How Does SOCSO Works In Malaysia

Introduction of Social Security Organization

Social Security Organization (SOCSO) is a Malaysian agency that was established to provide social security protection to Malaysian employees or in simple words, an insurance coverage if there is an accident happen to the employee in the work place.

Who Are The Employees

Reference to s.2 of the SOCSO Act 1969, employee means any person who is employed for wages under a contract of service or apprenticeship with an employer. When you first become an employer or employed your first employee, you must be registered with SOCSO not later than 30 days from the Act becomes applicable to you.

2 Types of  Insurance Scheme from Social Security Organization

First Category
The employment injury scheme which provides coverage for workplace accidents and the invalidity scheme which provides coverage to employees who suffer from invalidity or death due to any cause not related to their employment.
This is for employees who are less than 60 years of age.
The rate of contribution comprises:-

• 1.75% of employer’s share based on employee’s monthly wages
• 0.5% of employee’s monthly wages

Or you can just check the wages fall under which scope based on the schedule here provided by SOCSO.

Second Category
The employment injury scheme which provides coverage for workplace accidents.
The rate of contribution under this category is 1.25% of employees’ monthly wages that it is paid entirely by employer only. You can check out the schedule here provided by SOCSO.

Period to Contribute to Social Security Organization

By 15th of subsequent month, the employer must make contribution and payment to SOCSO.

Types of Wages That Subject to Social Security Organization

Wages for the purpose of SOCSO represents all monetary remuneration which includes any payment in respect of leave, holidays, overtime and extra work on holidays.
Nonetheless, there are certain remunerations which are not subject to SOCSO:-

1. Any contribution made by employer to EPF
2. Travelling allowance or value of travelling concession
3. Special expenses incurred as a result of his employment
4. Gratuity payable on discharge or retirement
5. Annual bonus
6. Any other remuneration as may be prescribed

Obligation of Employer to Social Security Organization

The employer must maintain and store an employee register manually or electronically. Such records shall maintain and keep for 7 years.
In the event the employer ceases it business or ceases to be an employer, the employer must inform SOCSO within 30 days from such date.
I hope the above gives you a clear picture of what you can expect as an employer for SOCSO. If you need assistance on our Business Process Outsource Services, please call us at 011-1217 8183.