SOCSO and EIS contributions in Malaysia, explained

What PERKESO actually covers

PERKESO administers three things an SME will meet in payroll: the Employment Injury Scheme, the Invalidity Scheme, and the Employment Insurance System.

• Employment Injury Scheme: accidents at work, accidents commuting to and from work, and occupational diseases. It pays medical benefit, temporary and permanent disablement benefit, and dependants' benefit.
• Invalidity Scheme: invalidity or death from any cause, not just work-related, subject to the contribution conditions being met.
• Employment Insurance System (EIS/SIP): temporary financial help and re-employment support for employees who lose their job.

These are insurance schemes, not savings accounts. Unlike EPF, the employee does not get a balance back. That is worth explaining to staff who query the deduction on their payslip.

Category 1 vs Category 2

Every employee you contribute for sits in one of two SOCSO categories, and the category decides who pays.

Category 1 is the first-schedule case: the employee is covered under both the Employment Injury Scheme and the Invalidity Scheme, and both employer and employee contribute. This is the default for employees below the age of 60.

Category 2 covers the Employment Injury Scheme only, and the employer contributes alone with nothing deducted from the employee. It applies to employees who are no longer eligible for the Invalidity Scheme, which in practice means employees aged 60 and above who continue working, and employees who first register with PERKESO after reaching a specified age.

The category is not a setting you choose. It follows from the employee's age and registration history, and it changes automatically when they cross the threshold. Confirm the exact eligibility rules with PERKESO, especially for staff who joined you late in their career.

SOCSO uses wage bands, not a percentage

This surprises people who have only seen SOCSO described as a percentage. PERKESO publishes a contribution table. Wages are grouped into bands, and each band has a fixed ringgit contribution for the employer and for the employee under Category 1, and a single employer figure under Category 2.

So the calculation is a lookup, not a multiplication. Take the employee's SOCSO wages for the month, find the band, read the amount. Two employees on slightly different salaries very often contribute exactly the same.

The percentages you may have seen quoted are the design basis of that table. Applying them directly to a wage will usually get you close, and usually not exact, which is precisely the problem when PERKESO reconciles your submission.

The RM6,000 wage ceiling

SOCSO and EIS both cap the wage used in the calculation at RM6,000 a month. An employee earning RM6,000 and an employee earning RM20,000 therefore contribute the same amount, because everything above the ceiling is ignored.

In practice this means the contribution table simply stops at the top band and every higher earner sits in it. It also means a pay rise for a senior employee changes their EPF and PCB but leaves SOCSO and EIS untouched.

The ceiling has been raised more than once over the years, so treat it as a configurable value in your payroll, not a constant baked into a formula.

EIS: 0.2% employer plus 0.2% employee

EIS is the simpler of the two. It is charged at 0.2% from the employer and 0.2% from the employee, on wages up to the same RM6,000 ceiling, which gives a combined 0.4%.

PERKESO publishes EIS in the same table format as SOCSO, so in a well-built payroll it is another band lookup rather than a separate calculation. It is submitted together with SOCSO.

EIS coverage has its own age boundaries, broadly aimed at employees of working age rather than those at or past retirement age, so an employee can be liable for SOCSO and not for EIS. Check the current eligibility range with PERKESO rather than assuming everyone on the SOCSO listing is also on the EIS listing.

What counts as wages here

PERKESO's definition of wages is close to EPF's but not identical, which is exactly why one column in a spreadsheet cannot serve both.

Generally included: basic salary, overtime payments, commissions, payment for leave, allowances of a wage nature, and service charges.

Generally excluded: employer contributions to any pension or provident fund, travelling allowances, gratuity, retirement and retrenchment benefits, and annual bonus.

Note the two differences that trip people up most: overtime is excluded for EPF but generally included for SOCSO, and annual bonus is included for EPF but generally excluded for SOCSO. If you carry one wage figure through your whole payroll, one of them is wrong.

Registering, paying and reporting

An employer with at least one employee must register with PERKESO and register each employee. Contributions for a wage month are due by the fifteenth day of the following month, submitted through PERKESO's online channel.

Separately from contributions, workplace accidents have to be reported to PERKESO promptly, and a claim needs the employee's contribution record to be in order. An employee whose contributions were never submitted is the worst possible time to discover a payroll gap.

What this means for your payroll

• Keep a separate SOCSO/EIS wage figure. It is not the same as EPF wages, chiefly because of overtime and bonus.
• Look the contribution up in the current PERKESO table instead of multiplying by a rate.
• Store the RM6,000 ceiling as a setting so a future revision is a config change and not a code change.
• Let age and registration history drive Category 1 versus Category 2 automatically, and re-test it every month.
• Do not assume a SOCSO-liable employee is also EIS-liable. Check the age eligibility separately.