1. Chapter Three The Social Security Laws
MALAYSIAN INDUSTRIAL RELATIONS & EMPLOYMENT LAW Author: Maimunah Aminuddin
Chapter Three
The Social Security Laws
Malaysian Industrial Relations & Employment Law

2. Malaysian Industrial Relations & Employment Law
Preview
Purpose of social security systems
The Employees Provident Fund – social security for old age
Contributions required by both employer and employee
The Employees Social Security Act – compensation in event of occupational accident or disease
Workmens Compensation Act
Malaysian Industrial Relations & Employment Law

3. Social security systems
Social security systems are designed to reduce financial stress in the event of loss or reduction of income.
Social security may protect income when people are faced with:
Unemployment
Post-retirement
Accident or serious illness
Child birth
Death of income earner
Malaysian Industrial Relations & Employment Law

4. Social security for post-retirement
Options to ensure elderly have sufficient
income after retirement:
Voluntary savings & investment
State provided pensions
Employer provided pensions
Joint employer-employee contribution saving schemes
Malaysian Industrial Relations & Employment Law

5. The Employees Provident Fund
The EPF is a compulsory savings scheme for employees so that they will have sufficient funds in their post-retirement years.
Simpanan Hari Tua Anda
Malaysian Industrial Relations & Employment Law

6. The Employees Provident Fund, cont.
Membership
Compulsory for:
All Malaysian employees working in private sector
Voluntary for:
Public sector employees on pension scheme
Foreign employees
Domestic servants
Self-employed persons
Malaysian Industrial Relations & Employment Law

7. The Employees Provident Fund, cont.
Contributions
Employer responsible to contribute 12% of employee’s wages and deduct 11% from employee’s wages and send both contributions to the EPF every month.
Malaysian Industrial Relations & Employment Law

8. The Employees Provident Fund, cont.
Definition of wages under EPF Act:
“All remuneration in money, due to an employee
under his contract of service or apprenticeship … and
includes any bonus or allowance payable by the
employer to the employee … but does not include:
Service charge
Overtime payment
Gratuity or retirement benefit
Retrenchment or termination benefit
Travelling allowance
Malaysian Industrial Relations & Employment Law

9. The Employees Provident Fund, cont.
Failure by an employer to remit EPF contributions as
required by the law is a serious offence.
Offenders are prosecuted and may be punished as
follows:
The money owing must be paid;
The employer may be fined or jailed (RM10,000 and/or 6 months);
Assets of employer may be seized; and
Directors of company may be prevented from leaving the country until payment made.
Malaysian Industrial Relations & Employment Law

10. Employees Social Security Act (SOCSO)
Purpose of the Act is to establish an insurance scheme which ensures employees involved in a work-related accident, or who contract a work-related disease receive compensation.
Malaysian Industrial Relations & Employment Law

11. Employees Social Security Act (SOCSO), cont.
Monthly contributions are made to SOCSO by employers and employees.
Scheme is compulsory for Malaysian employees in the private sector, earning up to RM3,000 per month.
Once-in, always in!
Malaysian Industrial Relations & Employment Law

12. Employees Social Security Act (SOCSO), cont.
Definition of wages:
“All remuneration payable in money by the
employer to the employee, including any
payment in respect of leave, holidays,
overtime and extra work on holidays but does
not include:
Travelling allowance
Malaysian Industrial Relations & Employment Law

13. Employees Social Security Act (SOCSO), cont.
Annual bonus
Reimbursement for employment related expenses
Gratuity paid on retirement or end of contract
Malaysian Industrial Relations & Employment Law

14. Workmen’s Compensation Act
Employers who employ foreign workers must
purchase an insurance policy to provide
compensation in case of work-related accident or
work-related disease.
The insurance policy must be paid for by the
employer.
Malaysian Industrial Relations & Employment Law

15. Malaysian Industrial Relations & Employment Law
Review
Purpose of social security systems
The Employees Provident Fund – social security for old age
Contributions required by both employer and employee
The Employees Social Security Act – compensation in event of occupational accident or disease
Workmens Compensation Act
Malaysian Industrial Relations & Employment Law