Malaysia Strengthens EPF Enforcement for Non-Malaysian Workers

Malaysia has taken a significant step to strengthen compliance with its newly introduced mandatory Employees Provident Fund (EPF) contribution requirement for non-Malaysian workers by formalising a collaboration with the Immigration Department of Malaysia (JIM). The strategic partnership aims to enhance enforcement, improve data verification, and streamline registration for foreign workers in the EPF system.

The collaboration was formalised with a strategic Collaboration Note, signed on 11 December 2025, during the Ministry of Home Affairs’ monthly assembly in Putrajaya. It directly supports the implementation of the mandatory contribution framework announced in Budget 2025, which became effective 1 October 2025.

What Is Changing and Why It Matters

Under the expanded policy, all non-Malaysian citizen employees (excluding domestic workers) must be registered with the EPF, and both the employer and the employee contribute at a rate of 2% on wages. This requirement already applies to wages from October 2025, corresponding to the contribution month of November 2025.

The main reason for increased enforcement is clear. While approximately 1.3 million foreign workers across approximately 60,000 employers are already contributing, many employers still do not fully comply, mainly because they undermine workers’ social protection. Incomplete compliance not only undermines the policy's social protection goal but also puts employers at risk of legal consequences. 

Therefore, this partnership focuses on:

• System Integration and Data Sharing. Linked platforms between EPF and the Immigration Department enable fast, secure checks of valid work passes, strengthening verification of workers’ status for contribution purposes.
• Better Enforcement Capabilities. Improved data flows enable faster identification of noncompliance and provide authorities with more effective tools to ensure employers meet their statutory EPF obligations.
• Faster Registration and Greater Transparency. The collaboration accelerates worker registration and enhances transparency for employers. Non-Malaysian workers with recognised work passes can be registered automatically without visiting EPF offices, while other categories are managed through standard office channels.
• Accurate Contribution Recording. Employers are reminded to submit complete worker details (names, passports, and EPF membership numbers) to prevent errors in contributions.

Starting January 2026, non-Malaysian workers are also encouraged to complete fingerprint registration at EPF offices to ensure accurate crediting of contributions.

Payroll Operations Changes Required

For global payroll professionals operating in Malaysia or for payroll providers managing customers with operations in Malaysia, recommended actions include the following:

• Update payroll systems to record non-Malaysian worker details and ensure accurate 2% employer and 2% employee contributions.
• Verify and maintain high-quality data, including complete and correct passport numbers and membership IDs, to prevent mis-recorded contributions and administrative complications.
• Monitor payment deadlines; ongoing compliance will be closely monitored by EPF and immigration authorities.
• Regularly check registration and contribution status through the i-Akaun (employer) portal.

In Conclusion

Malaysia’s move to strengthen EPF enforcement for non-Malaysian workers through better inter-agency cooperation signals a stricter compliance environment. Payroll teams must now align their systems, data, and processes or face penalties. Employers and payroll practitioners should also prepare for an ongoing emphasis on foreign workers’ social protection as part of statutory compliance.

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Max van der Klis-Busink, MCIPP, RPP, is the Owner of Passion For Payroll and Vice President of Global Strategy on PayrollOrg’s Board of Directors.