Employer Contribution of EPF in Malaysia

Regulated by the Employee Provident Fund Act of 1991, the EPF is a retirement savings program obliging eligible employees to contribute to the EPF in Malaysia. This contribution is directed into Simpanan Konvensional or Simpanan Shariah, managed and invested for future use. The fund comprises the employee's and employer's monthly contributions and annual dividends earned.

Also read: Employer contribution of SOCSO in Malaysia

Monetary disbursements that fall under EPF contribution include:

• Salaries
• Compensation for untaken annual or medical leave
• Bonuses
• Allowances (with specific exemptions)
• Commissions
• Performance-based rewards
• Back pay or wage arrears
• Wages for maternity, study, or half-day leave
• Other contractual or applicable payments

Below are the EPF contributions that do not cover the following monetary disbursements:

• Service charges, including tips
• Overtime, encompassing payment for work on rest days and public holidays
• Gratuities, given upon service completion or voluntary departure
• Payments in lieu of notice of service termination
• Retirement and cessation benefits
• Termination settlements
• Travel allowances
• Directorial fee
• Tokens, including monetary gifts during festivities like Hari Raya and Christmas
• Non-monetary benefits and perquisites

Employer's Duties Regarding EPF Contribution

1. Register as an employer with the EPF within 7 days of hiring the first employee.
2. Register your workforce as EPF members and maintain their current information.
3. Provide salary statements to your employees.
4. Collect your employees' portion of EPF contribution and submit it to the EPF and the employer's contribution.

Your employees can voluntarily contribute to the EPF even if it's not obligatory and can contribute beyond the specified threshold. Moreover, you and your employees can contribute more than the legally mandated rate through Voluntary Contribution.

*In line with the Budget 2021 announcement, the EPF contribution rate for employees below 60 years of age has been temporarily reduced from 11% to 9% by default, starting from the contribution made in February 2021 and continuing until the January 2022 contribution. Suppose an employee opts to maintain the 11% contribution rate. In that case, they are required to complete Borang KWSP 17A (Khas 2021), which should then be submitted to the EPF through their respective employer.

It is important to note that the contribution amount should be calculated by the contribution rate specified in the Third Schedule of the EPF Act 1991 rather than using a direct percentage calculation, except for salaries exceeding RM20,000.00.

Also read: Employer Contribution of EIS in Malaysia

When is the Deadline for EPF Contribution Payment? 

The combined monthly EPF contribution, encompassing the employees' and employer's portions, must be settled by the 15th day of each month, covering the salary disbursed in the preceding month. Make timely payments to avoid the imposition of late payment charges or dividends.

How to Submit EPF Contribution? 

EPF contributions can be submitted through the following avenues:

1. e-Caruman platform or mobile application
2. Online banking services
3. Designated bank agents, including Bank Simpanan Nasional, Maybank, Public Bank, and RHB Bank
4. EPF service centers are located across the nation.

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