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SOCSO Contributions

Updated

Both employers and employees (depending on their age and scheme) make statutory social security contributions to SOCSO (Social Security Organization) social security scheme. The scheme provides social security protections to Malaysian employees. All foreign workers must also contribute.

The deadline for SOCSO reporting and payments is the 15th of the month.

Employers are required to pay monthly contributions for each eligible employee according to the rate specified under the Employees’ Social Security Act, 1969. These contributions are divided into two (2) types, namely:

  • Employment Injury and Invalidity Scheme: Provides coverage to employees who suffer from invalidity or death due to any cause and not related to their employment.
  • Employment Injury Scheme: Provides coverage for workplace accidents.

This article will cover the following:

New wage ceiling for SOCSO and EIS contributions

Effective 1 October 2024, PERKESO will enforce a new wage ceiling for contributions from RM5,000 to RM6,000 per month. The contribution amount that applies to employees with salaries exceeding RM5,000 per month is stated in the Third Schedule, Act 4 and the Second Schedule, Act 800.

For employees with salaries exceeding RM6,000 per month, the contribution amount is subject to the wage ceiling of RM6,000. See the full details here.

Employment Injury & Invalidity Scheme

All employees younger than 60 years old contribute under this category, unless they began contributing at the age of 55 or above. 

Under this category, every month, the employer contributes 1.75%, and the employee 0.5% of monthly wages according to the contribution schedule. 

As of July 2024, non-resident employees and their employers will contribute to this scheme.

Note: All employees who have not reached the age of 60, must contribute under this First Category except for those who have attained 55 years of age and have no prior contributions before they reach 55 due to non-eligibility under the Employees’ Social Security Act, 1969.

Employment Injury Scheme

Employees who are 60 years old and above, and those who began contributing to SOCSO at the age of 55 or above, contribute under this category, as well as insured people receiving an invalidity pension while still working, and receiving less than one third of their average monthly salary before invalidity. 

Under this category, every month, the employer contributes 1.25% of employees’ monthly wages. There are no employee contributions.

Effective 1st September 2022, PERKESO will enforce a new wage ceiling for contributions from RM4,000 to RM5,000 per month for both schemes. 

Exempt payments

“Wages” for SOCSO contribution purposes refers to all remuneration payable in money by an employer to an employee, and include: 

  • Basic Salaries
  • 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

Business and Employee SOCSO settings

There are a few areas that you will need to check in order to ensure that the correct SOCSO amount will be withheld. These include:

  • Pay category settings: Check whether the 'SOCSO exempt' box is ticked or unticked as required:

    Screenshot of pay categories, highlighting socso exempt box

    Any system default pay categories have already had the SOCSO settings configured accordingly.
  • Employee setting: You can check to see the SOCSO configuration for an employee by going to the Employee file > Statutory details page:

    Screenshot of statutory details screen, highlighting socso configuration

    You will be able to select the following depending on the employees' age:

    • Employment Injury Scheme;
    • Employment Injury And Invalidity Scheme

Opening balances

SOCSO contributions can be entered as opening balances, and these will relate to the initial year basis period that has been set at the business level, and this should reflect the basis period that you have migrated from your previous payroll system. Both employee and employer SOCSO amounts can be entered via 2 different tabs:

  1. Statutory contributions and PCB: Enter the applicable value within the 'SOCSO' employee and/or employer field;
  2. Payroll history: you can enter in the payroll history data for SOCSO contributions paid from previous employers from January to the last month before commencing work with new employer part way through the year.

You can also export/ import opening balances and or payment history via the data extracts page. 

Processing SOCSO contributions

Within a pay run, the system will automatically calculate the required withholding amount for SOCSO, based on the scheme that has been selected for the employee on their Employee file > Statutory details page. You'll then see the amount withheld under the 'SOCSO' header as shown below:

Screenshot of pay run, highlighting socso contribution

The SOSCO contribution rates can be found here.

Once you have finalised the pay run, you'll be able to click on the 'Statutory exports' button and download export a file that lists the SOCSO amounts withheld for each employee:

Screenshot of statutory exports screen, highlighting socso file

Payment of SOCSO contributions

There is no direct integration between Perkeso and the payroll system, therefore, payment for SOCSO contributions can be made through the following channels:

  1. SOCSO’s ASSIST Portal
  2. Payment at Counter (Employers need to bring the ACR reference)

    a. SOCSO counters(Payment of contributions must be made using cheque or money/postal order only).

    b. Banks appointed by SOCSO as collection agents:
        i.   Maybank

        ii.  RHB Bank

        iii. Public Bank (Starting 1 March 2018)

  3. Internet Banking

SOCSO related reports

The following is a list of reports in order to assist in the reporting and registering of SOCSO contributions:

The following reports can also be used in relation to SOCSO:

  • Costing report: ‘Employer SOCSO’ column
  • Detailed activity report: ‘Employer SOCSO’ and ‘Employee SOCSO’ column
  • Ordinary time earnings report: Contains the following columns:
    • ‘Employer SOCSO’ column
    • ‘Employee SOCSO’ column
    • ‘Employer SOCSO % of Earnings’ column (Employer SOCSO  / Earnings X 100)
    • ‘Employee SOCSO % of Earnings’ column (Employee SOCSO  / Earnings X 100)
  • Pay run audit report: ‘Employer SOCSO’ and ‘Employee SOCSO’ column
  • Pay run comparison: ‘Employer SOCSO’ and ‘Employee SOCSO’ column
  • Pay run variance: ‘Employer SOCSO’ and ‘Employee SOCSO’ column
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