Payroll Service Agreement Sample

Payroll Service Agreement Sample

Here's a sample payroll service agreement for Malaysia.

Payroll Service Agreement

This Payroll Service Agreement (the "Agreement") is made and entered into on this [Day] day of [Month], [Year]

BETWEEN:

[Your Company Name] (Company Registration No.: [Your Company Registration No.])

a company incorporated in Malaysia and having its registered address at [Your Company Registered Address]

(hereinafter referred to as "the Client")

AND

Bestar Consulting Sdn. Bhd. (Company Registration No.: [Payroll Service Provider Company Registration No.])

a company incorporated in Malaysia and having its registered address at 12A-10 Plaza Permata, 6 Jalan Kampar, Sentul Selatan, 50400 Kuala Lumpur, Malaysia

(hereinafter referred to as "the Provider")

(The Client and the Provider hereinafter collectively referred to as "the Parties" and individually as "a Party")

WHEREAS:

A. The Client desires to outsource its payroll processing functions to a professional service provider.

B. The Provider is in the business of providing comprehensive payroll services and has the necessary expertise, resources, and systems to perform such services.

C. The Parties desire to set forth the terms and conditions under which the Provider will render payroll services to the Client.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the Parties agree as follows:

1. SCOPE OF SERVICES

The Provider shall provide the following payroll services to the Client (hereinafter referred to as "the Services"):

a. Monthly Payroll Processing:

i. Calculation of gross salary, deductions (EPF, SOCSO, EIS, PCB/MTD, Zakat, etc.), and net salary for all Client employees based on data provided by the Client.

ii. Generation of monthly payroll reports, including but not limited to, payslips (digital or physical as agreed), payroll summaries, and bank transfer files.

iii. Processing of new hires, terminations, salary adjustments, and other employee-related data changes as instructed by the Client.

b. Statutory Contributions Management:

i. Calculation and submission of Employee Provident Fund (EPF) contributions.

ii. Calculation and submission of Social Security Organization (SOCSO) contributions (EIS included).

iii. Calculation and submission of Income Tax (PCB/MTD) contributions to LHDN.

iv. Assistance with Zakat calculations and submissions (if applicable and requested by Client).

c. Annual Statutory Filings:

i. Preparation of EA forms for all employees by the stipulated deadline.

ii. Preparation and submission of Form E to LHDN by the stipulated deadline.

d. Reporting:

i. Provision of standard monthly payroll reports.

ii. Ad-hoc reports as mutually agreed upon, subject to additional charges.

e. Compliance:

i. Ensuring payroll processing adheres to relevant Malaysian labour laws, tax regulations, and statutory requirements (e.g., Employment Act 1955, Income Tax Act 1967, EPF Act 1991, SOCSO Act 1969).

ii. Keeping abreast of changes in payroll-related legislation and advising the Client accordingly.

2. CLIENT'S RESPONSIBILITIES

The Client shall provide the Provider with timely and accurate information necessary for the provision of the Services, including but not limited to:

a. Complete and accurate employee data (e.g., names, NRIC/passport numbers, bank account details, addresses, employment dates, salaries, allowances, deductions).

b. Timely notification of new hires, terminations, salary changes, leave information, overtime hours, bonuses, commissions, and any other payroll-related changes.

c. Approval of payroll data before final processing by the Provider within the agreed timeframe.

d. Ensuring sufficient funds are available in its bank account for timely payment of net salaries and statutory contributions.

e. Designating a primary contact person for all payroll-related communications.

3. FEES AND PAYMENT TERMS

a. Fees: The Client shall pay the Provider for the Services rendered according to the fee schedule attached hereto as Schedule A.

b. Invoicing: The Provider shall issue invoices to the Client on a monthly basis for Services rendered in the preceding month.

c. Payment: All invoices are due and payable within [Number] ([e.g., fourteen (14) or thirty (30)]) days from the date of the invoice.

d. Late Payment: Without prejudice to any other rights or remedies of the Provider, if the Client fails to make any payment on the due date, the Client shall pay interest on the overdue amount at the rate of [Percentage]% per annum, calculated daily from the due date until the date of actual payment.

e. Review of Fees: The fees may be reviewed annually or upon significant changes in the scope of services, with [Number] ([e.g., thirty (30)]) days prior written notice to the Client.

