You found the right person in Kuala Lumpur. Now your finance and legal teams want to know how to employ them without opening a Malaysian company first. An employer of record exists to answer exactly that. So, what is an employer of record? An EOR is a licensed third party that becomes the legal employer of your chosen staff in a country where you have no registered entity, while you keep full control of their day-to-day work.<\/p>\n\n\n\n
This guide is written for the CHRO, CFO, or operations lead at a mid-market company sizing up a first hire in Southeast Asia. It covers how the model works, where its limits are, and what the responsibility split does for your compliance risk. Cost gets a light touch here. The full pricing breakdown lives in its own resource, linked below.<\/p>\n\n\n\n
An employer of record is the company whose name goes on your employee’s contract in a country where you have none of your own. You found the hire and you run their work. The EOR does the rest: it signs a locally valid contract, runs payroll, handles the statutory deductions, and carries the legal risk of employing someone under Malaysian law. So a company in New York or Sydney can have a person working in Kuala Lumpur inside a week, with none of the months an entity setup normally eats. There is no headcount minimum at SummitNext, so the same setup covers one hire as easily as a team of fifty. One rule sits underneath all of it. The EOR has to be licensed to employ wherever your worker sits, which in Malaysia means following the Employment Act 1955 plus the EPF, SOCSO, and EIS rules.<\/p>\n\n\n\n
On paper, the EOR is the employer. The taxman sees its name, not yours. In the room, nothing changes. The person does the work you give them and reports to you, while the admin, payroll, and tax run quietly through a partner already set up to operate in the market.<\/p>\n\n\n\n
How does an employer of record work? It splits one job into two: the EOR holds the legal employment, you hold the management. You choose the candidate and agree the terms. The EOR formalises the hire under local law, and the person starts reporting to you. The whole thing runs in five steps.<\/p>\n\n\n\n
Because the EOR already holds the licences to employ in Malaysia, the gap between an offer and a legally employed worker is measured in days. Standing up your own entity to do the same takes months. That speed is why companies reach for an EOR before they ever incorporate. To weigh the EOR route against building an entity, our breakdown of what employer of record services cost<\/a> covers the pricing side.<\/p>\n\n\n\n What does an employer of record do? It carries the legal side of employing someone so you do not have to. The EOR signs the local contract and runs payroll each month. It pays the statutory contributions, files the tax, sorts out benefits, and handles a termination properly if it ever comes to that. Everything on the work side stays with you. You still set the tasks, run the reviews, and decide who gets promoted. With SummitNext that boundary is written down rather than left to assumption. SummitNext takes the HR and compliance work, you manage the person day to day, and your hire can sit in your own office if that suits you, which a remote-only BPO will not allow. For a CFO or HR director the draw is plain enough. The legal exposure of employing abroad goes away, and you never hand over control of the team. That holds for the whole engagement under Malaysian labour law.<\/p>\n\n\n\n The table below shows who handles what in a typical SummitNext engagement.<\/p>\n\n\n\nWho Is Accountable for What<\/strong><\/h2>\n\n\n\n