Monthly Salary Ceiling Limit Enforced by SOCSO in Malaysia Starting 1st September 2022

The Ministry of Human Resources through the Social Security Organisation (SOCSO) is implementing a fresh salary ceiling for the purpose of contribution starting 1st September 2022. This came in effect following changes to the Workers’ Social Security Act 1969 (Act 4) and Act Employment Insurance System 2017 (Act 800) involving increasing the salary ceiling limit for contribution purposes from RM4,000 to RM5,000 per month.

SOCSO’s Chief Executive Dato’ Sri Dr. Mohammed Azman Bin Dato’ Aziz Mohammed explains that this move will enhance SOCSO’s social security coverage by increasing the existing interest payment rate up to 25.3%. As seen on the statement, the benefits are such as Temporary Disability Benefit (FHUS), Permanent Disability Benefit (FHUK), Dependent’s Benefit (FOT), disability pension as well as pension in case of death for surviving nominee under Act 4 as well as Jobseeker’s Allowance (EMP), Reduced Income Allowance (EPB) and Early Reemployment Allowance (EBSA) under Act 800.

It is expected that there will be 1.5 million workers, both foreign and local, which is 19% of all SOCSO contributors, involved in the following salary ceiling increase. This step was taken in line with SOCSO’s continuous aim towards providing a clearer social protection to contributors and dependents. Over the past 5 decades, since 1971, the implementation of a salary ceiling increase has taken place five times by SOCSO – from RM500 in 1971 to RM5,000 in 2022. The Chief Executive states that, “The contribution amount that will apply to employees with a salary exceeding RM4,000 per month is as stated in the Third Schedule, Act 4 and the Second Schedule, Act 800. For employees with a salary exceeding RM5,000 per month, the contribution amount is according to the salary ceiling limit of RM5,000.” The Rate of Contribution from employer’s and employees summing up to the total contribution for different wages can be found here.

Source: Kementrian Sumber Manusia

With over 20 years of experience in creating business solutions that are tailored to your specific needs, we at Links International can help you. Let us guide you on how you can run your business more effectively with these new laws, while we take care of your payroll or other HR matters.

We will also keep you up to speed on the latest legal updates in your region, so you will know what else you need to comply with (together with the Employment Act).

Want to learn more? Feel free to get in touch with us today!

Related articles: