New salary ceiling limit for employer contributions in Malaysia, effective 1 Sep 2022

According to SOCSO, the contribution amount for employees earning more than RM5,000 monthly will follow the salary ceiling limit of RM5,000.

Malaysia's Ministry of Human Resources, through the Social Security Organisation (PERKESO, also known as SOCSO) will enforce a new salary ceiling for contribution purposes, effective 1 September 2022.

In increasing this contribution salary ceiling, the Employee Social Security Act 1969 (Act 4) and the Employment Insurance System Act 2017 (Act 800) will be amended to increase the salary ceiling limit for contribution purposes from RM4,000 to RM5,000 per month. 

Specifically, the contribution amount that will apply to employees who earn more than RM4,000 per month will follow the Third Schedule of Act 4 (Annex 1) and the Second Schedule of Act 800 (Annex 2) as shown below respectively:

Third Schedule of Act 4

(Annex 1 - for the full list, please refer to page 75)  

Second Schedule of Act 800

(Annex 2 - for the full list, please refer to page 57).

For employees who earn more than RM5,000 per month, the contribution amount will follow the salary ceiling limit of RM5,000.

Therefore, employers must make contribution payments in accordance with the new salary ceiling limit amendment starting September 2022. Employers are also requested to record the amount of contribution deductions in their respective employee's statements or pay slips, for the purpose of records and inspection activities by SOCSO.

It is expected that a total of 1.5mn workers, or almost 19% of all SOCSO contributors across the country, will be impacted by the increase — this includes local and foreign workers.

Since its establishment from 1971 until now, the salary ceiling increase has been implemented five times by SOCSO. This step is implemented in line with the agency's ongoing efforts towards providing more comprehensive social protection to contributors and their dependents.

According to the statement, this move to increase the salary ceiling will improve SOCSO's social security coverage through an increase in the existing benefits payment rate up to 25.3%. The benefits are such as Temporary Disability Benefit (FHUS), Permanent Disability Benefit (FHUK), Dependent's Benefit (FOT), disability pension as well as pension in case of death for surviving nominee under Act 4 as well as Jobseeker's Allowance (EMP), Reduced Income Allowance ( EPB) and Early Reemployment Allowance (EBSA) under Act 800.

Image / Shutterstock

Follow us on Telegram and on Instagram @humanresourcesonline for all the latest HR and manpower news from around the region!