Malaysia implements Employment Insurance System

Malaysian companies with one or more employee must now be compliant with the newly-implemented Employment Insurance System (EIS).

The Malaysian government passed the Employment Insurance System Bill in October 2017 as a new protection measure, and it became compulsory on 1 January 2018. The system – or scheme – itself is administered by the country’s Social Security Organisation (Socso), and both employers and employees must make contributions.

The EIS is intended to assist employees in situations where they have lost their employment. Alongside financial assistance, other components of the EIS include training programmes and job-seeking assistance designed to help the Insured Persons (IP) return to work as soon as possible. The meaning of Loss of Employment is stipulated under section 30(1) & (2) of the Act.

Companies or enterprises with one or more employees must register and pay the EIS contribution accordingly. Exemptions apply to public servants, domestic helpers, foreign workers and the self-employed.

Contribution rate 

The contribution rate for the EIS comprises 0.2% from the employer and 0.2% of the employees’ monthly salary. All employees, regardless of wages, must contribute subject to the insured wage ceiling of RM 4,000.00. The contribution rates for the EIS are stipulated under section 18.

Penalties

Malaysian companies found to be in breach of the EIS can face questions from the regulator, and penalties that will affect their business operations.

Action

Human Resources departments should ensure the appropriate contributions are now in effect, and included in their payroll processing. Malaysian company employees should reach out to their HR department if they do not see the EIS contribution reflected on their January pay record.

Talk to us

TMF Malaysia’s HR and payroll services include checks to make sure our clients are in full compliance with the new EIS, and that contributions are applied from January 2018 payroll processing.

Need more information? Get in touch with our team in Malaysia.

Find out how our HR and payroll services can help drive efficiency in your business.

Calvin  Chan
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