【Malaysia Company Registration Basics】 Understanding the statutory fees that Malaysian companies pay for their employees
Statutory contributions in Malaysia include the Employees Provident Fund (EPF), Social Security Organisation (SOCSO), and Employment Insurance System (EIS).
Employees Provident Fund (EPF)
EPF savings are an important foundation for securing employees' future financial well-being, ensuring that employees build a retirement fund in a structured manner after leaving their jobs.
Image source: Employees Provident Fund (EPF) website
Local employees with salaries below RM5,000 and below, the employer's contribution rate is 13% , while the employee's contribution rate is 11%。 Local employees with salaries exceeding RM5,000 the employer's contribution rate is changed to 12% . While the employee's contribution rate remains unchanged at 11%。 There is no salary limit for foreign employees , employers need to pay RM5 , while the employee's contribution rate is 11% (voluntary) 。
*All local and foreign employers must pay the EPF contribution on or before the 15th of each month.
Social Security Organisation (SOCSO)
The Social Security Organisation is a government agency under the Ministry of Human Resources responsible for administering, implementing and enforcing the Employees' Social Security Act 1969 and the Employees' Social Security (General) Regulations 1971.
Image source: Social Security Organisation (SOCSO) website
According to the contribution table, the contribution rate for local employees includes an employer share of 1.75% and 0.5% 。
Image source: Social Security Organisation (SOCSO) website
From January 1, 2019, employers employing foreign workers should register their employees with SOCSO and contribute to the Employment Injury Scheme under the Employees' Social Security Act 1969 (Act 4). The contribution rate is 1.25% of the insured person's monthly salary, payable by the employer.
*All local and foreign employers must pay the contribution for that month before the 15th of the following month.
Employment Insurance System (EIS)
The Employment Insurance System (EIS) was established on 1 January 2018 to provide income replacement for insured persons (IPs) who lose their jobs.
Image source: Employment Insurance System (EIS) website
The contribution rate for the Employment Insurance System (EIS) is 0.4% of the employee's basic monthly salary. Of which, 0.2% is paid by the employer, 0.2% deducted from the employee's monthly salary.
All legal foreign workers will be covered by the Employment Injury (EI) Scheme under Act 4, not the Employment Insurance System (EIS) under the Employment Insurance System Act 2017 (Act 800). Meanwhile, the Employment Insurance System, implemented since January 1, 2018, provides protection for unemployed Malaysian and permanent resident workers who meet the eligibility requirements under Act 800.
*All local and foreign employers must pay the contribution for that month before the 15th of the following month.
If you are considering registering a company in Malaysia, setting up a new factory, etc., FOZL is your best choice. We have extensive experience and a professional team dedicated to providing customized solutions for our clients. Welcome to contact the FOZL team, we will wholeheartedly serve you.
FOZL accompanies you to see the world and create social value.
Relevant Knowledge
Malaysia Office：Suite 1, Level 23, Menara KOMTAR, 80888 Ibrahim International Business District, Johor Darul Ta‘zim, Malaysia
Tel：+607 272 5827
E-mail：enquiry@fozl.sg
Follow Us