Increased Ceiling Wages for SOCSO & EIS — What You Need to Know

Blog

September 8, 2022

Disclaimer: This article should not be considered to be legal advice, and altHR is not liable for any actions taken based on this article.

There have been a number of significant changes in the Malaysian HR space that employers (and of course, HR managers/practitioners) in recent times, including updates to the Employment Act 1955. Those amendments only come into effect on the 1st of January 2023, so be sure to look into our full guide for the complete breakdown.

Additionally, SOCSO has confirmed that as of the 1st of September 2022, there is now a new monthly salary ceiling for contribution purposes. This means that for September pay run, there will be some significant changes for employee & employer contributions for social security payments — also known as PERKESO.

Here’s a quick summary of what you need to know.

Ceiling wages increased to RM5,000

Following amendments to the Employees Social Security Act 1969 (Act 4) and the Employment Insurance System Act 2017 (Act 800), the ceiling limit for employees’ monthly salary has now been increased from RM4,000 to RM5,000.

What this means in practice: employees who earn monthly salaries between RM4,000 and RM5,000 must now make increased SOCSO and EIS contributions (refer to PERKESO’s latest contribution rates here). Those earning above RM5,000 per month are subject to flat contribution rates for both SOCSO (Employer: RM86.65; Employee RM24.75) and EIS (Employer and Employee: RM9.90).

‍

‍

Previously, employees earning monthly wages above RM4,000 were subject to flat contribution rates for both SOCSO (Employer: RM69.05; Employee: RM19.75) & EIS (Employer & Employee: RM7.90).

The new changes must be reflected in September’s payroll.

Why?

According to SOCSO CEO Datuk Seri Dr Mohammed Azman Aziz Mohammed, the adjusted ceiling rates should benefit around 19 percent of total SOCSO contributors in Malaysia — approximately 1.5 million workers.

This will reportedly increase the benefits payment rate by up to 25.3 percent, therefore improving social security coverage for affected workers in Malaysia.

Benefits include Temporary Disability Benefit (FHUS), Permanent Disability Benefit (FHUK), Dependent's Benefit (FOT), disability pension, pension in case of death for surviving nominee under SOCSO, Jobseeker's Allowance (EMP), Reduced Income Allowance (EPB), and Early Reemployment Allowance (EBSA) under EIS.

For context, this is the 5th time that the ceiling salary has been adjusted since SOCSO’s inception back in 1971.

Need help digitalising your HR?

Speak to the altHR team today!

Success!

Your submission has been received! One of our Customer Success Officer will be in touch with you shortly.

Oops! Something went wrong while submitting the form.

Awesome, here's your download!

If you are interested to learn more about altHR, find out more here.

Download now

Oops! Something went wrong while submitting the form.

altHR: Taking care of employees and employers

Our long-term aim here at altHR is to enable Malaysian businesses to be awesome at doing what they do with Digi’s super app, altHR. If you’re already an altHR customer with a Payroll subscription (available on assessment basis), you won’t need to make any changes to reflect the updated contribution rates for either SOCSO or EIS — check your inbox or reach out to us for more information on that front.

Manually keeping track of HR processes like leave entitlements, payroll, and even performance reviews for employees can be a challenging process for employers and HR professionals — but it doesn’t have to be.

altHR can help with this. The Leaves module (one of the most popular features on the app) is a comprehensive tool that helps to keep track of your employees leave allocations, requests, and policies.

You’ll even be able to handle the more complex aspects of leave policies, such as the different entitlements for different groups of employees based on tenure with the company, marital status, levels, carry-forward balances, replacement leave policy, and even leave reports. There are even options for automatic carry-forward leave balances, or custom limits you can set.

And of course, all of that works seamlessly with the other modules in the new normal, such as Highlights, Documents, Expense and Payroll Management.

HR professionals are often faced with daunting, often tedious tasks on a daily basis — tasks that have become even more difficult to handle in today’s fast-moving digital world.

But help is available, if you know where to look. Let us streamline your HR processes by managing and automating day-to-day tasks, so you won’t have to worry about things like paperwork, privacy concerns, time-tracking, or onboarding challenges.

Subscribe to the altHR Resources blog

By submitting this subscription request, I consent to altHR sending me marketing communication via email. I may opt out at any time. View altHR's Privacy Policy.

| Please enter a valid email

Awesome! Your submission has been received!

Oops! Something went wrong while submitting the form.