All about Employment Insurance Scheme - EIS in Malaysia

All about Employment Insurance Scheme - EIS in Malaysia

The government of Malaysia has realized the importance of employee long before some of the other neighboring nations made any notice on this factor. This therefore gives Malaysia to develop some upper hand policies for the benefits of the employee working spontaneously for developments of the nation’s economy.

Right after the Singapore, Malaysia introduced some beneficial schemes for their workers. The country thereafter ensured employment schemes for the wellbeing of the workers deployed in various sectors in this nation.

Employment insurance scheme also known as EIS in Malaysia is one of such scheme introduced for the benefit of employees during switching of employment sectors and also if under SOCSO policies.

This article is dedicated to the EIS or Employment Insurance Scheme in Malaysia, its payment method, and benefits of withstanding this particular scheme for Malaysian employees.

Historical timeline of EIS

  • EIS was first proposed by the former Prime Minister of Malaysia Datuk Seri Najib Razak
  • EIS was raised in parliament in the middle of 2017.
  • The core aim of EIS was to help employees who are seeking opportunities to switch employments and also a running member of SOCSO contribution scheme.
  • On May 1, 2017, former Prime Minister Datuk Seri Najib Razak had announced had officially announced the EIS. The government agreed to provide RM70 million financial benefits for the EIS. Starting from the year 2018. 

Defining EIS

This is a governmental approved scheme introduced by the formal Prime Minister Datuk Seri Najib Razak and approved by the government on May 1, 2017. The aim of this scheme is to bring all employees under an account. Especially employees who are considering switching jobs and at the same time registered under SOCSO policy.

What is SOCSO? (social security organization) See all policies!

It is a scheme planned and acted for the wellbeing of the employee in Malaysia. This therefore acts as a protection curtain for employees who are trying to switch jobs as their employers are getting bankrupts or insolvents. During the period between unemployment and getting a new job of an employee the Employment Insurance Scheme provide financial support to those employees.

In an addition to aiding them, this scheme also provides an employee with consultancy and job search assistance as well as skill buildup opportunities, which help them to find a new job as soon as possible.

Payment process of EIS

The Following are the process of EIS payment system which is applicable for both employees and employer:

  • The whole EIS process is managed by SOCSO
  • It is compulsory for both employees and employers to contribute for this employee’s insurance account
  • 0.25% has been fixed as the compulsory contribution rate which either employees or employers need to pay per month from the employee’s per month wages.
  • It is similar to SOSCO or EPF contribution but this 0.25% contribution goes to EIS.
  • Ignoring this contribution or violating the EIS contribution rule result to federal crime and the individual employers violating this rule are considered guilty. For this the accused employer will be penalized with a jail term of up to two years. The accused individual may also have to pay a fine of maximum RM10000.

What are the benefits of EIS in Malaysia?

EIS has been implemented with the Malaysian private sector employee welfare in mind. It therefore comes up with multiple benefits that come in handy for employees in a company when in need. Below is the list of highlighted benefits Employee Insurance Scheme or EIS covers for typical employees in Malaysian Private Sectors:

  • EIS acts like additional employee welfare coverage for millions of employees working in Malaysian private companies.
  • This contribution however refrain employers to reduce or cut employee monthly wages that they are contracted for at the beginning of their work sessions.
  • EIS supports employee financially during retrenched period. When employer gets bankrupts or unable to pay wages, and employees have to find another job. During this unemployment period, the aid from EIS until they find new job, turns out to be very useful for them.
  • EIS not only provide financial aid during critical hour of an employee, but also assist an employee logically and mentally. Employment Insurance Scheme (EIS) in Malaysia sponsors career counseling and skill training programs, to skill up and opens up more job opportunities for these employees. The scheme also acts as job searching assistant for employees whenever needed.
  • EIS sponsors various career and skilled development courses for employees. These courses skill up employees, so that they can get better opportunities as soon as they leave their previous work place.

The EIS plan has turn out to be a beneficiary scheme along with SOCSO and EPF contribution plan in Malaysia. Introduced in 2018 the Employment Insurance System (EIS) is already helping thousands of employees working in private sector along with other employee welfare schemes. But to enjoy this scheme to the fullest, employer of the company need to come forward as well. It’s been proven that EIS benefits have add employee efficiency in Malaysian labor market.

Employees through this scheme can be introduced with more productive workplace and can work more efficiently, which in turn ultimately is accelerating the economic wheel faster for the nation. On the other hand, the sponsored skill development programs of these schemes are sharpening skills of labors in this nation, which in return providing skilled workforce throughput Malaysian corporate field.

When it comes about moral and psychological welfare of employee, especially during retrenched period of an employee, EIS offers some splendid programs. These programs include job search assistance, moral and psychological counseling, advisory services etcetera.

These retrenchment benefits mentioned throughout the article can surely contribute in minimizing psychological and emotional distresses among all labors currently going through such sensitive moments in their job career in Malaysia.

As a result, Employment Insurance Scheme, EIS in Malaysia along with other similar schemes can turn out to be an economically sustainable step. Even when the economy of other nations face financial crisis, these schemes taken by the government of Malaysia in 2017 can definitely contribute to stabilize economic curriculum in Malaysia. Well, you may want to know about setting up a company in Malaysia.


What is the EIS deduction rate in Malaysia?

EIS deduction rate is 0.25% for both employees and employers in Malaysia. This rate is deducted from the monthly wages of the employee in Malaysia

Is it compulsory to apply for the EIS program in Malaysia?

Yes, EIS program is compulsory for a private company employee, which has been ruled after 2018, set by the government of Malaysia.

What are the eligibility criteria for EIS program?

Eligibility criteria for EIS program in Malaysia:
**Has to be a Malaysian resident
**The age limit must be in between 18 to 60 years.
**The individual must be registered under SOCSO contribution scheme
However, individual of age 57 or above who have not enlisted in any contribution are exempted from EIS.

How can I claim for EIS relief?

You can claim for EIS relief only if you are an investor. You can claim up to RM 1m-worth of investments if qualified. You can even claim for up to RM 2m if you are investing in knowledge-intensive businesses.


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