Statutory Contributions
Employees Provident Fund (EPF)
The statutory contributions under the Employees Provident Fund (EPF) Act 1991 effective 1 January 2020:
Age Group 60 Years and Below (as at 28 February 2020)
| Employers | a) Monthly wages RM5,000 (US$1,150) and below Statutory rate of 13% of the employees’ monthly wages b) Monthly wages exceed RM5,000 (US$1,150) Statutory rate of 12% of the employees’ monthly wages |
| Employees | Statutory rate of 11% of the employees’ monthly wages |
(Third Schedule (Part A) of the EPF Act 1991)
Age Group 60-75 Years
Malaysian Citizens
| Employers | a) Statutory rate of 4% of the employers monthly wages |
| Employees | b) Statutory rate of 0% of the employees’ monthly wages |
(Third Schedule (Part E) of the EPF Act 1991)
Permanent Residents
| Employers | a) Monthly wages RM5,000 (US$1,150) and below Statutory rate of 6.5% of the employees’ monthly wages b) Monthly wages exceed RM5,000 (US$1,150) Statutory rate of 6% of the employees’ monthly wages |
| Employees | Statutory rate of 5.5% of the employees’ monthly wages |
(Third Schedule (Part C) of the EPF Act 1991)
All foreign workers and expatriates and their employers are exempted from statutory contributions. They can, however, choose to contribute and the applicable rates are as follows:
Age Group 60 Years and Below
Employer’s share – RM5.00 (US$1.15) per employee per month
Employee’s share – 11% of the employees’ monthly wages
(Third Schedule (Part B) of the EPF Act 1991)
Age Group 60-75 Years
Employer’s share – RM5.00 (US$1.15) per employee per month
Employee’s share – 5.5% of the employees’ monthly wages
(Third Schedule (Part D) of the EPF Act 1991)
Source: Employees Provident Fund – www.kwsp.gov.my
Social Security Organisation (SOCSO)
Employees’ Social Security Act 1969 (Act 4)
The Social Security Organisation (SOCSO) provides two social security schemes to protect the welfare of employees and their dependents under the Employees’ Social Security Act 1969 (Act 4). The two social security schemes are:
· Employment Injury Insurance Scheme
· Invalidity Scheme
Employment Injury Insurance Scheme
Employment Injury Insurance Scheme provides protection to employees who suffer from work related accidents or occupational diseases arising out of and in the course of employment in an industry. The benefits provided under the Employment Injury Insurance Scheme consists of Medical Benefit, Temporary Disablement Benefit, Permanent Disablement Benefit, Constant-attendance Allowance, Dependants’ Benefit, Funeral Benefit, Rehabilitation Benefit and Education Benefit.
Invalidity Scheme
The Invalidity Scheme provides 24-hour coverage to employees against invalidity or death due to any cause not connected with his employment. However, the employee must fulfill the condition to be eligible for invalidity pension. Benefits provided under the Invalidity Scheme are Invalidity Pension, Invalidity Grant, Constant-attendance Allowance, Survivors’ Pension, Funeral Benefit, Rehabilitation Benefit and Education Benefit.
Contributions
Contributions to SOCSO are compulsory under the Act for eligible employers and employees.
These schemes are classified into 2 categories of contribution:
• First Category
Employment Injury Insurance Scheme and Invalidity Pension Scheme. The contribution payment is made by both the employer and employee. The rate of contribution under this category comprises 1.75% of employer’s share and 0.5% of employees’ monthly wages according to the contribution schedule.
• Second Category
The rate of contribution under this category is 1.25% of employees’ monthly wages, payable by the employer, based on the contribution schedule. All employees who have reached the age of 60 must be covered under this category for the Employment Injury Scheme only.
Employer Eligibility
Any employer who hires one or more employees as defined under the Act is required to register and make contributions to SOCSO.
Employee’s Eligibility
All employees who are employed under a contract of service or apprenticeship in the private sector and contractual / temporary staff of Federal / State Government as well as Federal / State Statutory Bodies need to be registered and covered by SOCSO. The rate of contribution is capped at monthly wage ceiling of RM4,000.00 (US$978).
