Coverage of the Workers Social Security Act 1969
Employers are required to pay monthly contributions for each eligible employee according to the rate specified under the Employees’ Social Security Act, 1969. These contributions are divided into two (2) types, namely:
Contributions of the First Category
For employees who are less than 60 years of age, contributions payable by employers and employees are for the Employment Injury Scheme and the Invalidity Scheme.
The rate of contribution under this category comprises 1.75% of employer’s share and 0.5% of employees’ monthly wages according to the contribution schedule.
Note: All employees who have not reached the age of 60, must contribute under the First Category except for those who have attained 55 years of age and have no prior contributions before they reach 55 due to non-eligibility under the Employees’ Social Security Act, 1969.
Contributions of the Second Category
The rate of contribution under this category is 1.25% of employees’ monthly wages, payable by the employer, based on the contribution schedule. All employees who have reached the age of 60 must be covered under this category for the Employment Injury Scheme only.
Note: For eligible new employees who are 55 years of age, they must be covered under the Second Category.
Coverage of the Employment Insurance System Act 2017
The Employment Insurance System Act 2017 was introduced and came into force on 1 January 2018.
All employers in the private sector are required to pay monthly contributions on behalf of each employee. (Government employees, domestic workers and the self-employed are exempt)
An employee is defined as a person who is employed for wages under a contract of service or apprenticeship with an employer. The contract of service or apprenticeship may be expressed or implied and may be oral or in writing.
All employees aged 18 to 60 are required to contribute. However, employees aged 57 and above who have no prior contributions before the age of 57 are exempt.
Contribution rates are capped at an assumed monthly salary of RM4000.00
Contributions to the Employment Insurance System (EIS) are set at 0.4% of the employee’s assumed monthly salary. 0.2% will be paid by the employer while 0.2% will be deducted from the employee’s monthly salary.
Contribution rates are set out in the Second Schedule and subject to the rules in Section 18 of the Employment Insurance System Act 2017. Employers in the private sector are required to pay monthly contributions on behalf of each employee. (Government employees, domestic workers and the self-employed are exempt)
Eligibility To Claim Benefits
All employees insured under the Act (known as Insured Persons) who have lost their employment are eligible with the following exceptions:
- Voluntary resignation by the Insured Person
- Expiry of the Insured Person’s fixed-term contract
- Unconditional termination of a contract of service based on an agreement between the Insured Person and his/her employer
- Completion of a project specified in a contract of service
- Retirement of the Insured Person
- Dismissal due to misconduct by the Insured Person
Applicants for benefits must prove that they are able to work, available to work and actively seeking work.