In addition to receiving monthly salaries, Malaysian employers are required to pay contributions to their workers’ EPF, SOCSO, and EIS accounts respectively. Whenever you started a business, did you notice that there is a deductible from your gross monthly pay in your payslips? Every month as an employer you should ensure contribution to both KWSP and PERKESO under Malaysian labor laws concerning EPF, SOCSO, and EIS for your employees.
EPF – Employees Provident Fund Contribution
In Malaysia, EPF contributions are made on salary inclusive of some types of payment such as for instance bonuses, commissions and maternity or study leave amount. However, some payments such as service gratuities, work done on rest days or public holidays, overtime as well as the end of service benefits are not subjected to EPF contributions.
An employer should register with EPF within a week of employing their first worker. They also have to keep all data about the employees, make a monthly pay statement and manage their contribution as well as that of EPF.
It will entail that employers make compulsory contributions but employees may choose to supplement their contribution in Voluntary Contribution. To employees below 60 years of age in Malaysia there was a reduction of EPF contribution rate from 11% to 9% which was between February to January. However, they also could keep on contributing with 11%.
High salary earnings exceeding RM 20,000 are guided by the third schedule of the EPF Act 1991 regarding contributions.
Employer and worker share of EPF contribution, should be paid on or before the 15tth of the succeeding month. Late payment attracts late-payment fines or charges.
The company will use several avenues to facilitate the payment procedure of employee’s contribution towards EPF, such as the e-caruman web/app. Some individuals may prefer to use internet banking. Other people may want to make payments through specific bank agents and EPF counters across.
SOCSO – Social Security Organization Contribution
In Malaysia, SOCSO contributions cover different monetary payments such as salary, overtime, commission, specific leave (maternity leave, study leave, and half day leave). Nevertheless, some forms of payment such as employers’ contribution towards pension or provident funds, gratuity, compensation for expenses related to work, bonus and gift during holidays need not be paid to SOCSO.
An employer must register with SOCSO for their first employee within 30 days then enroll staff and update records, report accidents occurring from work within 48 hours as well as manage monthly payroll records. The employers have an obligation of collecting SOCSO contributions from their employees as well as remitting them together with their contributions.
The Workplace Injury Scheme is applied for those new workers’ who are aged 55 years-old and above and have never made any contribution towards the SOCSO in life. It is waived for employees above age sixty years that they should pay their own share in SOCSO. This cap is set at a maximum of RM 4.000 per month.
One has to take into consideration that contributions should be made according to the relevant table for calculation published at the website of SOCSO rather than strictly precise percentage calculations.
Both employee and employers’ portion of SOCSO contributions are due by the fifteenth of the subsequent month after the wage month. Interest at the rate of six percent per annum, calculated daily for every day’s delay, applies on delayed payments.
Contributions to SOCSO can be made through various channels: Agents of Maybank, RHB Bank, and Public Bank, PERKESO ASSIST portal, internet banking, cheque, money order or a postal order and bank counters and SOCSO counters countrywide.
EIS – Employment Insurance System Contribution
EIS contribution rates for employers and employees
This table shows contribution rates but they do not apply to the new workers above 57 years without previous contributions. The contribution rate as outlined in the second schedule of the Employment insurance system act 2017 should be applied when calculating the payable amount instead of a precise percentages calculation. The Employment Insurance System (EIS) requires contributions amounting to 0.4% of the employee’s presumed monthly salary. This comprises a 0.2% payment from the employer and a corresponding 0.2% deduction from the employee’s monthly earnings.The maximum monthly contribution is not more than RM4,000 per month. However, it should be noted that this figure may not always remain constant.
The EIS contributions, both from employees and employers, align with the SOCSO contribution schedule. Payment methods for the EIS mirror those available for SOCSO contributions.
With the growth of your company, paying EPF, SOCSO, and EIS for your workers may turn into a pain. In addition, you should select a payroll service provider for your staffs’ EPF and SOCSO registration, salary payment as well as payroll tax and relevant statutory contributions (such as EPF, SOCSO, and EIS).
Ready to streamline your payroll and ensure compliance with Malaysian labor laws? Explore FastLane Group’s efficient HR and payroll services for seamless management of EPF, SOCSO, and EIS contributions, allowing you to focus on growing your business. Schedule a free consultation with FastLane Group now.