Expanding into Malaysia presents exciting growth opportunities for foreign businesses. However, one critical decision is determining the best way to hire employees—should you engage an Employer of Record (EOR) or opt for direct hiring by setting up a local entity?
Both approaches come with their advantages and challenges. In this guide, we’ll compare EOR vs. direct hiring to help you decide the best solution for your business.
At Amaze Advisory, we specialize in helping foreign companies hire employees quickly and compliantly in Malaysia through our EOR services, eliminating the need to set up a local entity.
What Is an Employer of Record (EOR)?
An Employer of Record (EOR) is a third-party service provider that legally employs workers on behalf of foreign companies. This means:
- The EOR acts as the official employer on record
- Handles payroll, taxes, benefits, and compliance
- The foreign company retains control over daily operations and work assignments
With an EOR like Amaze Advisory, businesses can hire employees in Malaysia within days, without needing to establish a local entity or navigate complex employment regulations.
What Is Direct Hiring?
Direct hiring means setting up a legal entity in Malaysia, such as a Sdn Bhd (Private Limited Company), and employing workers directly. This requires:
- Company incorporation with the Companies Commission of Malaysia (SSM)
- Registering for taxes, EPF, SOCSO, and EIS contributions
- Setting up an HR department to manage payroll, benefits, and compliance
- Long-term financial and legal commitments
While direct hiring gives full control, it also comes with administrative burdens and compliance risks.
Key Differences Between an EOR and Direct Hiring
| Factor | Employer of Record (EOR) | Direct Hiring (Local Entity) |
|---|---|---|
| Time to Hire | Days – No entity setup required | Weeks to Months – Must incorporate a company first |
| Compliance & Legal Risks | Fully Managed by EOR | Company is responsible for all legal obligations |
| Payroll & HR Management | EOR handles payroll, taxes, benefits | Company must set up HR, payroll, and tax systems |
| Cost | No setup costs – Pay per employee | High initial and ongoing costs for compliance and HR |
| Flexibility | Easy to scale up/down | Long-term commitment required |
| Exit Strategy | Quick & low-risk | Complex exit process with financial liabilities |
5 Key Benefits of Choosing an Employer of Record (EOR)
1. Faster Market Entry
With Amaze Advisory’s EOR services, businesses can hire employees in Malaysia within days. There’s no need for lengthy company registration, licensing, or compliance approvals.
2. No Legal Entity Required
Setting up a local company involves extensive paperwork, regulatory compliance, and operational setup. An EOR eliminates this burden, allowing businesses to operate immediately.
3. Full Compliance & Risk Mitigation
Malaysia has strict labor laws governing employee benefits, tax deductions, and termination procedures. Amaze Advisory ensures compliance, so businesses avoid costly fines and legal issues.
4. Lower Costs & Greater Flexibility
Instead of investing in HR, payroll software, and tax administration, an EOR manages everything at a lower cost. Businesses can scale their workforce up or down without financial risk.
5. Hassle-Free Payroll & Benefits Administration
Amaze Advisory handles:
- Payroll processing & salary disbursement
- EPF, SOCSO, EIS, and PCB tax compliance
- Employee contracts & benefits management
This allows businesses to focus on growth and operations without HR-related stress.
When Should You Use an Employer of Record (EOR)?
- You want to enter Malaysia quickly without entity setup
- You prefer a cost-effective hiring solution
- You need to ensure compliance with Malaysian employment laws
- You want to test the market before committing to full incorporation
- You plan to scale your workforce up or down based on business needs
Why Choose Amaze Advisory as Your EOR Partner in Malaysia?
At Amaze Advisory, we specialize in helping foreign companies expand into Malaysia effortlessly. Our EOR services provide:
- Quick hiring & onboarding – No delays, no bureaucracy
- Compliance with Malaysia’s labor laws
- End-to-end payroll & HR management
- Dedicated support for SMEs & multinational companies
With our expertise in serving SMEs and multinational corporations, we simplify expansion, ensuring that your business operates smoothly in Malaysia.
Get Started with a Hassle-Free Hiring Solution Today!
Looking to expand into Malaysia without the hassle of setting up a local entity? Amaze Advisory’s EOR services provide a fast, compliant, and cost-effective hiring solution.
Contact us today to learn how we can support your expansion into Malaysia!