4. TERM AND TERMINATION

a. Term: This Agreement shall commence on [Start Date] and shall continue for an initial period of [e.g., one (1) year] (the "Initial Term"), unless terminated earlier in accordance with the provisions of this Agreement. Thereafter, this Agreement shall automatically renew for successive periods of [e.g., one (1) year] (each a "Renewal Term") unless either Party gives written notice of non-renewal to the other Party at least [Number] ([e.g., sixty (60) or ninety (90)]) days prior to the expiry of the then-current term.

b. Termination for Convenience: Either Party may terminate this Agreement for convenience by providing [Number] ([e.g., sixty (60) or ninety (90)]) days' prior written notice to the other Party.

c. Termination for Cause: Either Party may terminate this Agreement immediately by written notice to the other Party if:

i. The other Party commits a material breach of any term of this Agreement and fails to remedy such breach within thirty (30)] days of receiving written notice specifying the breach.

ii. The other Party becomes insolvent, makes any assignment for the benefit of creditors, or commences any proceeding under any bankruptcy, insolvency, or debtor's relief law.

d. Effect of Termination: Upon termination of this Agreement for any reason whatsoever:

i. The Client shall pay all outstanding fees and charges for Services rendered up to the date of termination.

ii. The Provider shall cease all payroll processing activities for the Client.

iii. The Provider shall return all Client data, records, and documents in its possession to the Client within thirty (30) days of termination, in a mutually agreed format.

iv. Any provisions of this Agreement which by their nature are intended to survive termination shall remain in full force and effect.

5. CONFIDENTIALITY

a. Both Parties acknowledge that in the course of performing their obligations under this Agreement, they may have access to confidential information of the other Party, including but not limited to, employee data, salary information, business strategies, and proprietary software ("Confidential Information").

b. Each Party agrees to maintain the strictest confidentiality of the other Party's Confidential Information and shall not disclose, copy, or use such information for any purpose other than for the performance of this Agreement, unless required by law or with the prior written consent of the disclosing Party.

c. This confidentiality obligation shall survive the termination or expiration of this Agreement for a period of [Number] ([e.g., three (3) or five (5)]) years.

6. DATA PROTECTION AND SECURITY

a. The Provider shall implement appropriate technical and organizational measures to ensure the security and confidentiality of the Client's payroll data, in compliance with the Personal Data Protection Act 2010 (PDPA) of Malaysia.

b. The Provider shall notify the Client immediately in the event of any actual or suspected data breach affecting the Client's data.

c. The Provider shall only process personal data of the Client's employees strictly in accordance with the Client's instructions and for the purpose of providing the Services.

7. LIMITATION OF LIABILITY

a. The Provider shall perform the Services with reasonable care and skill.

b. In no event shall the Provider be liable for any indirect, incidental, special, consequential, or punitive damages, including but not limited to, loss of profits, data, or business interruption, arising out of or in connection with this Agreement.

c. The Provider's total aggregate liability to the Client under this Agreement, whether in contract, tort (including negligence), or otherwise, shall not exceed the total fees paid by the Client to the Provider for the Services during the [e.g., twelve (12)] month period immediately preceding the event giving rise to the claim.

d. The Provider shall not be liable for any errors or omissions arising from inaccurate or incomplete information provided by the Client.

8. INDEMNIFICATION

The Client agrees to indemnify, defend, and hold harmless the Provider, its officers, directors, employees, and agents from and against any and all claims, liabilities, damages, losses, and expenses, including reasonable attorneys' fees, arising out of or in connection with:

a. Any breach by the Client of its obligations or representations under this Agreement.

b. Any inaccurate or incomplete information provided by the Client that results in errors in payroll processing.

9. FORCE MAJEURE

Neither Party shall be liable for any delay or failure in performance of its obligations under this Agreement to the extent that such delay or failure is caused by an event beyond its reasonable control, including but not limited to, acts of God, war, terrorism, riots, embargoes, fires, floods, earthquakes, pandemics, epidemics, or strikes ("Force Majeure Event"). The Party affected by the Force Majeure Event shall promptly notify the other Party and shall use reasonable efforts to mitigate the effect of the Force Majeure Event.

10. GOVERNING LAW AND DISPUTE RESOLUTION

a. This Agreement shall be governed by and construed in accordance with the laws of Malaysia.

b. Any dispute, controversy, or claim arising out of or relating to this Agreement, or the breach, termination, or invalidity thereof, shall first be attempted to be resolved amicably through good faith negotiations between the Parties.

c. If the Parties are unable to resolve the dispute amicably within [Number] ([e.g., thirty (30)]) days, the dispute shall be referred to and finally resolved by arbitration administered by the Asian International Arbitration Centre (AIAC) in Kuala Lumpur, Malaysia, in accordance with the AIAC Arbitration Rules. The seat of arbitration shall be Kuala Lumpur, Malaysia. The language of the arbitration shall be English. The number of arbitrators shall be one (1).

11. MISCELLANEOUS

a. Entire Agreement: This Agreement, together with its Schedule A, constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations, and discussions, whether oral or written, between the Parties.

b. Amendments: No amendment, modification, or waiver of any provision of this Agreement shall be effective unless in writing and signed by duly authorized representatives of both Parties.

c. Severability: If any provision of this Agreement is held to be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

d. Notices: Any notice required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given when delivered personally, sent by registered mail, or by reputable courier service, or by email with confirmation of receipt, to the addresses specified at the beginning of this Agreement or to such other address as a Party may designate by written notice to the other Party.

e. Assignment: Neither Party may assign or transfer any of its rights or obligations under this Agreement without the prior written consent of the other Party, which consent shall not be unreasonably withheld.

f. Independent Contractor: The relationship between the Client and the Provider is that of independent contractors. Nothing in this Agreement shall be construed as creating a partnership, joint venture, employment, or agency relationship between the Parties.

g. Counterparts: This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the Parties have executed this Agreement on the date first above written.

FOR AND ON BEHALF OF [Your Company Name]

[Name of Authorized Signatory]

[Title]

[Company Stamp]

FOR AND ON BEHALF OF Bestar Consulting Sdn. Bhd.

[Name of Authorized Signatory]

CEO

[Company Stamp]

Schedule A: Fee Schedule

(This is a sample fee structure. You will need to fill in your specific pricing.)

1. Setup Fee (One-Time):

• New Client Onboarding: RM [Amount]

2. Monthly Payroll Processing Fees:

• For employees 1-10: RM [Amount] per employee

  
  

• For employees 11-20: RM [Amount] per employee

  
  

• For employees 21-50: RM [Amount] per employee

  
  

• For employees 51+: RM [Amount] per employee (or custom quote)

  
  

• Minimum Monthly Fee: RM [Amount]

3. Additional Services (if applicable):

• Ad-hoc Payroll Reports: RM [Amount] per report / per hour

  
  

• Revision/Correction of Payroll after approval (due to Client error): RM [Amount] per revision

  
  

• Physical Payslip Printing and Delivery: RM [Amount] per payslip

  
  

• Zakat Calculation and Submission: RM [Amount] per employee / per month (if not included in base fee)

  
  

• Expatriate Tax Filing Assistance (beyond EA form): Quoted on a case-by-case basis

4. Out-of-Pocket Expenses:

• Any courier charges, postage, or other reasonable out-of-pocket expenses incurred by the Provider on behalf of the Client will be charged at cost.

5. Payment Terms:

• Invoices issued on the [e.g., 25th] of each month.

  
  

• Payment due within [e.g., 14] days of invoice date.

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