We don’t often print out statutory on which item is subjected to contributions. Most people inclusive of the business owner and HR personnel may not remember what those items are subjected to contributions. Probably 1 out of 10 are aware of it.
But hey it’s not your fault. Maybe if you are a business owner you will rely on your HR or finance to take care of the payroll and statutory matters.
Don’t you think once a while you may need to be updated on some knowledge about the statutory? I bet you do.
Today let me go back to the basics of SOCSO contribution. Many people ask me is there a difference compare to EPF on the items subjected to contribution?
Yes, there are some differences, let’s go straight to the point:
SOCSO (Social Security Organisation), also known as PERKESO (Pertubuhan Keselamatan Sosial), is a government agency that was established to provide social security protections to Malaysian employees. Since June 2016 all Malaysian and permanent resident employees must contribute to SOCSO. As of Jan 2019, foreign workers must contribute as well.
Wages For Contributions – All the below are subjected to contributions
“Wages” for contributions purposes refers to all remuneration payable in money by an employer to an employee, and include:
✅ Basic Salaries
✅ Overtime payments
✅ Commissions
✅ Payments in respect of leave
✅ Service charges
Wages that are Exempted from Contributions:
❌ Any contribution payable by the employer towards any pension or provident fund
❌ Any travelling allowances
❌ Any gratuity payable on discharge or retirement of the employee
❌ Any sum paid to cover expenses incurred by the employee in the course of his duties
❌ Annual bonus
❌ Gifts – e.g., cash payments for holidays like Hari Raya, Christmas
❌ Benefits-in-kind and non-monetary perquisites
A general example for better explanations below:
Let’s give a name: Mr. Steven Lee
SOCSO
Age: 30
Basic salary: RM 5,100
Overtime: RM 500
Travel allowance: RM 800 (exempt)
Bonus: RM 1,500 (exempt)
➡️ Salary subject to SOCSO contributions = 5,100 + 500 = RM 5,600
SOCSO employee (based on SOCSO table): RM 19.75
SOCSO employer (based on SOCSO table): RM 69.05
Similarly for EIS (Employment Insurance System)
EIS
Age: 30
Basic salary: RM 5,100
Overtime: RM 500
Travel allowance: RM 800 (exempt)
Bonus: RM 1,500 (exempt)
➡️ Salary subject to EIS contributions = 5,100 + 500 = RM 5,600
SOCSO employee (based on EIS table): RM 7.90
SOCSO employer (based on EIS table): RM 7.90
Hope the above sharing gives you a simple summary of how SOCSO/EIS is being calculated and wages that are subjected to contributions and other wages which are Exempted from contributions.
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