SOCSO, EPF and EIS : An Employer’s Guide to Employee Contribution

Did you know that failure to comply with statutory contribution requirements in Malaysia can result in fines up to RM10,000 per offence? For many small businesses, navigating SOCSO, EPF, and EIS obligations can feel overwhelming—but it doesn’t have to be.

This guide provides Malaysian entrepreneurs and business owners with a clear and actionable understanding of SOCSO, EPF, and EIS contributions, ensuring you meet your legal obligations and cultivate a supportive environment for your team. We’ll break down the essentials, highlight common pitfalls, and underscore why managing these contributions responsibly is fundamental to your business’s success.

⚡️ TL;DR: Your Quick Compliance Cheat Sheet

Confused about SOCSO, EPF, and EIS? You’re not alone—but the rules are clear:

1. Register your company with KWSP and PERKESO before hiring.
2. Contribute monthly by the 15th—or face penalties.
3. Know your rates:
   • EPF: 12–13% (employer), 11% (employee)
   • SOCSO: 1.75% + 0.5%
   • EIS: 0.2% each

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👉 Compliance isn’t just legal—it’s leadership.

What Are SOCSO, EPF, and EIS – and Why Should Employers Care?

Employee statutory contributions aren’t just a formality—they’re essential social protections.

SOCSO Contribution: Social Security for Workers

SOCSO, managed by PERKESO, provides insurance coverage for employees against employment injuries, disabilities, and death. It includes:

• Employment Injury Scheme

• Invalidity Scheme

• Foreign Workers Compensation Scheme (FWCS)

EPF: Retirement Savings Made Mandatory

The Employees Provident Fund (EPF) is a compulsory savings plan where both employer and employee contribute monthly to secure the employee’s retirement.

EIS Contribution: Unemployment Safety Net

The Employment Insurance System (EIS) supports employees who lose their jobs by offering:

• Temporary financial assistance

• Career counselling and retraining programmes

✅ Why It Matters

Employers who understand and manage these contributions not only comply with Malaysian law but also gain trust, attract better talent, and boost retention.

Employer Contribution Rates at a Glance (2025)

Source: KWSP, PERKESO

Step-by-Step Guide: How to Register & Make Employee Contributions

Step 1: Register Your Business

Before hiring employees, register as an employer with:

• KWSP for EPF

• PERKESO for SOCSO and EIS

You’ll need:

• SSM Registration (Form 9)

• Business details and contact info

• List of employees

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Step 2: Calculate Contributions Correctly

Include the following when calculating monthly wages:

• Basic salary

• Commissions and bonuses

• Overtime and allowances

Use official calculators:

• EPF Contribution Calculator

• SOCSO Table

Step 3: Submit Payments on Time

Deadlines matter. Ensure payments reach on time:

• EPF: 15th of every month

• SOCSO & EIS: Also by the 15th

Use:

• KWSP i-Akaun: Register or login here

• PERKESO ASSIST Portal: Login to contribute

Step 4: Keep Records

Maintain detailed reports for each submission:

• Monthly payment slips

• Contribution breakdowns

• Employee statements

✅ Pro Tip: Set up automated payroll software or consult a corporate services provider in Malaysia to avoid errors.

5 Common Mistakes Of Employee Contributions in Malaysia

Many employers inadvertently make mistakes when handling employee contributions. Here are some frequent pitfalls and strategies to avoid them:

• Misclassifying Employees: Ensure you correctly categorise your staff. Generally, contributions are also required for part-timers/contract staff, although specific regulations may apply. Always verify the latest guidelines from the respective authorities.
• Using Outdated Contribution Rates: Contribution rates for EPF, SOCSO, and EIS can be subject to change. Always refer to the official websites for the most current information.
• Delayed or Missed Payments: This can lead to penalties and legal complications. Implement a robust system for timely processing of payments.
• Incorrectly Handling Foreign Workers: Regulations concerning EPF, SOCSO, and EIS for foreign workers often differ. Consult the official websites of these organisations for specific guidance.
• Maintaining Inadequate Records: Keep meticulous records of all employee contributions for audit purposes and compliance checks.

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Special Cases: Foreign Workers, Interns & Directors

SOCSO for Foreign Workers

As an employer in Malaysia, you are responsible for your foreign workers’ social security. To ensure this, you must register all your foreign employees with PERKESO and subsequently make mandatory contributions to two essential schemes: the Employment Injury Scheme and the Invalidity Scheme. Here’s what else you need to know:

• Employment Injury Scheme: You pay 1.25% of the worker’s monthly wage. This covers work-related accidents and occupational diseases.
• Invalidity Scheme: Both you and the foreign worker contribute 0.5% each of the monthly wage (for eligible workers under 60). This provides protection for non-work-related invalidity.

MANDATORY monthly contribution payment :	Share	Employment Injury Scheme	Invalidity Scheme	Total Contribution
	Employer	1.25%	0.5%	1.75%
	Foreign Worker	–	0.5%	0.5%

Source: PERKESO

Ultimately, you must ensure you pay these contributions accurately and on time. Failing to register your workers or make these mandatory contributions is a serious offense under the law and can lead to severe penalties, including fines up to RM10,000 or two years imprisonment, or both. By complying fully, you not only provide crucial social protection for your foreign workforce but also ensure your business operates legally and avoids these significant repercussions.

Interns

• Contributions only if they receive monthly wages above RM30 and are legally employed.

Directors

• Contributions apply if they’re salaried and have an employment contract.

Why Use a Corporate Services Provider?

Managing compliance manually is risky—especially for new businesses. Grof offers:

• Accurate payroll processing

• On-time statutory filing

• Customised business advisory

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FAQs: Your Compliance Questions Answered

Q: Do I still contribute if an employee takes unpaid leave?
A: Yes, if any part of the month was worked or paid.

Q: Can I delay SOCSO or EPF if cash flow is tight?
A: No. Delays result in fines and potential audits.

Q: Is registration required if I only have one employee?
A: Yes, even one full-time staff triggers mandatory registration.

Conclusion: Make Compliance a Business Strength

When you stay compliant with SOCSO contribution, EPF, and EIS contribution, you’re not just avoiding penalties—you’re showing leadership. Malaysian businesses that invest in employee wellbeing build trust, loyalty, and long-term success.

Ready to embark on your business journey in Malaysia? Ensure you handle all the necessary foundational steps, including understanding the intricacies of company incorporation in Malaysia or simply contact us for a free consultation today!