Most business owners rely on their HR or finance team to handle SOCSO contributions, so it’s easy to lose track of exactly which wages count and which don’t, especially since the rules were last updated in October 2024. Here’s a refresher on how SOCSO and EIS contributions actually work in 2026.
What Is SOCSO?
SOCSO (Social Security Organisation), also known as PERKESO, is a government agency providing social security protection to Malaysian employees. All Malaysian and permanent resident employees must contribute, and foreign workers have also been covered since 2019 under the Employment Injury Scheme.
The 2024 Update Most Employers Still Haven’t Adjusted For
Effective 1 October 2024, PERKESO raised the SOCSO wage ceiling from RM5,000 to RM6,000 per month. If your payroll system or calculations still reference the old RM5,000 cap, contributions for higher earners are likely being under- or miscalculated.
- Category 1 (Employment Injury + Invalidity): total contribution capped at approximately RM133.90/month at the RM6,000 ceiling
- Category 2 (Employment Injury only, employees 60+): employer contribution capped at approximately RM74.40/month
Broadly, employers contribute around 1.75% and employees around 0.5% of monthly wages under Category 1, up to the RM6,000 ceiling, though the exact amount should always be confirmed against PERKESO’s official contribution table rather than calculated as a flat percentage.
What Counts as “Wages” for SOCSO
Subject to contribution:
- Basic salary
- Overtime payments
- Commissions
- Payments in respect of leave
- Service charges
Exempted from contribution:
- Employer contributions to any pension or provident fund
- Travelling allowances
- Gratuity paid on discharge or retirement
- Reimbursement of expenses incurred in the course of duty
- Annual bonus
- Festive gifts (e.g. Hari Raya, Christmas cash gifts)
- Benefits-in-kind and non-monetary perquisites
Worked Example
Take an employee with a basic salary of RM5,100, RM500 overtime, RM800 travel allowance (exempt), and a RM1,500 bonus (exempt):
Wages subject to SOCSO = RM5,100 + RM500 = RM5,600. Since this falls under the RM6,000 ceiling, contributions are calculated on the full RM5,600, based on the current PERKESO contribution table (not a flat percentage).
EIS (Employment Insurance System)
EIS is contributed alongside SOCSO, funded equally by employer and employee at 0.2% each, also subject to the RM6,000 wage ceiling. It provides financial assistance and job search support for employees who lose their jobs through retrenchment. Employees aged 60 and above, and foreign workers, are not covered under EIS.
Frequently Asked Questions
What is the current SOCSO wage ceiling?
RM6,000 per month, effective since 1 October 2024, up from RM5,000.
Does bonus count toward SOCSO contributions?
No. Annual bonus is exempted from SOCSO contribution, along with travel allowances and festive gifts.
What is the EIS contribution rate?
0.2% from the employer and 0.2% from the employee, capped at the RM6,000 wage ceiling.
Are foreign workers covered under SOCSO and EIS?
Foreign workers are covered under SOCSO’s Employment Injury Scheme, but are not covered under EIS.
Related Reading
- HR & Payroll Compliance Checklist for Malaysian SMEs
- What Is EIS in Malaysia? Benefits & Eligibility
- Employment Act Malaysia: Key Updates Employers Need to Know
Getting SOCSO and EIS Right, Every Month
Between the updated wage ceiling, what counts as exempt wages, and keeping EIS aligned with SOCSO, this is exactly the kind of detail that’s easy to get wrong when payroll is handled alongside a dozen other responsibilities. If you’d rather have this checked and applied correctly every cycle, talk to Righthouse’s SOCSO compliance team.
