Payroll Deduction Form for Malaysia

Payroll Deduction Form Template for Malaysia

A legally binding document used in Malaysia that authorizes an employer to make specific deductions from an employee's salary in accordance with the Employment Act 1955 and related Malaysian employment legislation. The form covers both mandatory statutory deductions (such as EPF, SOCSO, and income tax) and voluntary deductions (such as loan repayments or insurance premiums), while ensuring compliance with the Personal Data Protection Act 2010. It includes detailed information about the nature, amount, and frequency of deductions, along with necessary authorizations and declarations from both employer and employee.

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What is a Payroll Deduction Form?

The Payroll Deduction Form is a crucial document in Malaysian employment relationships that establishes the legal framework for salary deductions. It is required whenever an employer needs to implement regular deductions from an employee's salary, whether for statutory contributions or voluntary arrangements. The form must comply with the Employment Act 1955, which strictly regulates permissible salary deductions in Malaysia. It typically includes provisions for both mandatory deductions (EPF, SOCSO, EIS, income tax) and voluntary deductions (loans, insurance, union dues), along with specific amounts, frequencies, and durations. The document serves as proof of employee consent and protects both parties by clearly documenting the agreed-upon deduction arrangements.

What sections should be included in a Payroll Deduction Form?

1. Employee Information: Personal details including name, employee ID, NRIC/passport number, department, and position

2. Employer Information: Company name, registration number, and business address

3. Deduction Authorization: Clear statement authorizing the employer to make specified deductions from the employee's salary

4. Mandatory Statutory Deductions: Section listing all statutory deductions including EPF, SOCSO, EIS, and PCB/Income Tax

5. Deduction Details: Specific amounts or percentages to be deducted, frequency of deductions, and duration if applicable

6. Declaration and Consent: Employee's declaration of understanding and consent to the deductions, including acknowledgment of PDPA requirements

7. Execution: Signature blocks for employee, employer representative, and witness with date

What sections are optional to include in a Payroll Deduction Form?

1. Voluntary Deductions: Used when employee opts for additional voluntary deductions such as insurance premiums, union dues, or company loan repayments

2. Foreign Worker Provisions: Required for foreign workers, including specific deductions related to work permits or accommodation

3. Variation Clause: Optional section allowing for future changes to deduction amounts with proper notice and consent

4. Cancellation Rights: Details of how and when the employee can cancel voluntary deductions

5. Emergency Contact: Optional section for emergency contact details in case of payment disputes or issues

What schedules should be included in a Payroll Deduction Form?

1. Schedule A - Deduction Schedule: Detailed breakdown of all deductions, including amounts, frequencies, and start dates

2. Schedule B - Payment Details: Employee's bank account details and payment method preferences

3. Appendix 1 - Supporting Documents: List of required supporting documents (e.g., copy of NRIC, work permit for foreign workers)

4. Appendix 2 - Terms and Conditions: Detailed terms and conditions governing the deductions, including statutory references

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

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Relevant legal definitions

Clauses

Authorization
Consent
Data Protection
Statutory Deductions
Voluntary Deductions
Payment Terms
Duration
Variation
Cancellation
Representations
Employee Acknowledgment
Notice Requirements
Governing Law
Declaration
Execution

Relevant Industries

Manufacturing

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Healthcare

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Agriculture

Mining

Oil and Gas

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Relevant Teams

Human Resources

Finance

Payroll

Legal

Compliance

Administration

Corporate Services

Relevant Roles

HR Manager

Payroll Manager

HR Executive

Finance Manager

Accounts Executive

Compensation and Benefits Manager

HR Director

Finance Director

Compliance Officer

Legal Counsel

HR Administrator

Payroll Administrator

HR Business Partner

Department Manager

Administrative Officer

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Authorisation Form

A Malaysian legal document granting specific powers or permissions from an authorizer to an authorized representative, compliant with Malaysian contract law.

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What is a Payroll Deduction Form?

What sections should be included in a Payroll Deduction Form?

What sections are optional to include in a Payroll Deduction Form?

What schedules should be included in a Payroll Deduction Form?

Authors

Alex Denne

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