EIS is an employment insurance system, which provides income protection insurance in case of redundancy. The contributions are collected in a fund in order to provide financial assistance to retrenched employees. It also aims to provide extended welfare coverage and aid in job search via career counselling and job-hunting assistance.
NB. If you want to withhold EIS contributions for employees, you'll need to disable this setting via the Payroll settings > Statutory settings page:
Eligible employees
Employees who are eligible under the Employment Insurance System Act 2017 (Act 800) are as follows:
- Malaysian citizens / permanent residents;
- All employees aged 18 to 60 are required to contribute. However, employees aged 57 and above who have no prior contributions before the age of 57 are exempt;
- Working in the private sector, however, Act 800 does NOT cover domestic workers, the self-employed, civil servants and workers in local authorities and statutory bodies;
- Employed based on a contract of service.
If an employee meets the above criteria, and the business is configured to withhold EIS contributions, you'll be able to see the contribution percentage that will be withheld for the employee by going to their Employee file > Statutory details page.
These rates are the mandatory % based on the employees earnings entered on the Employee file > Pay run defaults page. The actual calculation will be completed in the pay run using the actual earnings.
Employees can also be set up as exempt from EIS which means they won't have any EIS calculated in the pay runs. To do this, go to their Employee file > Statutory details page and tick the 'EIS Exempt' box as shown below:
You can set up a recurring EIS contribution for an employee by going to their Employee file > Pay run inclusions and adding a Statutory contribution adjustment of either 'Employer EIS' or 'Employee EIS' as shown below:
This adjustment be a fixed amount, a percentage of net or a percentage of gross. See this article for more information on pay run inclusions.
Excluding earnings from EIS calculations
Pay categories can be set up to be EIS exempt, which means the earnings for that pay category won't be included in the monthly salary value for the EIS calculation:
To do this, navigate to the Payroll settings > Pay categories page and select the pay category that you are wanting to exclude. Tick the 'EIS Exempt' box, and then 'Save'. Once you do that, any income related to pay category is excluded from EIS calculations.
EIS calculations
Contributions to the Employment Insurance System (EIS) are set at 0.4% of the employee’s assumed monthly salary. 0.2% is paid by the employer while 0.2% is deducted from the employee’s monthly salary. Effective 1st September 2022, PERKESO will enforce a new wage ceiling for contributions from RM4,000 to RM5,000 per month.
“Wages” for contribution purposes refers to all remuneration payable in money by an employer to an employee, and include:
- Overtime payments
- Commissions
- Payments in respect of leave
- Service charges
The following payments are not considered “wages” and are not included in the calculations for monthly deductions:
- Any contribution payable by the employer towards any pension or provident fund
- Any travelling allowances
- Any gratuity payable on discharge or retirement of the employee
- Any sum paid to cover expenses incurred by the employee in the course of his duties
- Annual bonus
- Gifts e.g. cash payments for holidays like Hari Raya, Christmas
- Benefits-in-kind and non-monetary perquisites
How to submit EIS contributions
EIS contributions must be submitted by the 15th of the following month, direct to Perkeso via the following ways:
- Registered employers may pay contributions in Assist;
- Financial Process Exchange (FPX)
- Cheque, money order or postal order
For more information on the above methods, see here.
NB. There is no direct integration to pay EIS contributions from within the payroll system.
EIS Reporting
You are able to generate a number of reports in order to show EIS withheld within finalised pay runs, based on the date paid.
EIS form
From within a finalised pay run, you can click the 'Statutory exports' button in order to download an EIS form (txt format only) which will show any EIS contributions withheld
SIP2A Form
This is a notification of employee (applicable for the new employees of the month). This includes EIS contributions for all employees and their associated EIS reference numbers.
Other reports
The following reports also contain EIS data:
- Costing report
- Detailed activity report
- Gross to net report
- Ordinary times earnings report
- Pay run audit report
- Pay run comparison report
- Pay run variance report
- Timesheet report
- Payroll export (txt file)
- Payroll summary