Payslip
What a payslip is, what it shows and how Malaysian employers issue one each payday.
Published Wednesday 30 September 2026
Table of contents
Key takeaways
- A payslip is the record of an employee's pay for each wage period, showing how gross pay becomes net pay after deductions
- Malaysian payslips usually show statutory deductions for retirement savings, social security, employment insurance and income tax
- Employers covered by the Employment Act 1955 must give a written wage statement by payday and keep wage records for at least six years
- Electronic payslips are common practice, and software can build them for you each pay run
What is a payslip?
A payslip is a document an employer gives an employee each payday, showing the total they earned less deductions such as tax. In Malaysia, people often call it a salary slip or slip gaji, and some businesses use the term pay advice.
Think of it as a receipt for work. It shows your employee how their pay was worked out and gives your business a record of what you paid.
What information is on a payslip?
It lists everything that makes up an employee's pay for one wage period. It usually includes:
- employer and employee details, such as names and employee numbers
- the pay period and payment date
- earnings and reimbursements, such as salary, hourly wages, commission and travel claims
- statutory deductions and any other deductions the employee has agreed to
- employer contributions, such as the employer's retirement fund share
- gross pay and net pay
- leave balances, if you track leave through payroll
Starting from a payslip template helps you include every item, every pay run.
Common payslip deductions in Malaysia
Most Malaysian pay statements show four statutory deductions covering retirement savings, social security, employment insurance and income tax. The rates below are current as of September 2026, so check the official websites before each payroll run.
Employees Provident Fund (EPF) contributions build retirement savings. According to KWSP, the EPF's Malay name, Malaysian employees under 60 contribute 11% of their wages. Employers add 13% on monthly wages of RM5,000 and below, or 12% above RM5,000. Both shares are due on or before day 15 of the following month.
Social Security Organisation (SOCSO) contributions cover the Employment Injury Scheme and the Invalidity Scheme. For employees under 60, PERKESO sets the employer share at 1.75% and the employee share at 0.5%. Employment Insurance System (EIS) contributions are 0.2% each from employer and employee, and both SOCSO and EIS apply to monthly wages up to RM6,000.
Monthly tax deduction (MTD), also called potongan cukai bulanan (PCB), is income tax taken from pay each month. According to HASiL, the Inland Revenue Board of Malaysia (LHDN), employers must remit MTD by day 15 of the following month.
Employer-only costs are kept separate from employee deductions. For example, the business alone pays the Human Resources Development Fund (HRDF) training levy.
Gross pay vs net pay
Gross pay is the total an employee earns before deductions, and net pay is what they take home afterwards. Showing both lets your employee see exactly where the difference went.
Say an employee under 60 earns a monthly salary of RM4,000. EPF takes RM440 (11%), SOCSO about RM20 and EIS about RM8, leaving roughly RM3,532 before any PCB. The official contribution tables round the SOCSO and EIS amounts slightly, and PCB depends on each employee's tax reliefs.
Gross pay and the wages used for EPF can differ. KWSP excludes overtime payments from EPF contributions, so an employee's overtime raises their gross pay without raising their EPF deduction.
Are payslips a legal requirement in Malaysia?
Yes. Employers covered by the Employment Act 1955 must give each employee a written wage statement for every wage period, on or before payday.
This duty comes from regulation 9 of the Employment Regulations 1957, which requires a separate statement of wages on or before payday. KWSP also lists issuing payslips among an employer's responsibilities.
The obligation reaches a large share of the workforce: Malaysia had 12.01 million monthly salary and wage earners in 2025, according to the Department of Statistics Malaysia’s Salaries and Wages Survey Report 2025.
Payment timing has its own rule. Under the Employment Act 1955, you must pay wages no later than the seventh day after the wage period ends. The wage statement should reach your employee by the day you pay them.
Payslip vs pay stub vs paycheck
A payslip and a pay stub are the same record, while a paycheck is the payment itself. Malaysians usually say payslip, and pay stub is the term the US Department of Labor uses for the written wage statement.
Whether you pay by cheque or bank transfer, the slip is the written record that explains the amount.
How to create and issue payslips
The process comes down to accurate numbers and on-time delivery. These five steps cover the process for each wage period.
1. Gather employee and pay details
Collect each employee's details, pay rate and any changes for the period, such as overtime or commission. Keeping this information in one place makes online payroll quicker to run each month.
2. Calculate gross pay
Add up salary or wages, overtime, allowances and commission for the period. This total is the starting point for every deduction.
3. Work out statutory deductions
Apply the EPF, SOCSO, EIS and PCB rates to the right wage amounts using the official contribution tables. Check each agency's website for updated tables before you run payroll.
4. Prepare the payslip
Enter the earnings, deductions, employer contributions and net pay for each employee. Payroll software can calculate these figures and build each slip automatically, which saves you manual checking.
5. Issue payslips and keep records
Give each employee their pay statement on or before payday. Slips were once printed on paper, and payslips can be given in hard copy or online, according to activpayroll's Malaysia payroll guide.
File a copy of each one with your payroll records. If payroll takes up too much of your week, you can outsource payroll to a specialist provider.
Keep payslips and payroll records organised with Xero
Accurate payslips help your employees trust their pay and keep your records ready for any check. With Xero, you can track wage costs and statutory payments alongside the rest of your accounts, and add payroll apps from the Xero App Store. Try Xero today and get one month free.
FAQs on payslips
These answers cover questions employers and employees in Malaysia often ask.
Can a payslip be used as proof of income?
Yes. Lenders often ask for recent payslips as proof of income, for example Maybank accepts the latest month's salary slip for personal financing. Requirements vary by bank and product.
How long should employers keep payslip records?
The Employment Act 1955 requires employers to keep employee and wage registers for at least six years. Keeping pay statements for the same period gives you a complete record if questions come up.
Where can employees get their payslips?
Employees get them from their employer, usually by email or through an online employee portal. If one goes astray, the employee can ask the business owner or HR team for a copy.
Do foreign workers contribute to EPF?
Yes. KWSP requires contributions for non-Malaysian employees at 2% from the employer and 2% from the employee, effective from October 2025 wages.
Do these payslip rules apply in Sabah and Sarawak?
The Employment Act 1955 covers Peninsular Malaysia and Labuan, while Sabah and Sarawak have their own labour ordinances. If you employ staff in those states, check the ordinance that applies to them.
Can an employer deduct the employer's EPF share from wages?
No. KWSP rules require the business to pay its own share, so only the employee's share can appear as an EPF deduction.
Related terms
Learn more about payslips
Handy resources
Advisor directory
You can search for experts in our advisor directory
Your guide to hiring
Learn tips for hiring, onboarding and paying an employee, while keeping everyone happy.
Online accounting with Xero
Automate your accounting in the cloud
Disclaimer
This glossary is for small business owners. The definitions are written with their requirements in mind. More detailed definitions can be found in accounting textbooks or from an accounting professional. Xero does not provide accounting, tax, business or legal advice.