Employer Contribution of SOCSO in Malaysia

The Social Security Organization(SOCSO) operates under the Employees' Social Security Act 1969. Its primary mission is financially supporting employees and their families during challenging times, including work-related injuries, disabilities, or unfortunate circumstances. Think of it as a financial safety net for employees.

The Employees' Social Security Act 1969 oversees two schemes - the Employment Injury Scheme, which safeguards employees against occupational accidents or diseases, and the Invalidity Scheme, which provides insurance to employees who cannot work due to incurable or unlikely-to-be-cured conditions or death. 

All Malaysian and permanent resident employees, except Federal and State Government permanent employees, domestic servants, and self-employed individuals, must register with SOCSO. As of January 2019, foreign workers are also covered by SOCSO.

Also read: Employer Contribution of EPF in Malaysia

When it comes to monetary payments, those subject to SOCSO contribution encompass:

• Salaries
• Overtime payments
• Commissions
• Wages for maternity leave, study leave, half-day leave
• Other contractual payments or similar forms of compensation

Conversely, the following monetary payments are exempt from SOCSO contributions:

• Employer contributions to pension or provident funds
• Gratuity, which denotes payments made to employees at the end of their service period or upon voluntary resignation
• Any sum disbursed to cover expenses incurred by employees during their duties
• Bonuses
• Travel allowances
• Gifts, including cash payments for holidays like Hari Raya, Christmas, and other such occasions.

What employers need to know

• Ensure you register as an employer within 30 days of hiring your first employee.
• Register your employees as SOCSO members and keep their details up to date.
• Promptly report any work-related accidents involving your workers within 48 hours.
• Maintain an up-to-date monthly record of employee information.
• Collect your employees' share of SOCSO contributions and submit both your share and theirs to SOCSO.

*Note that the contribution rates listed in the table do not apply to new employees who are 55 years old and above and have no prior contributions. These individuals are only covered under the Employment Injury Scheme. Additionally, employees who are 60 years old and above are not required to contribute to the employee's share of SOCSO.

When calculating your contribution to SOCSO, please refer to the Rate of Contribution table on the SOCSO website instead of using a precise percentage calculation. Remember that the monthly contribution is limited to a maximum salary of RM4,000.

When to make SOCSO payments?

SOCSO contributions should be paid monthly, and the deadline for payment is typically within the first 15 days of the following month for the previous month's contributions. Timely payments are essential to avoid incurring penalties or late charges, which can amount to an interest rate of 6% per year for each unpaid contribution day.

Also read: Employer Contribution of EIS in Malaysia

How to make SOCSO payments?

Employers can make your SOCSO contributions through various channels, including:

• The PERKESO ASSIST portal
• Internet banking
• Payments by cheque, money order, or postal order
• Visiting bank counters
• Utilizing bank agents from Maybank, RHB Bank, and Public Bank
• Directly at SOCSO counters located nationwide.

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