Malaysia Social Security Organisation (SOCSO)
What is the Social Security Organisation (SOCSO)?
Social Security Organisation (SOCSO), also known as PERKESO (Pertubuhan Keselamatan Sosial), was formed under the Employees’ Social Security Act 1969 as a government department of the Ministry of Labour and Manpower on 1 January 1971. It is an organisation that protects Malaysian employees in accordance with the Employees’ Social Security Act 1969. The act requires all employers in Malaysia to register their business and also to register their employees with SOCSO. A monthly contribution must be made by both employer and employees according to the percentage stipulated by the government.
SOCSO is entrusted with the administration of two social security schemes, namely the Employment Injury Scheme and the Invalidity Scheme. The Employment Injury Scheme provides protection for employees against contingencies, including occupational disease and accidents that occur while travelling in the course of employment. The Invalidity Scheme, on the other hand, provides 24 hours coverage against invalidity or death due to any cause.
Employers are categorised into two (2), namely principal employer and immediate employer.
An employer who employs an employee directly under a contract of service or apprenticeship. The employer is responsible for all matters relating to services and payment of wages.
An employer who employs employees to perform work under the supervision of the principal employer. This includes a person who has a contract of service with an employee and temporarily lends or leases the service of that employee to a principal employer.
Duties of an Employer
The principal and immediate employers who employ one or more employees are responsible to register and contribute to Social Security Organisation (SOCSO) based on the rates specified under the Employees’ Social Security Act, 1969, administered by SOCSO.
The principal employers are also responsible for ensuring that all workers employed by immediate employers are registered with SOCSO and the contributions are paid accordingly.
Employers are responsible for reporting all work-related accidents that befall their workers within 48 hours of notification.
An employee is any person who is employed for wages paid under a contract of service or apprenticeship with an employer, whether the contract is expressed or implied, or oral or in writing, or in connection to the work of an industry to which the Act applies: all employees who are employed under a contract of service or apprenticeship in the private sector, and contractual / temporary staff of Federal / State Government, as well as Federal / State Statutory Bodies.
Employees exempted from the coverage of the Employees’ Social Security Act, 1969 are as follows:
- Federal and State Government permanent employees
- Domestic servants
- Spouses of a sole proprietor or a partnership owner
It is compulsory for all eligible employees who are Malaysian citizens and permanent residents to register and be covered by SOCSO. The rate of contribution is capped at monthly wage ceiling of RM4,000.00.
Rate of Contributions
Coverage of the Workers Social Security Act 1969
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:
Contributions of the First Category
For employees who are less than 60 years of age, contributions payable by employers and employees are for the Employment Injury Scheme and the Invalidity Scheme.
The rate of contribution under this category comprises 1.75% of employer’s share and 0.5% of employees’ monthly wages according to the contribution schedule.
Note: All employees who have not reached the age of 60 must contribute under the 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.
Contributions of the Second Category
The rate of contribution under this category is 1.25% of employees’ monthly wages, payable by the employer, based on the contribution schedule. All employees who have reached the age of 60 must be covered under this category for the Employment Injury Scheme only.
Note: For eligible new employees who are 55 years of age, they must be covered under the Second Category.
Contribution Payment Period
Contributions payable for any month must be paid no later than the 15th day of the following month (if the 15th is a holiday the deadline will be the last working day before the 15th). (For example: Contributions for July 2017 must be paid latest by 15 August 2017).
Interest on Late Payment of Contributions (ILPC)
If contributions are made later than the 15th of following month (if the 15th is a holiday the deadline will be the last working day before the 15th) , a fine of 6% per annum for each day of late payment will be charged.
The minimum fine is RM 5, hence if the monthly fine is calculated to be less than RM5, then it will be charged at RM5 per month.
Employment Injury Scheme
Employment Injury Scheme provides protection to an employee against accident or an occupational disease arising out of and in the course of his employment. The protection under this scheme covers the following:
1. Industrial accident
2. Commuting accident, defined as accidents occuring:
- on a route between his place of residence or stay and his place of work
- on a journey made for any reason which is directly connected to his employment
- on a journey between his place of work and the place where he takes his meal during any authorized recess
- Note : An accident that occurs during any interruption or deviation shall not be deemed to arise out of and in the course of his employment.
3. Accident during emergency: accident which occurs during an emergency at the employer’s premises in the course of assisting, rescuing, or protecting other people from disaster or danger during an emergency.
4. Occupational diseases: diseases resulting from the employee’s occupation as described in the Fifth Schedule of Employees’ Social Security Act 1969.
Amongst the occupational diseases include:
- Loss of hearing due to continuous excessive noise exposure
- Occupational asthma due to work involving constant exposure to the inhalation of dust, harmful chemicals, etc.
Benefits under The Employment Injury Scheme
- Medical Benefit
- Temporary Disablement Benefit
- Permanent Disablement Benefit
- Constant-attendance Allowance
- Facilities for Physical / Vocational Rehabilitation
- Dependents’ Benefit
- Funeral Benefit
- Education Benefit
An Insured Person shall be considered as suffering from invalidity by reason of specific morbid condition of permanent nature either incurable or is not likely to be cured and no longer capable of earning, by work corresponding to his strength and physical ability, at least 1/3 of the customary earnings of a sound Insured Person. The scheme provides 24-hour coverage to an employee who suffers from invalidity or death due to any cause and not related to his employment.
Benefits Under Invalidity Scheme
- Invalidity Pension
- Invalidity Grant
- Constant-attendance Allowance
- Survivors’ Pension
- Funeral Benefit
- Facilities for Physical / Vocational Rehabilitation and Dialysis
- Education Benefit