Understanding the Difference between SOCSO vs EIS

As an employee in Malaysia, you have the right to be covered by SOCSO and EIS. These two schemes are specifically designed to protect you if anything unfortunate happens, like a sickness during your job or losing your job.

So, what exactly are SOCSO and EIS? What are their benefits, and how are they different? Find out all the details in this article.

What is SOCSO?

The Social Security Organization (SOCSO), also known as Pertubuhan Keselamatan Sosial (PERKESO), is Malaysia’s social safety net designed to protect workers in case of work-related sickness or accidents. 

Since life can be unpredictable, SOCSO's main purpose is clear, to provide financial aid when you need it most. SOCSO helps manage the challenges of work-related health issues without the burden of financial stress. This support includes medical benefits, compensation during recovery, and rehabilitation programs.

Who benefits from SOCSO? All employees in Malaysia. Whether you are a local or a foreign worker, if you are employed, you are likely covered. SOCSO's coverage spans across all industries and income levels, making it a universal benefit for the nation’s workforce.

According to Brio HR, employers and employees contribute to SOCSO every month. Employers pay a larger portion (around 1.75% of the employee’s monthly salary), while employees contribute around 0.5%.

These contributions go towards funding the support and benefits that SOCSO provides. Keep in mind that these rates can change, so it’s a good idea to stay updated on any adjustments to the contribution percentages.

Employers typically handle the registration and contributions of their employees. However, if you are self-employed or a gig worker, you can opt to register voluntarily for SOCSO to gain access to these benefits.

SOCSO offers two main types of schemes to ensure protection for employees:

1. Employment injury scheme

This scheme protects you if you suffer any accidents or illnesses directly related to your job. It covers everything from minor workplace injuries to more severe incidents like traffic accidents during work-related trips. 

An employment injury scheme ensures that you are financially supported while getting medical treatment, covering your hospital bills and rehabilitation costs if necessary. Additionally, in the unfortunate event of permanent disability, it offers compensation to support you and your family.

2. Invalidity scheme

The invalidity scheme is designed to help those who suffer from long-term illnesses or disabilities that are not necessarily caused by work. If you are diagnosed with a condition that affects your ability to work and earn a living, this scheme provides financial support. 

This could include situations like chronic illnesses or severe injuries that prevent you from working for an extended period or permanently.

 

What is EIS?

Besides SOCSO, Malaysia also has another social safety net for workers called the Employment Insurance System (EIS). EIS provides temporary financial support to employees who have lost their jobs, helping to ease the transition between roles. Think of it as a safety cushion, softening the landing when you lose your income. 

EIS not only offers financial assistance to cover basic expenses while you are job hunting. It also provides resources and programs to help you find new opportunities and improve your skills. EIS is designed to assist workers who have been retrenched or involuntarily separated due to downsizing, business closures, or restructuring. 

To qualify for EIS benefits, employees must meet certain criteria, including having made contributions to the EIS fund and experiencing job loss under specific conditions, like retrenchment.

EIS contributions are made by both the employer and the employee. Based on Brio HR, each party contributes 0.2% of the employee’s monthly salary. 

In the unfortunate event of job loss, the process to claim EIS benefits is straightforward. Simply contact the EIS office, fill out an application, and provide any required documents. Once your claim is approved, you will start receiving financial support, which can last for up to six months, depending on your situation.

The details of EIS’s benefits are:

Unemployment Benefits

If you find yourself out of a job, EIS offers unemployment benefits to help you financially while you are actively looking for new work. 

The amount you receive is calculated based on your last drawn salary, and the benefit is designed to help you cover your essential needs during the time you are unemployed.

Job Search Allowance

In addition to unemployment benefits, EIS provides a job search allowance to encourage you to find work quickly. This allowance acts as a support system while you go through the process of applying for jobs, attending interviews, and getting back into the workforce.

Training Programs

EIS also focuses on helping you improve your employability. If you need to upskill, reskill, or learn something new to secure a job in a different field, EIS offers training programs to help you develop the right skills. From technical courses to career development workshops, these programs are aimed at making you more competitive in the job market.

Additionally, EIS provides re-employment programs, which include job placement services and career guidance to help you match your skills with suitable job opportunities.

Key differences between SOCSO and EIS

In the explanation above, we already know what makes SOCSO and EIS different from each other in general view. Let’s dig deeper into their differences to ensure more understanding.

1. Coverage and purpose

SOCSO and EIS both provide financial security for employees in Malaysia, but they serve different purposes. 

