Employment Insurance System (EIS) Scheme in Malaysia
Employment Insurance System (EIS) Scheme in Malaysia

Employment Insurance System (EIS) Scheme in Malaysia

What is EIS?

The Employment Insurance System Act 2017 (‘the EIS Act’) is enacted for the purpose of establishing a social security scheme known as the Employment Insurance System (‘EIS’) in Malaysia. The EIS had since launched into operation on 1 January 2018 pursuant to gazette published by the Minister of Human Resource. EIS is currently administered under the Social Security Organization (“SOCSO”).

Purpose & Overview

The purpose of this enactment is to allow those who are insured under the Act to claim up to six (6) months’ benefits in the event of the insured’s contract of service being terminated or voided. Loss of employment, of course, shall exclude that of voluntary resignation, expiry of employment contract, employment contract terminated by mutual consent, retirement, completion of the work in accordance with the terms of the contract, or termination of contract due to misconduct.

Benefits

The benefits that the insured employees could receive under the EIS include job search allowance, early re-employment allowance, reduce income allowance, training allowance, and also career counseling, just to name a few.

The ‘insurance premium’ to be paid in order to be covered under EIS is in the form of contribution at the prescribed rate partly by employers and partly by employees. Such contribution as it stands now shall be at the rate of 0.2% of employees’ monthly salary to be paid by the employer and another 0.2% of the employees’ monthly salary to be deducted from the employees’ monthly salary.  The exact amounts of contribution are as specified in the Second Schedule of the EIS Act

In brief, it is now the law that all employees between the age of 18 and 60 years old and their employers to make the statutory contribution under EIS, except for those employees who have reached the age of 57 before the coming into operation of the EIS Act. Failing to comply with this will result in the employer being fined a maximum of RM10,000, or up to two years imprisonment, or both.

How to Pay for EIS?

(a)        Employers and employees have to be first registered under the EIS with SOCSO. For those who have not yet registered with SOCSO before, they should first register using Form SIP1 (for employers) and Form SIP2 (for employees), whereas for those who have registered with SOCSO before, they should then register using Form SIP 1A (for employers) and Form SIP 2A (for employees).

(b)        Once registered, employers may pay the contribution over-the-counter OR via online payment. For the online payment method, employers are advised to register an account with iPerkeso portal (the previous online payment portal for SOCSO) via this weblink:

https://www.iperkeso.my/sip-contribution/organisation/select

(c)        The ASSIST portal is an online payment portal particularly for EIS. In order to enrol into the portal, the employers must complete an enrolment form and submit it to the nearest PERKESO office or email to idportal@perkeso.gov.my.

The form can be downloaded at PERKESO’s website. Once enrolled, the employers may utilize the portal to manage their company details, employees’ and monthly contribution information at great convenience. A comprehensive guide to the portal can be accessed at here.

This article was written by Chia Swee Yik, Partner of this Firm (+0 16-214 8218, chia@chialee.com.my) and legal intern, Cheong Xiao Wei, who has provided advice on employment law. Feel free to contact us if you have any queries.

 

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  1. Pingback: Employment Law: 5 Compulsory Statutory Contributions or Deductions - Chia, Lee & Associates

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