Employees Provident Fund (EPF) contributions for eligible non-Malaysian employees changed from October 2025 wages. If your payroll was already running at the time, 2026 is a good point to check that every affected employee was registered and placed in the right contribution category.
For the ordinary eligible category, the contribution is generally 2% from the employer and 2% from the employee. Don’t apply that rate to every non-citizen without checking the person’s status.
Who falls within the current requirement?
KWSP’s employer guide for non-Malaysian citizen employees describes the requirement from October 2025 wages. Relevant conditions include authorised work status and being below age 75. Domestic workers are excluded.
The guide’s FAQ also includes eligible short-term, part-time and casual employees. A short contract or part-time label doesn’t create an automatic exclusion.
Permanent residents and members registered before 1 August 1998 retain their applicable different treatment. Check the employee’s category before loading the rate into payroll.
Use the EPF Third Schedule effective October 2025, including Part F, together with the category guidance.
Fictional case study: checking a new employee’s first payroll
Assume an eligible employee’s first payroll is for August 2026. Gross wages and EPF contribution wages are both RM2,000 in this example, the ordinary 2% category applies, and there are no other payments or deductions:
- employer share: RM2,000 × 2% = RM40;
- employee share: RM2,000 × 2% = RM40;
- total EPF contribution: RM80;
- pay after the employee EPF deduction: RM1,960 before other deductions; and
- employer payroll cost: RM2,040 before other employer costs.
The first draft payslip incorrectly deducts the full RM80, leaving RM1,920. The reviewer checks the category and calculation, then corrects the employee deduction to RM40. The employee receives RM1,960 and the employer pays RM80 to KWSP, giving a combined cash outflow of RM2,040.
The August contribution is due by 15 September 2026 under KWSP’s following-month rule. The payroll officer submits and pays it, checks the acknowledgement and saves the evidence with the payslip calculation.
The lesson is to reconcile three separate figures: the employee deduction, the employer cost and the total remitted. A correct RM80 remittance would not excuse an incorrect RM80 deduction from wages. Different membership categories still require their own rate assessment.
How does KWSP illustrate rounding?
KWSP’s current guide provides a fractional example using RM1,751 of wages. Each 2% share is RM35.02 before rounding. Employer FAQ question 23 and the other/general FAQ question 24 illustrate:
- employer contribution: RM36;
- employee contribution: RM36; and
- total contribution: RM72.
Check that payroll reproduces KWSP’s stated rounding as well as the rate. A system that calculates 2% correctly but retains RM35.02 as the payable share would not match this illustration. No payroll software was tested for this guide.
Monthly payroll checklist
1. Confirm identity and work status
Keep the employee’s passport and authorised work information current. Match the name and identification details used for payroll and EPF.
2. Confirm the EPF member and category
Check the membership number and registration result. Don’t assume an automatic process succeeded without reviewing the record.
Identify whether the ordinary 2% category or a pre-existing category applies. Record the reason and supporting information.
3. Check contribution wages
Review which wage components are included under the current EPF rules. Don’t calculate from basic salary alone unless that is genuinely the correct contribution-wage amount.
4. Review deductions and employer cost
The employee share is a payroll deduction. The employer share is an additional employer cost. Show them separately in payroll reports and on the appropriate payslip records.
5. Reconcile and pay
Reconcile the approved payroll, employee deductions, employer contributions, submission and payment. KWSP states payment is due by the 15th of the following month.
Save the acknowledgement and investigate rejected or unmatched employees promptly.
6. Review changes
Include non-Malaysian employees in the starter, leaver and monthly-change process. KWSP’s employer FAQ question 27 lists cessation events including the month of death, reaching age 75, two months before an unextended work pass expires, and two months before an extended work pass expires.
Record the work-pass expiry, extension status and applicable contribution end point. Use the separate leaver guidance for resignation, absconding or transfer: FAQ question 29 addresses Immigration notification and contributions through the last month of service. Have the responsible payroll person confirm which rule fits the employee’s actual status before changing deductions.
Use an employee-level control sheet
Keep identity, work-status evidence and the membership category in the employee record. A shorter monthly sheet can then focus on amounts and completion. This row uses the fictional employee above:
| Employee / wage month | Contribution wages | Employer / employee share | Total remittance | Completion evidence |
|---|---|---|---|---|
| Employee F01 / August 2026 | RM2,000 | RM40 / RM40 | RM80 | Category checked; payment and acknowledgement reconciled by 15 September |
This helps catch an employee missing from the submission or placed in the wrong category even when the overall payroll total looks plausible. Keep the actual identifiers in the controlled payroll file.
What to review now
Compare employee records, payroll settings and EPF submissions from October 2025 onward. If you find an error, preserve the original reports and have the correction assessed under current KWSP procedures.
Explain the deduction to affected employees in plain language. A clear payslip and contribution record helps keep the two shares distinct. Review basic wages separately using the RM1,700 minimum-wage guide; an EPF calculation does not establish that the underlying pay is compliant.
Sources checked on 24 September 2026 against KWSP’s current non-Malaysian employee guide and Third Schedule effective October 2025. Confirm individual categories and current contribution rules before changing payroll.
Sources referred to in this guide (2)
We’ve taken reasonable steps to verify the cited sources and check this information as at the source-check date. We can’t guarantee 100% accuracy, completeness or that it remains up to date. This is general information and does not replace professional accounting, tax or legal advice tailored to your circumstances. How these guides were prepared.