Malaysia is a flourishing economy in Southeast Asia with a GDP of 337 billion USD. An attractive destination for businesses looking to expand overseas, Malaysia is the gateway to the vast Asia-Pacific market. Besides, the excellent infrastructure and connectivity, political stability, dynamic workforce, and a favorable regulatory environment contribute to the pro-business climate of Malaysia.
If you’re looking to expand your business into the Malaysian market, it’s pertinent that you follow the country’s employment rules and regulations while hiring. Read on to know all about employment background checks in Malaysia.
What Is Employment Background Verification?
An essential step of the recruitment process is employment background verification. It is a process of screening new hires in an organization by verifying their education and employment history, financial records, criminal records, social media, and other activities for authenticity.
Background checks help companies build trustworthy teams while also protecting the organization’s reputation and ensuring that they are hiring the right persons for the job.
Therefore, pre-employment background checks and screening during the recruitment process help employers:
- ~Hire qualified candidates after making just and informed decisions
- ~Reduce the risks of negligent hiring
- ~Protect the organization against liability claims
- ~Improve compliance with federal, state, and industry regulations
- ~Maintain a safe and secure work environment
Benefits of Background Checks in Malaysia
An employee screening process in Malaysia has several benefits for the hiring organization. So, if you are an employer looking to onboard new members into your organization, take note of these advantages of an employee background screening in Malaysia:
- ~Background checks reveal details not mentioned in the candidate’s resume
- ~A thorough pre-employment background check in Malaysia protects employers from the possibility of future lawsuits and liability claims
- ~By eliminating candidates who could be a possible threat to the organization, background checks mitigate the risk of workplace violence and ensure workplace safety
- ~Background checks also help lower financial risks
- ~Negligent hiring often puts reputable companies in a pickle when their employees’ false claims about qualifications and work experience come into the limelight. However, a background check can save your organization from such negative publicity
- ~Most importantly, background checks improve hiring quality and help organizations recruit the best fit for a job position
Hiring employees is one of the costliest investments you will make in your organization. To ensure that the investment has a positive long-term outcome, an employee background screening in Malaysia is necessary.
Are Background Checks Legal in Malaysia?
Currently, there is no law that regulates conducting a pre-employment background check in Malaysia. However, employers must comply with the legal provisions of the Personal Data Protection Act, 2010. As per the Act's requirements, the employer must issue a personal data protection notice (in English and Malay) to the prospective employee, briefing them about the intention of data collection, how the employer will process the collected data, etc. In addition, the employer must seek the subject’s consent for the collection and processing of the latter’s data.
Things to Know When Performing a Background Check in Malaysia
Cases of impersonation during job interviews are commonplace. Therefore, while hiring new people, employers should be extremely wary of fraud and thoroughly verify the authenticity of the information furnished by candidates. Recruiters widely conduct employment background screening in Malaysia to verify the reliability and integrity of job applicants.
Employers assess the validity of a candidates’ personal information provided in the resume and other supporting documents to corroborate the candidate's claims. The background screening process helps eliminate candidates who present false or invalid information such as fake educational certificates and employment records. The pre-employment background check in Malaysia involves verifying the following information to get a complete picture of candidates:
When screening employees in Malaysia, you must validate if a potential employee has, in the past, worked in the organizations listed in their resume. It also includes verifying the candidate’s past designations, reasons for leaving past jobs, and whether they are eligible for rehire.
Moreover, the employment records of the candidate will help you determine if a potential employee is productive, can deliver on their work, and gets on well with colleagues or other office staff.
An employment background check in Malaysia also involves checking the candidate’s education history. Verifying educational records identifies disparities and confirms if the academic claims are valid. These background checks will help you hire qualified candidates, lowering the risks of recruiting people with false academic credentials.
Checking a candidate’s criminal background during a pre-employment background check in Malaysia is crucial to ensure a safe workplace that’s free from criminal intent. These checks reveal a candidate’s criminal history, if any, by scrutinizing data available in the public domain. By conducting a criminal background check for employees in Malaysia, you can rest assured that the individual will pose no threat to your company and its employees.
The Royal Malaysian Police holds a comprehensive database of criminal convictions in Malaysia. However, third parties cannot access this database to conduct a criminal background check in Malaysia. Therefore, it is best to seek expert advice before conducting a criminal record check.
Many employers conduct a credit report assessment during employee screening in Malaysia. This kind of check is especially relevant if you hire people in financial services such as banking, investment, and accounting. A credit check essentially shows the debts of an individual, including credit card debts, loans, mortgages, car payments, and the payment history of the debts and loans. Thus, a credit report investigation reveals the candidate’s money management skills, if they are in any kind of financial trouble, and whether they pay off their loans and debts on time.
Checking how prospective employee behaves and presents themself on their social media accounts reveals a lot about their personality. Therefore, social media background checks are increasingly relevant to employee screenings, especially in this technology-driven age. When you conduct a social media background check, you can find out the groups and forums they frequent on LinkedIn or Facebook, how they handle public discussions, the social activities they are interested in, and so on. However, you must comply with legal standards and be careful not to breach any individual’s privacy.
Information Essential for a Background Check in Malaysia
Employee background screening in Malaysia is a significant step in the recruitment process in the country, mainly if the nature of the job demands one. It is a method of evaluating candidates who have applied for a job and verifying whether the personal information they have provided is accurate or not.
However, if you are hiring and need to carry out a pre-employment background check in Malaysia, here is a broad list of information/documents you may need:
- ~First and last name
- ~Last known address
- ~Date of birth
- ~A photo of the candidate
- ~Malaysian National Registration Identity Card Number (NRIC #)
- ~Employment references from past and current employers (including salary slips, offer letters, and experience letters)
- ~Statutory declaration from a prospective employee on past criminal convictions or ongoing criminal proceedings
- ~Relevant academic mark sheets/degrees/certificates
- ~Financial records include credit card debts, loans, payments, default history, and delayed payments.
You may also need to contact various sources such as the candidate’s college/university and past employer to gather relevant information.
Process Involved in Background Checks
Here are the steps to conduct an employee background screening in Malaysia.
1. Seek the candidate’s consent
The first step in conducting an employee background screening in Malaysia is to seek the candidate’s consent for collecting and processing their data.
2. Determine the information you need
Once you have the candidate’s consent, the next step is to collect the necessary information to carry out the background check. This essentially includes the following:
- ~Employment history
- ~Education history
- ~Criminal records
- ~Credit report
- ~Social media presence
3. Collect the relevant documents/information
Once you have figured out the background checks you want to cover, collect relevant documents/information to quicken the screening process. The data primarily includes the candidate’s details, NRIC number, employment and education records, criminal records, credit history, and so on.
4. Perform the background check
Once you have collected the required information from various sources, the next step is to conduct the background check. For instance, you can directly contact the candidate's educational institution to verify academic credentials or communicate with past employers to authenticate employment history. Likewise, you can conduct a social media background check on LinkedIn, Facebook, Instagram, and Twitter.
Keeping the NRIC number of the candidate handy serves as an identifier during a pre-employment background check in Malaysia, especially if they are citizens or permanent residents of the country.
Industries and Situations That are Most Suitable for Background Checks in Malaysia
Below we have listed some industries and professions that could benefit from an employment background check in Malaysia. However, the following list is not exhaustive, and all businesses should conduct employee background checks for safety and assurance.
- ~Financial services
- ~Legal services
- ~Energy and utilities
- ~Transportation and construction
- ~Any occupation involves dealing with special needs or vulnerable populations such as caregivers of children, aged persons, and people with disabilities.
- ~Any profession requiring registration or licensing
- ~Hiring overseas employees
How Does Multiplier Help With Background Checks?
Setting up an overseas business can be a complicated and confusing process. However, Multiplier can help you employ global talent while you can focus on business growth and expansion.
What’s more, you don’t have to get into the hassle of incorporating a new entity. Multiplier offers end-to-end solutions for managing international payroll, taxes, and benefits while complying with local laws.
Frequently Asked Questions
Do Malaysian companies do background checks?
As per the regulations of the Central Bank of Malaysia, employment background checks are mandatory for financial institutions. However, there is no law that mandates businesses across other sectors from conducting pre-employment background checks in Malaysia.
Why are background checks necessary?
Background checks are essential for several reasons. For instance, it lowers the chances of negligent hiring, improves hiring quality, protects company assets, provides safety and security, and mitigates the possibility of liability claims.
What do they check in background checks for employment?
Employment background checks typically involve vetting a prospective employee’s past employment records, educational records, criminal background, and credit report. Some employers also verify health records, driving records, social media checks, and drug screenings.