On October 26, 2017, the Malaysian House of Representatives approved the new Malaysia Employment Insurance Scheme (EIS), which is currently pending approval by the Senate and Parliament. The EIS was first proposed in mid-2016. The approved bill states that EIS will be implemented as of January 2018. The scheme will be a brand new and additional tax contribution for all Employers and Employees in Malaysia. The contribution rate will be
0.02% 0.2% (Updated 12/13/2017 – Source) for both Employee and Employer Portion. The contributions will be managed by the Social Security Organization (SOCSO) also known as PERKESO (Pertubuhan Keselamatan Sosial) of Malaysia.
The goal of EIS is to allow for the creation of an insurance scheme for laid-off employees to claim a portion of their insured salary for a period of between three and six months. EIS would cover staff involved in a voluntary or mandatory dismissal, or those made redundant due to business restructuring or closure.
Many believe the implementation of the EIS would increase the productivity of a company through employees who had undergone skills and re-training programs, as well as reduce the pressure on them if there was a need to reduce costs or downsize operations.
Once the Senate and Parliament give final approval to the EIS (which will most likely happen) Employers should expect to see a new tax contribution on their Malaysian payroll and payslips.
Celergo will ensure to confirm exactly when the bill will officially pass and ensure compliance in Malaysia once it comes into effect in January. For now, if you have any questions about Malaysian payroll concerns or EIS, feel free to reach out to our team here, we are happy to help!
**This article is for informational purposes only. It is not intended to constitute legal advice.