Malaysia
Full implementation of 1:3 Internship Policy for expatriate hiring
Impact date: 1 June 2026
Malaysia's 1:3 Internship Policy moved from pilot phase to full implementation on 1 June 2026. Companies receiving EP approvals are required to provide structured paid internship placements for Malaysian students at specific category-dependent ratios, subject to specified limits and exemptions.
Employer implications/action needed Employers hiring expatriates should factor the corresponding internship commitments into workforce planning and budgets. Internships must generally be structured, MySIP-endorsed and at least 10 weeks long, with minimum monthly remuneration of RM500 or more depending on the student's level of study.
Employer risk Employers may incur additional administrative and cost obligations when hiring expatriates and should ensure that internship commitments arising from EP approvals are properly tracked and fulfilled.
New SOCSO 24-hour non-employment injury protection
Impact date: 1 June 2026; voluntary participation for local employees from 8 July 2026
The Employees’ Social Security (Amendment) Act 2026 came into force on 1 June 2026 and introduced the LINDUNG 24 Jam scheme, extending SOCSO (social security) protection to accidents occurring outside the course of employment. Following a Cabinet decision on 8 July 2026, participation became voluntary for local employees but remains mandatory for foreign workers. Phase 1 contributions are 0.75% and are borne by the employee.
Employer implications/action needed Employers should ensure payroll and SOCSO processes correctly reflect each employee’s participation status and that mandatory contributions continue to be made for foreign workers.
Employer risk Incorrect deductions or administration may create payroll issues for local employees, while failure to register and make mandatory contributions for covered foreign workers may result in statutory penalties.
Federal Court confirms company directors may also be employees (case law)
Impact date: 24 June 2026
In Acexide Technology Sdn Bhd & Anor v Chang Heng Keong & Anor, the Federal Court confirmed that a company director may simultaneously be an employee or “workman” for the purposes of the Industrial Relations Act 1967. Whether an employment relationship exists depends on the totality of the evidence, including matters such as payroll records, EPF and SOCSO (social security) contributions, tax deductions and the company’s treatment of the individual.
Employer implications/action needed Employers should distinguish carefully between removing an individual from corporate office as a director and terminating any separate employment relationship. Where an executive director is also an employee, termination of employment should separately comply with Malaysian unfair dismissal principles and be supported by just cause or excuse.
Employer risk A valid removal from office under company law does not necessarily terminate an employment relationship lawfully. Directors who are also employees may pursue unfair dismissal claims.
Forthcoming mandatory reporting of job vacancies to SOCSO
Impact date: Forthcoming — revised Bill approved by the Dewan Rakyat on 30 June 2026
On 30 June 2026, the Dewan Rakyat approved the revised Employment Insurance System (Amendment) Bill 2025 following amendments made by the Dewan Negara. Among other changes, the Bill would require employers to notify SOCSO (social security organization) of job vacancies or newly created positions before recruiting to fill them, with proposed progressive fines of up to RM1,000 for a first offence, RM3,000 for a second offence, and RM5,000 for a third or subsequent offence.
Employer implications/action needed Employers should monitor commencement and implementation guidance and be prepared to incorporate SOCSO vacancy notification into their recruitment processes.
Employer risk Once the relevant provisions take effect, failure to report vacancies as required may expose employers to financial penalties. Details of commencement and any employer exemptions should be monitored before implementation.
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