SOCSO covers work-related accidents, illnesses, and disabilities. On the other hand, EIS focuses on providing support for those who lost their job by offering temporary financial aid and resources.

2. Eligibility for employees and employers

Both Malaysian employees and employers contribute to SOCSO and EIS. However, there is a slight difference for non-Malaysian employees. They are only covered under SOCSO through employer contributions but are not eligible for EIS.

Essentially, if you are a Malaysian working in any industry, you are likely contributing to both SOCSO and EIS. For non-Malaysians, only the employer contributes to SOCSO, while EIS does not apply.

3. Contribution rates (employer vs employee contribution)

For SOCSO, the contribution rates vary based on the type of benefit provided, with a portion typically covered by both employers and employees. Some benefits are entirely employer-borne. The rate you contribute as an employee will depend on your monthly salary.

Meanwhile, EIS contributions are fixed at 0.2% of your monthly income. The rate is equally shared between both you and your employer. 

4. Impact and duration of benefits

The focus of SOCSO is on long-term protection. It provides support for medical leave, disabilities, and dependents in case of work-related accidents or illnesses. Additionally, SOCSO offers rehabilitation programmes to help employees recover and re-enter the workforce.

EIS is more short-term and is aimed at those facing unemployment. The benefits include temporary income support while you search for a new job, as well as training programmes to enhance your skills and employability. 

EIS acts as a bridge during the period you are actively looking for work, helping to ensure financial stability while you are transitioning to your next role.

 

Why SOCSO and EIS are important for employers and employees

Malaysia ensures that its workers, including non-Malaysians working in the country, are protected in case of sickness on the job or unexpected job loss through SOCSO and EIS. 

Imagine if SOCSO and EIS did not exist. Employees would face huge financial burdens from work-related injuries, medical expenses, or sudden unemployment without any safety net. 

Employers would also struggle to support their staff during these tough situations, potentially leading to lower morale and a less productive workforce. 

So, the existence of SOCSO and EIS provides crucial support for both parties, offering peace of mind and ensuring that employees can focus on their work, knowing they have financial protection when they need it most.

Protecting employee welfare

SOCSO and EIS are crucial in ensuring employee welfare by providing financial support during difficult times. 

SOCSO assists employees in the case of work-related injuries, illnesses, or disabilities by covering medical expenses, offering compensation, and providing rehabilitation support. 

EIS helps those who are unemployed by offering temporary financial assistance and access to job-seeking resources. 

Together, they act as a safety net for employees facing workplace challenges or job loss.

Compliance with Malaysian employment laws

For employers, contributing to SOCSO and EIS is a legal requirement under Malaysian employment laws, ensuring that employees are financially protected. 

Regular contributions not only help avoid legal issues but also demonstrate a commitment to employee well-being. 

By adhering to these obligations, employers foster a fair workplace and strengthen trust between management and staff, showing that they care about their employees’ security and welfare.

Long-term security (SOCSO) vs short-term support (EIS)

SOCSO and EIS offer different types of support. SOCSO provides long-term benefits for employees facing work-related health issues, including medical leave, disability benefits, and dependents’ support, ensuring financial stability over time. 

In contrast, EIS serves as short-term assistance for those who are unemployed, offering temporary financial support while they seek new job opportunities. 

Their goal is the same: to protect employees both in the long term from health-related incidents and in the short term from unexpected job loss.

 

Frequently Asked Questions (FAQs)

1. What should I do if my employer does not pay for SOCSO or EIS?

If your employer is not making the required contributions to SOCSO or EIS, you can report it to the relevant authorities. Employers are required by law to make these contributions, and failure to do so can result in fines or legal action against them.

2. Can I pay for SOCSO or EIS if I am self-employed or freelancing?

Yes, if you are self-employed or a freelancer, you have the option to make voluntary contributions to SOCSO and also sign up for EIS. This allows you to enjoy the same protection and benefits as regular employees, providing financial security during tough times.

3. What should I do if I lose my job and need EIS benefits?

If you become unemployed and need EIS support, contact the EIS office quickly. You need to fill out an application and provide the required documents. Once approved, EIS will provide financial assistance to help you through your job search period.

4. What steps should I take if I am injured at work and need SOCSO benefits?

If you get injured at work, let your employer know right away. They will help you get medical treatment and guide you through the process of applying for SOCSO benefits to ensure you receive the support and compensation you need.

 

So now you understand SOCSO and EIS roles and differences. Make sure you are protected by them, and if not, contact your employer to know more about their contribution to your SOCSO and EIS.

 

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