Employers must legally contribute to EPF, SOCSO, and EIS to support employee welfare and financial security.
These statutory contributions can be complex, requiring accurate calculations and timely submissions. Businesses need to understand the requirements and processes for EPF, SOCSO, and EIS to stay compliant and avoid penalties.
This guide offers an overview of these payroll taxes and the associated responsibilities.
Key Takeaways
- Outsourcing payroll reduces administrative burden, ensures compliance, and minimises errors.
- EPF provides long-term retirement savings for employees, with employer and employee contributions.
- SOCSO offers social protection for work-related injuries and invalidity, covering employees’ medical and rehabilitation needs.
- EIS delivers financial aid and support for retrenched employees, including job search allowances and reemployment assistance.
Why Understanding Payroll and Outsourcing is Key to Employer and Employee Contribution
Outsourcing payroll helps businesses ensure timely, accurate contributions to EPF, SOCSO, and EIS, reducing the risk of errors and penalties.
By leaving payroll tasks to experts, companies can focus on their core operations while staying compliant with ever-changing regulations.
Outsourcing also ensures correct division of responsibilities between employers and employees, providing peace of mind and reducing administrative burden.
Discover how EOR can streamline your payroll processing and explore the key differences between EOR vs PEO to choose the best solution for your business.
Simplify EPF Contribution Compliance and Maximise Employee Benefits
The Employees Provident Fund (EPF) is a mandatory retirement savings scheme to provide financial security for employees after retirement.
In Malaysia, employers contribute 12%–13% of an employee’s monthly salary, while employees contribute 11%.
These contributions are meant to accumulate over time, providing employees with a safety net once they retire.
|
Aspect |
Details |
|
Benefits |
EPF provides financial security for retirement and can be used for housing, medical expenses, education, and critical illness withdrawals. |
| How to Make Payment |
Employers submit EPF contributions via the i-Akaun (Employer) portal. Payments are made through FPX, bank transfers, or cheques, due by the 15th of each month. |
|
Division of Responsibility |
Employers ensure correct employee records; payroll providers handle calculations, submission, and payment tracking. |
| Compliance Assurance |
Outsourcing payroll ensures timely submission and accurate calculations, helping businesses avoid penalties and remain compliant with EPF regulations. |
Streamline SOCSO Contribution and Safeguard Employee Welfare
SOCSO provides social protection to employees in Malaysia through two key schemes: the Employment Injury Scheme and the Invalidity Scheme.
These schemes provide employees with support for work-related injuries, illness, or permanent disability. SOCSO also extends dependents’ benefits for death and funeral expenses.
|
Aspect |
Details |
| Benefits |
SOCSO covers for work-related injuries, medical care, rehabilitation, and dependents’ benefits. It also ensures income replacement during periods of disability. |
|
How to Make Payment |
Employers submit contributions via the PERKESO ASSIST Portal. Payments are made via FPX or direct debit, due by the 15th of every month. |
| Division of Responsibility |
Employers ensure employee eligibility and enrolment, while payroll providers handle contribution calculations, submission, and payment monitoring. |
|
Compliance Assurance |
Outsourcing payroll ensures accurate classification between the First and Second Categories of SOCSO, reducing the risk of misclassification and penalties for non-compliance. |
Ensure Accurate EIS Contribution and Support Employee Recovery
Employment Insurance System (EIS) benefits offers financial aid and support to employees who are retrenched or lose their jobs due to unforeseen circumstances.
The system helps individuals re-enter the workforce by offering job search allowances, re-employment assistance, and training programs.
Both employers and employees contribute 0.2% of the employee’s monthly salary to the EIS fund.
|
Aspect |
Details |
| Benefits |
EIS offers retrenched employees job search allowances, re-employment allowances, and training support. It aims to ease the transition back into the workforce. |
|
How to Make Payment |
Contributions are made through the SOCSO ASSIST Portal alongside SOCSO payments. The submission and payment are due by the 15th of each month. |
|
Division of Responsibility |
Employers ensure employees’ eligibility and maintain records. Payroll providers calculate and submit the contributions to EIS along with SOCSO. |
| Compliance Assurance |
Outsourcing payroll ensures correct EIS contributions are made on time, reducing the risk of fines and ensuring employees are properly covered. |
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Key Differences Between EPF, SOCSO, and EIS for Employee and Employer Contribution
EPF, SOCSO, and EIS are crucial statutory contributions that protect employees and employers.
While they share some similarities in their role within Malaysia’s social welfare and payroll system, each has distinct purposes, benefits, and obligations that businesses must understand to ensure compliance.
|
Aspect |
EPF | SOCSO | EIS |
| Purpose | Retirement savings for employees | Social protection for work-related injuries and invalidity |
Financial aid and job support for retrenched employees |
|
Coverage |
Long-term retirement savings and withdrawals for emergencies, medical needs, or housing | Covers employment injuries, illnesses, and permanent disability | Provides job search allowances, re-employment assistance, and training |
| Employer Contribution/Statutory Deductions | 12%–13% | 1.75% |
0.2% (shared equally with employees) |
|
Employee Contribution for Salary Reductions |
11% | 0.5% | 0.2% |
| Benefit Type | Savings, pension, and housing/medical support | Income replacement, rehabilitation, and dependents’ benefits |
Job search, retraining allowances, and career support |
|
Payment Submission |
Through i-Akaun portal | Through PERKESO ASSIST portal |
Through SOCSO ASSIST portal |
Optimise Payroll Outsourcing in Malaysia with Amaze Advisory
Amaze Advisory offers integrated business solutions, including expert payroll outsourcing in Malaysia, ensuring your business complies with EPF, SOCSO, and EIS requirements.
|
Service |
Details |
| EPF, SOCSO, EIS Compliance |
Amaze Advisory ensures accurate calculations for EPF, SOCSO, and EIS based on statutory rates, and handles timely submissions to relevant government portals (i-Akaun, PERKESO ASSIST, etc.). |
|
Payroll Expertise |
With years of experience, Amaze Advisory’s payroll team is equipped to handle complex calculations and resolve issues swiftly, ensuring your business meets all statutory obligations and deadlines. |
| Employee Records & Documentation |
Amaze Advisory maintains precise records of employee contributions, simplifying audit processes and providing reliable documentation for your business. |
Why Amaze Advisory is the Ideal Payroll Outsourcing Solution
Outsourcing payroll solutions to Amaze Advisory offers numerous advantages:
- Accurate & Timely Submissions: Our experienced team processes payroll accurately and on schedule, easing your administrative workload.
- Stay Compliant: We align your business with the latest EPF, SOCSO, and EIS regulations, ensuring compliance.
- Minimise Penalties & Errors: We reduce the chances of errors, helping your business avoid penalties due to incorrect or late submissions.
- Focus on Growth: While we manage the payroll complexities, you can focus on confidently scaling your business.
Conclusion
Managing EPF, SOCSO, and EIS contributions is a critical responsibility for businesses in Malaysia, ensuring compliance with local laws and the welfare of employees.
With the complexities involved in calculating and submitting these contributions, outsourcing payroll offers a clear advantage.
By working with Amaze Advisory, businesses can reduce administrative workload, avoid penalties, and stay up-to-date with regulatory changes.
Contact Amaze Advisory today to discover how we can assist with EPF, SOCSO, EIS compliance, and payroll outsourcing, helping your business remain efficient and fully compliant.
