Why My Salary Is Less Than Offer Letter in Malaysia

One of the most common experiences for new employees in Malaysia — and indeed around the world — is the shock of seeing the first payslip. You eagerly open it expecting to see the RM5,000 from your offer letter, but instead, the "net pay" line shows something like RM4,190. What happened to the missing RM810?

This is completely normal and expected. The amount in your offer letter or employment contract is your **gross salary** — the total compensation before any statutory deductions. By law, every Malaysian employer must deduct several mandatory contributions from your salary each month. These deductions are not arbitrary or excessive; they fund your retirement savings, social protection, and income tax obligations.

The four main deductions that reduce your gross salary to net take-home pay are:

1. **EPF (KWSP):** 11% of your gross salary goes to your retirement savings. For RM5,000, this is RM550 per month. While this feels like a reduction, the money is yours — it goes into your EPF account and earns annual dividends.

2. **SOCSO (PERKESO):** 0.5% of wages (capped at RM5,000) provides workplace injury and disability insurance. Maximum RM25 per month.

3. **EIS:** 0.2% of wages (capped at RM4,000) provides retrenchment protection. Maximum RM8 per month.

4. **PCB (Income Tax):** The amount varies based on your tax bracket. For RM5,000 gross, the estimated monthly PCB is around RM227.

Understanding these deductions before you receive your first payslip helps you set realistic financial expectations and budget appropriately.

Besides the standard four statutory deductions, there are other reasons your payslip amount may differ from your offer letter:

**Joining mid-month:** If you started your job in the middle of the month, your salary will be prorated. For example, if you start on the 15th and there are 11 working days remaining, your prorated salary would be approximately RM2,115 instead of the full RM5,000.

**Probationary salary:** Some companies pay a lower salary during the probation period (typically the first 3-6 months). Your offer letter should state whether the salary changes after confirmation.

**Advance deductions:** If you received a salary advance in your first month (some companies do this to help new employees with relocation or setup costs), the advance will be deducted from subsequent months' salaries.

**Staff loans or benefits:** Some companies deduct for staff loan repayments, company housing, or other benefits. These should be clearly stated in your payslip.

**Absences:** If you took unpaid leave or were absent during the month, your salary may be reduced accordingly.

**Tax category:** Your PCB deduction depends on your tax category (which depends on marital status and number of children). If your employer does not have your complete information when processing your first payslip, they may use a default category that could over-deduct.

If you believe your payslip is incorrect, speak to your HR department first. They can explain each deduction and correct any errors. For PCB issues, you can also contact LHDN directly.