1. Two numbers, not one
Payroll calculation produces two different numbers. Net pay is what the employee takes home: wage minus employee EPF, SOCSO, EIS and PCB. Employer cost is what the company actually spends: wage plus employer EPF, SOCSO, EIS and any HRD levy. Confusing the two is the most common payroll mistake. This guide covers both, for Malaysian payroll in 2026.
2. What is deducted from the employee
Employee EPF is 11% of wages for Malaysians and permanent residents below 60 (0% at 60 and above; 2% for non-Malaysians). Employee SOCSO and EIS use RM100 wage bands capped at RM6,000, so at RM6,000 and above they stay at RM29.75 and RM11.90. PCB is the resident-only monthly tax deduction, category 1, calculated on chargeable income after EPF and approved reliefs. Allowances, overtime, bonuses and reliefs change every one of these figures, which is why two employees on the same basic wage can have different net pay.
3. What the employer adds
Employer EPF is 13% on wages up to RM5,000 or 12% above RM5,000 (4% at 60 and above; 2% for non-Malaysians). Employer SOCSO is shown at its ceiling row only: Category 1 RM104.15, Category 2 RM74.40 at RM6,000 and above. Employer EIS is RM11.90 at the ceiling. The HRD Corp levy is off by default in the calculator, with 1% and 0.5% options for eligible employers. Employer contributions are a cost on top of the wage, never a deduction from it.
4. Worked example: RM6,000
Employee side: RM6,000 wage minus RM660 employee EPF, RM29.75 employee SOCSO, RM11.90 employee EIS and RM207.50 PCB = RM5,090.85 net pay. Employer side: RM6,000 wage plus RM720 employer EPF, RM104.15 employer SOCSO and RM11.90 employer EIS = RM6,836.05 employer cost. Both totals are the calculator's verified outputs. Try your own figures in the payroll calculator.
5. Bonus months change everything
In a bonus month, PCB is recalculated on the higher month because additional remuneration is taxed when it is paid. Net pay therefore falls by more than the bonus alone would suggest, and employer EPF rises with the higher wage. The bonus-month guide walks through the spike in detail.
6. Staff differences to watch
Employees aged 60 and above and non-Malaysian employees use different EPF rates, and SOCSO categories change the employer ceiling row. If your payroll mixes local staff, older staff and foreign workers, calculate each group separately rather than applying one rate to everyone. The EPF guide lists the rates by age and status, and the methodology page states exactly what is estimated.
7. Common questions
Is employer cost the same as the salary budget? No: budget wage plus employer contributions plus any levy. Does the calculator include HRD levy automatically? No, it is off by default; switch it on only if your company is liable. Does payroll include PCB for non-residents? No, the engine is resident-only. Is this a substitute for payroll software? No: it is an independent estimate for understanding and checking, not a filing or payment system.