Employees exempted from the coverage of the Employees’ Social Security Act, 1969 are as follows:
i. Federal and State Government permanent employees
ii. Domestic servants
iii. Self-employed (excluding self-employed taxi drivers and individuals providing similar services including e-hailing drivers such as GrabCar as well as self-employed bus drivers)
iv. Spouses of a sole proprietor or a partnership owner
Self-Employment Social Security Act 2017 (Act 789)
The Self-Employment Social Security Act 2017 (Act 789) came into force on 1 June 2017. Currently, this Act provides protection under the Self-Employed Employment Injury Scheme to self-employed taxi drivers and individuals providing similar services including e-hailing drivers such as GrabCar as well as self-employed bus drivers such as stage buses, charter buses, express buses, mini buses, employee’s buses, feeder buses, school buses and airport busses. The scheme provides protection to self-employed insured persons and their dependents from employment injuries including occupational diseases and accidents during work-related activities. It provides cash benefits to taxi drivers and their dependents besides providing medical care, physical rehabilitation and vocational training. The duration of protection is 12 months from the date and time the contribution is paid. The contribution rate stipulated is 1.25% per month from the insured salary option.
Employment Insurance System Act 2017 (Act 800)
The Employment Insurance System (EIS) was implemented in January 2018 to provide immediate financial assistance to insured workers who lost their employment. The affected workers will also be assisted to find new jobs and if necessary, they are given training to improve their employability
EIS Objectives
i. Provide immediate financial assistance to contributing employees who have lost their jobs
ii. Help unemployed workers find new employment through the Re-Employment Placement Program
iii. Increase the employability of unemployed workers through vocational training
EIS Coverage
i. All employers in the private sector are required to pay monthly contributions for each of their employees. (Government employees, domestic workers and the self-employed are exempted).
ii. An employee is defined as a person who is employed for wages under a contract of service or apprenticeship with an employer. The contract of service or apprenticeship may be expressed or implied and may be oral or in writing.
iii. All employees aged 18 to 60 are required to contribute. However, employees aged 57 and above who have no prior contributions before the age of 57 are exempted.
iv. Contribution rates are capped at insured salary of RM4000.00 (US$978).
EIS Contribution Rate
Employer: 0.2%
Employee: 0.2%
EIS Benefits
· Job Search Allowance (JSA)
· Reduced Income Allowance (RIA)
· Training Fee (TF)
· Training Allowance (TA)
· Early Re-Employment Allowance (ERA)
· Re-Employment Placement Program
· Career Counselling
Extension of Social Security Coverage
Spouse
As of 1 July 2018, SOCSO has expanded social security protection to a spouse working with his or her spouse in an enterprise under Act 4 and Act 800. With the extension of the social security protection, qualified wives or husbands who are employed by their respective spouses to work for their spouses under Act 4 and Act 800 will be covered by social security under both Acts.
Foreign Workers
SOCSO has also extended its coverage for all legal foreign workers (excluding domestic servants) in Malaysia, effective 1 January 2019, whereby they will be covered by Employment Injury (EI) Scheme under Act 4. The rate of contribution is 1.25% of the insured monthly wages and to be paid by the employer. The EI Scheme provides protection to an employee against accident or an occupational disease arising out of and in the course of his employment as well as commuting accidents.
Return to Work Programme (RTW)
The RTW programme was introduced in 2007 as a proactive approach in helping SOCSO’s Insured Persons suffering from employment injury or illness. Injured or sick workers who have successfully undergone SOCSO’s RTW programme are now able to continue financially supporting themselves and their families as well as become part of the nation’s productive workforce again, thus contributing to the country’s economic growth.
SOCSO Tun Razak Rehabilitation Centre (TRRC)
The SOCSO TRRC, which is located at Hang Tuah Jaya in Banda Hijau, Melaka, commences its operations on 1 October 2014. The centre supports the RTW programme by providing comprehensive facilities to referred participants until the Insured Persons are able to get back actively into the working world, contributing to the socio-economic development of families, communities and the country.
Health Screening Programme (HSP)
SOCSO introduced the Health Screening Programme (HSP) in 2013 where it distributes health screening vouchers to insured workers once they turn 40. The HSP programme is as part of efforts to promote healthy lifestyle practices and subsequently address the non-communicable diseases among workers.
Source : Social Security Organisation (SOCSO) – www.perkeso.gov.my
