candidates look at benefits before deciding to apply or accept an offer. A strong benefits package can make your company stand out, especially when competing for experienced or in-demand talent.

Improves Retention and Reduces Turnover

When employees feel supported through healthcare, flexibility, and fair leave policies, they are more likely to stay. Company money can be saved in the long run by reducing recruitment and training costs.

Increases Productivity and Well-being

Benefits like mental health support, medical coverage, and wellness perks help employees stay healthy and focused. When staff feel cared for, they’re more engaged and perform better in their roles.

Builds a Strong Employer Brand

Companies that offer good benefits build a reputation as people-first employers. This helps attract top talent and positions your company as a great place to work, even before you post a job opening.

Tips for Malaysian Employers

If you want your employee benefits to make a real impact, follow these tips below:

1. Follow All Legal Requirements First

Start with the basics. Make sure your company is fully providing all statutory benefits under the Employment Act 1955 and related laws. By following these legal laws, you can form the foundation of a fair and compliant workplace.

2. Understand What Your Employees Actually Want

Different teams value different things. Some may prefer better medical coverage, while others appreciate more flexible hours. Conduct simple surveys or feedback sessions to learn which benefits matter most to your people.

3. Compare with Others in Your Industry

Look at what other companies in your sector are offering. Benchmarking helps you see where your benefits stand and whether you need to improve in certain areas to stay competitive.

4. Communicate Your Benefits Clearly

Even the best perks won’t have an impact if employees don’t know about them. Explain your full benefits package during onboarding, team meetings, or internal HR updates. Job candidates should also hear about them during interviews.

5. Review and Update Your Offerings Regularly

As your workforce changes, so do their needs. Check in on your benefits at least once a year to see if they’re still relevant, used, and effective. Small updates can keep your package fresh and aligned with employee expectations.

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