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:
- Employment Injury and invalidity Scheme
- Employment injury Scheme
- Exempt payments
- Business and Employee SOCSO settings
- Opening balances
- Processing SOCSO contributions
- Payment of SOCSO contributions
- SOCSO related reports
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. This is up to a maximum value of RM 69.05 for the employer, and a maximum value of RM 19.75 for the employee.
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.
As of January 2019, foreigners began contributing under this scheme only.
Under this category, every month, the employer contributes 1.25% of employees’ monthly wages, based on the employee’s monthly salary up to a maximum value of RM 49.40.
There are no employee contributions.
“Wages” for SOCSO contribution purposes refers to all remuneration payable in money by an employer to an employee, and include:
- Basic Salaries
- Overtime payments
- 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:
Any system default pay categories have already had the SOCSO settings configured accordingly.
- Employee setting: SOCSO type is determined based on age and residency. You can check to see the SOCSO configuration for an employee by going to the Employee file > Statutory details page:
If the employee does not have residence status, or if they are non-Malaysian, 'employment injury scheme' is the only option.If they are a resident or permanent resident you are able to select the following depending on the employees' age):
- Employment injury scheme;
- Employment injury and invalidity scheme
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:
- Statutory contributions and PCB: Enter the applicable value within the 'SOCSO' employee and/or employer field;
- 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:
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:
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:
- SOCSO’s ASSIST Portal
- 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:
ii. RHB Bank
iii. Public Bank (Starting 1 March 2018)
- Internet Banking
SOCSO related reports
The following is a list of reports in order to assist in the reporting and registering of SOCSO contributions:
- SOCSO statutory payroll export
- SOCSO - Borang 8A
- SOCSO - New employee registration form Borang 2
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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