Malaysia seems to be generous about the nation’s employees who are constantly working on nation’s economic rise and developments. The government came up with various schemes and policies for the wellbeing of employees working in all business bodies in Malaysia. One of such schemes is SOCSO or Social Security Organization.
In Malaysia, this is known as iPERKESO. Although just a governmental agency, But SOCSO contribution in Malaysia has made compulsory for all employers in Malaysia when running a company.
So, what is this SOCSO or iPERKESO in Malaysia? How it can be gathered, also the rules and regulations that incorporate SOCSO and what are the advantages of SOCSO? Let’s find out.
SOCSO is the abbreviation for the term Social Security Organization is also popular with the name iPERKESO. It is the Social welfare program for the benefit of all company employees in Malaysia. The organization is run under the Ministry of Human Rights in this nation to ensure social protection for all employees actively working in various companies.
The government of Malaysia made it mandatory for all employees and employers to contribute a recommended amount of funds as insurance at a regular monthly interval. This fund is later on used in case of an employee’s unfortunate medical emergencies or relevant crises.
The Employees' Social Security or SOCSO follows Employees’ Social Security Act 1969 has been implemented by the Malaysian federal law. It has been consolidated under the law to provide social security to the employees working under various companies’ tag name. It has been made compulsory for all employers for the benefits of foreign and resident employee community in this nation. The law for SOCSO contribution in Malaysia is enacted and monitored by the Social Security Organization or PERKESO.
You may see related article here: Employees Provident Fund Malaysia – EPF Malaysia
In order to register for the SOCSO contributions Malaysia, a candidate need to go through several steps. Below are the required processes:
Employers of a company should be aware of the fact that SOCSO contribution in Malaysia has to be done on a monthly basis. It needs to be on time or else there’s a fine for discrepancies. It must be remembered that the SOCSO is strictly implemented by the government of Malaysia. To keep the contribution method convenient for payees, SOCSO can be paid from the following banks:
Most of these banks provide online banking facilities. Along with the banks, the SOCSO payment can be carried out by the nearest SOCSO office in various regions of Malaysia to make the contribution even more convenient.
To contribute for SOCSO, it is necessary to know which wage niches are eligible for this particular SOCSO scheme. So, in order to get the eligibility, the wages must come from the following source:
However, at following cases SOCSO contribution is not applicable:
SOCSO contribution is compulsory for foreign expatriate and investors. It is compulsory for all employers of Malaysian FDI company to pay the SOCSO. It is compulsory and falls under federal rules of the nation. An employer needs to contribute a fixed amount from employee’s monthly payment. Employee therefore doesn’t need to go for extra hassle for this contribution procedure.
Employer has to pay about 1.24% of an employee’s monthly salary. It must be remembered that the monthly wages have to be capped at least RM4000. Month if SOCSO contribution has to be made. This payment needs to be contributed every month during the employee’s service period.
In order to check for the SOCSO contribution status, both employee and employer have their own identification number. In case for an employer a SOCSO employment code number will be provided. This specific number is used every time to check the status of each contribution status.
Employee of a company on the other hand, has a Foreign Worker Social Security No. which is a 12-digit KSPA Number. To get this number foreign employees has to register themselves. This number is necessary to refer and submit employees’ contribution data, and also to check the SOCSO contribution employee status.
You may see: SOCSO contribution rates in the table
This process of checking the SOCSO code number is pretty simple and straight forward. It is possible that you might have lost your SOCSO employment code number. This code number is compulsory and has to be shown every time you submit your SOCSO contribution fund.
When this is the case, you just have to give a call to the nearest SOCSO office, or give a visit to the office nearest to you. Then you will give your IC number to the designated official, and he/she will saccharify and get your SOCSO employment code. The whole process is simple and can be done even over phone.
The SOCSO contribution Malaysia has a long-term benefit over the employees working in Malaysian companies. However, the benefits under SOCSO has been classified under two categories for Malaysian residents. These are:
Is it compulsory to register for SOCSO?
Yes, it is a must requirement.
What happens if I don’t register for SOCSO?
Failing to register for SOCSO are subjected to the federal punishment that includes a fine of RM10000 or up to 2 years of imprisonment.
What happens if an employee quit, resign or leave a company?
In case an employee resigns, quit or leaves, or even dismissed by the company itself, the employer has to clarify with the SOCSO office for that employee, to cross out that employee from the contribution fund list.
Read more about SOCSO in Malaysia