MALAYSIAN INDUSTRIAL
RELATIONS & EMPLOYMENT LAW
Author: Maimunah Aminuddin
Chapter Three
The Social Security
Laws
Malaysian Industrial Relations &
Employment Law
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Preview
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Purpose of social security systems
The Employees Provident Fund – social security for
old age
Contributions required by both employer and
employee
The Employees Social Security Act – compensation
in event of occupational accident or disease
Contributions required by both employer and
employee
Workmens Compensation Act
Malaysian Industrial Relations &
Employment Law
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Social security systems
Social security systems are designed to reduce
financial stress in the event of loss or reduction of
income.
Social security may protect income when people are
faced with:
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Unemployment
Post-retirement
Accident or serious illness
Child birth
Death of income earner
Malaysian Industrial Relations &
Employment Law
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Social security for post-retirement
Options to ensure elderly have sufficient
income after retirement:
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Voluntary savings & investment
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State provided pensions
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Employer provided pensions
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Joint employer-employee contribution
saving schemes
Malaysian Industrial Relations &
Employment Law
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The Employees Provident Fund
The EPF is a compulsory savings scheme for
employees so that they will have sufficient
funds in their post-retirement years.
Simpanan Hari Tua Anda
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Employment Law
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The Employees Provident Fund,
cont.
Membership
Compulsory for:
 All Malaysian employees working in private sector
Voluntary for:
 Public sector employees on pension scheme
 Foreign employees
 Domestic servants
 Self-employed persons
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Employment Law
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The Employees Provident Fund,
cont.
Contributions
Employer responsible to contribute 12% of
employee’s wages and deduct 11% from
employee’s wages and send both
contributions to the EPF every month.
Malaysian Industrial Relations &
Employment Law
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The Employees Provident Fund,
cont.
Definition of wages under EPF Act:
“All remuneration in money, due to an employee
under his contract of service or apprenticeship … and
includes any bonus or allowance payable by the
employer to the employee … but does not include:
 Service charge
 Overtime payment
 Gratuity or retirement benefit
 Retrenchment or termination benefit
 Travelling allowance
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Employment Law
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The Employees Provident Fund,
cont.
Failure by an employer to remit EPF contributions as
required by the law is a serious offence.
Offenders are prosecuted and may be punished as
follows:
 The money owing must be paid;
 The employer may be fined or jailed (RM10,000 and/or 6
months);
 Assets of employer may be seized; and
 Directors of company may be prevented from leaving the
country until payment made.
Malaysian Industrial Relations &
Employment Law
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Employees Social Security Act
(SOCSO)
Purpose of the Act is to establish an
insurance scheme which ensures employees
involved in a work-related accident, or who
contract a work-related disease receive
compensation.
Malaysian Industrial Relations &
Employment Law
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Employees Social Security Act
(SOCSO), cont.
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Monthly contributions are made to SOCSO
by employers and employees.
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Scheme is compulsory for Malaysian
employees in the private sector, earning up
to RM3,000 per month.
Once-in, always in!
Malaysian Industrial Relations &
Employment Law
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Employees Social Security Act
(SOCSO), cont.
Definition of wages:
“All remuneration payable in money by the
employer to the employee, including any
payment in respect of leave, holidays,
overtime and extra work on holidays but does
not include:
a)
Travelling allowance
Malaysian Industrial Relations &
Employment Law
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Employees Social Security Act
(SOCSO), cont.
b)
Annual bonus
c)
Reimbursement for employment related
expenses
d)
Gratuity paid on retirement or end of
contract
Malaysian Industrial Relations &
Employment Law
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Workmen’s Compensation Act
Employers who employ foreign workers must
purchase an insurance policy to provide
compensation in case of work-related accident or
work-related disease.
The insurance policy must be paid for by the
employer.
Malaysian Industrial Relations &
Employment Law
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Review






Purpose of social security systems
The Employees Provident Fund – social security for
old age
Contributions required by both employer and
employee
The Employees Social Security Act – compensation
in event of occupational accident or disease
Contributions required by both employer and
employee
Workmens Compensation Act
Malaysian Industrial Relations &
Employment Law
15