payslip in malaysia

Why Is Payslip Important and How to Prepare It in Malaysia

When we think of a payslip, what often comes to mind is just a piece of paper that shows the breakdown of our salary.

However, a payslip holds much more significance than merely being paper. It carries great importance for both employers and employees.

This article will explore the importance of the payslip, detailing how to prepare one effectively, what to include in it, and more.

What is a Payslip?

In Malaysia, a payslip is a paper that shows how much money a person earns from their job. It details the salary they earn, including extra payments like house rent allowance and bonuses.

It also lists the money taken out for things like taxes and savings, such as the provident fund. This paper is essential for both the employer and the employee because it keeps a record of what was paid and what was deducted from the salary each month.

The Importance of a Payslip in Malaysia

In Malaysian, a payslip, also referred to as a salary slip, carries profound importance for both employers and employees. Let’s explore the many reasons why the payslip is so important at work.

Legal Proof and Employment Details

The issuance of a payslip is not a mere formality; it’s a legal mandate embedded in the Malaysia Employment Act 1955. Employers are compelled to furnish employees with a detailed statement elucidating wages and allowances earned during specific wage periods.

Beyond a legal requirement, the payslip transforms into irrefutable proof of employment, offering critical insights into designations and monthly earnings for employees.

Financial Transactions and Creditworthiness

The significance of payslips extends beyond the confines of legality, playing an important role in various financial transactions. When individuals apply for loans or credit cards, financial institutions meticulously scrutinize their creditworthiness. 

The payslip emerges as a tangible document that mirrors an individual’s income and proves their ability to meet repayment obligations, thereby influencing credit-related decisions.

Tax Compliance and Income Proof

When it comes to taxation, payslips are an invaluable tools for both employers and employees. Employers utilize these documents to comply with the Malaysia Employee Act, ensuring transparent communication of wage details.

For employees, payslips serve as the basis for filing accurate income tax returns. The detailed breakdown of income components and deductions facilitates the precise computation of tax liability.

Negotiation Tool and Job Search Support

For individuals seeking career advancements, payslips are also negotiation tools. During job transitions, prospective employers frequently request salary slips as evidence of current designations and salary levels.

Equipped with this information, employees can negotiate favorable positions and compensation packages commensurate with their existing roles.

How to Prepare a Payslip?

What Should be in a Payslip?

In Malaysia, a complete payslip should consist of the following important information:

  • Company Details: Inclusion of the company name and address for identification purposes.
  • Employee Information: Provision of essential details such as name, employee number, IC/passport number, EPF number, SOCSO number, and income tax number.
  • Salary Statement: Explicit detailing of the specific month, covering basic pay, allowances, and deductions for EPF, SOCSO, tax, and EIS.
  • Employer Contributions: Transparent outlining of contributions made by the employer for EPF, SOCSO, EIS, and HRDF.
  • Gross and Net Pay Calculations: Clear presentation of calculations involving gross pay, gross deductions, gross company contributions, and the net pay amount.

The Use of Digital Payslips in Malaysia

The advent of technology has changed how companies prepare payslips. Employers are increasingly adopting e-payroll systems and payroll software in Malaysia, fostering efficiency and accuracy in the payroll process. This transition offers several advantages:


The automation of the payroll process through e-payroll systems substantially reduces manual efforts, minimizes errors, and expedites the entire payroll cycle, resulting in enhanced operational efficiency.


Digital payslips align seamlessly with the legal requirements stipulated in the Malaysia Employment Act. They provide a structured and compliant avenue for disseminating wage details, ensuring adherence to statutory obligations.


Password-protected digital payslips enhance security, safeguarding against unauthorized access and guaranteeing the confidentiality of sensitive financial information.


Digital payslips, whether delivered through email or online portals, ensure seamless accessibility for employees, enabling them to retrieve their financial documents conveniently.

Different Payroll Periods

Companies can pay various employees at different times by choosing mid-month or end-month pay runs. Use ad-hoc runs for bonuses, back pay, or one-time payments.

Seamless Integration with Leave, Claims, and Attendance

Effortlessly include leave, reimbursements, overtime, and attendance allowances in your payroll system. This integration streamlines the process without requiring manual data entry or imports.

In a Nutshell

The payslip in Malaysia is far more than a mere piece of paper—it’s a legal requirement, a financial record, and a key to career progression for both employers and employees.

Its significance lies in providing proof of employment, facilitating financial transactions, ensuring tax compliance, and aiding negotiations during job transitions.

As the country progresses into the digital age, the adoption of e-payroll systems and specialized software offers numerous advantages.

These technological advancements offer efficiency, compliance, security, and accessibility benefits, streamlining the payroll process while integrating seamlessly with leave, claims, and attendance systems.

Transitioning to digital payslips not only ensures compliance with legal obligations but also elevates the efficiency and security of payroll management.

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