RM2,000 Minimum Wage Employer Cost for Small Businesses in 2027

The short answer: A worker paid RM1,700 costs an employer RM1,953 a month after employer EPF, SOCSO and EIS. At the RM2,000 minimum wage from June 2027, the employer cost becomes RM2,298 a month, so the increase is RM344.90 rather than only the RM300 wage rise. This employer cost estimate covers statutory contributions only.

Why the RM300 wage rise becomes a larger employer cost

The current minimum wage is RM1,700 a month under the Minimum Wages Order 2024. It applies from 1 February 2025 to employers with five or more employees, and from 1 August 2025 to all employers.

Budget 2027 announced a new minimum wage of RM2,000 a month from June 2027. The change takes effect through a new minimum wages order. For an employer affected by the new rate, the basic wage increase is RM300 per worker each month.

The important budgeting point is that the wage is not the whole payroll cost. Employer EPF, SOCSO and EIS also change when the wage changes. In this example, the employer contributions rise by RM44.90 a month, taking the total increase to RM344.90.

That difference becomes easy to miss when a payroll spreadsheet has one line for basic wages but leaves the contribution rows unchanged. For 2027 planning, create separate rows for the wage, EPF, SOCSO and EIS so the total employer cost is visible.

Side-by-side cost per worker

The table uses full-time, monthly-rated workers below 60 on standard EPF rates. It assumes wages exactly at the minimum, with no overtime, allowances or bonus.

The per-worker yearly increase is RM4,139. Use that figure when you compare the cost of keeping a worker at the current minimum with the cost under the announced new rate. It includes the higher statutory contributions rather than treating the wage change as the complete increase.

For a budget worksheet, keep the current-rate and new-rate columns beside each other. This lets you see whether a change in the basic wage has also been reflected in the employer contribution lines.

What changes in EPF, SOCSO and EIS

Employers contribute 13% of wages to EPF for employees earning RM5,000 or less. Both wage levels in this example fall within that stated EPF band. The EPF line therefore rises from RM221 to RM260 between the two wage scenarios.

Employer SOCSO and EIS contributions follow PERKESO’s wage-band tables. They are not represented here as one combined percentage. The table shows the applicable employer amounts at each wage level, allowing you to record the contribution lines separately in your payroll planning.

A practical check is to review the payroll template rather than changing only the gross-wage field. Look for separate employer fields labelled EPF, SOCSO and EIS, then update the new-rate scenario in the same worksheet. This reduces the chance of carrying the old contribution amounts into a new wage calculation.

The figures are based on standard EPF rates for full-time, monthly-rated workers below 60. If your payroll uses a different worker arrangement, treat this as a planning example and check the relevant contribution treatment before finalising the budget.

Budgeting for a team of workers

A per-worker change becomes a larger budget item when several people are paid at the affected minimum. The table applies the yearly increase in the example to the stated team sizes.

Start by listing employees or roles paid at the minimum wage. Mark whether each person is full-time and monthly-rated, then separate those workers from employees already paid above the minimum. The example is designed for workers whose wages are exactly at the stated minimum, so it does not estimate a separate pay adjustment for higher-paid employees.

For a team size not shown in the table, build the budget from the per-worker yearly increase rather than multiplying the wage rise alone. Keep any existing payroll differences visible instead of forcing every employee into one standard line.

You can also split the planning into regular wages and variable costs. That gives the owner or HR team a clearer view of which part comes from the announced wage change and which part comes from scheduling or employee benefits.

Check the MSME exemption and new order

Budget 2027 states that MSMEs whose sales are below RM50,000,000 are exempt from the new RM2,000 rate. The announced rate is from June 2027, and it takes effect through a new minimum wages order.

Before changing a payroll template, record the business sales position and check whether the business falls within the stated MSME exemption. Keep a note of the basis for that classification so the payroll decision can be reviewed internally.

If the exemption applies, do not treat the RM2,000 scenario as the applicable wage solely because it was announced. You can retain it as a planning comparison while tracking the new minimum wages order. If the exemption does not apply, review the affected workers and update the wage and contribution rows together.

The current RM1,700 rate is based on the Minimum Wages Order 2024. The announced RM2,000 rate, its timing and the MSME exemption come from Budget 2027; the new order is the mechanism through which the change takes effect.

Keep excluded payroll items separate

These examples cover the basic monthly wage, employer EPF, employer SOCSO and employer EIS. They assume twelve months of wages a year, with no overtime, allowances or bonus.

Do not fold overtime into the minimum-wage line. Record the extra hours separately, then keep the resulting overtime amount apart from the statutory-contribution estimate. The same approach applies to allowances, bonuses and other levies, which are not included in these figures.

For a practical review, take these steps:

• List workers paid exactly at the minimum and identify roles already paid above it.
• Check the business against the stated MSME sales exemption.
• Add separate payroll rows for employer EPF, SOCSO and EIS.
• Create separate budget lines for overtime, allowances, bonuses and other levies.
• Track the new minimum wages order before applying the announced rate.

This process gives you a cleaner 2027 budget because the wage change, statutory contributions and variable payroll items are not mixed together.

Sources

• Minimum Wages Order 2024
• Ministry of Finance, Budget 2027 speech
• KWSP, Third Schedule
• PERKESO, contribution rates