All You Wanted to Know About SOCSO (PERKESO) Deductions

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Payday is perhaps the most anticipated day of the month. However, when we get our pay slip, we might get discouraged to see many deductions from our salary.

Most Malaysians are familiar with salary cuts for the Employee Provident Fund, Monthly Tax Deduction (PCB), or other company-related deductions. However, a large majority of the workforce is still unclear about SOCSO and why a portion of their monthly salaries has to go into the fund.

Related: EPF FAQ: How Much Can You Withdraw, and for What Purpose?

Wonder no more, as today we will provide you with all the information you need about SOCSO (PERKESO).

What is SOCSO?

SOCSO stands for Social Security Organisation and is sometimes also referred to as PERKESO (Pertubuhan Keselamtan Sosial). This Malaysian government agency was established in 1971 to provide social security protections to Malaysian employees under the Employees’ Social Security Act, 1969.

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What do they do?

The main functions of SOCSO are as the following:

  1. Registration of employers and employees
  2. Collection of contributions from employers and employees
  3. Payment of benefits to workers and/or their dependents when tragedy strikes
  4. Provision of physical and vocational rehabilitation benefits
  5. Promotion of awareness of occupational safety and health

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“Do I have to make contributions towards SOCSO?”

All private companies in the country will have to register itself with SOCSO within 30 days from the time the first worker joins the company.

It is compulsory that the following type of employees are registered and covered by SOCSO:

  • Those employed under a contract of service or apprenticeship in the private sector
  • A contractual or temporary staff of the Federal or State Governments
  • A contractual or temporary staff of the Federal or State Statutory Bodies

The rate of monthly deductions is capped at a wage ceiling of RM4,000 per month. Companies will also have to make contributions for each employee but at a much higher rate.

However, there are also employees who are exempted from SOCSO coverage. Those who fall in this category are as the following:

  1. Federal and State Government permanent employees
  2. Domestic servants
  3. Self-employed workers
  4. Sole proprietor or owners of a partnership
  5. Spouse(s) of a sole proprietor or partners
  6. Foreign workers

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“What schemes are available under SOCSO and how much do I need to pay?”

SOCSO protects and provides benefits to registered members via three different schemes – the Employment Injury Scheme, Invalidity Scheme, and the Self-Employed Employment Injury Scheme (Taxi).

With the exception of taxi drivers, contributions for employees who are less than 60 years of age go to the first two schemes. The rate of contribution comprises 1.75% of the employer’s share and 0.5% of the employees’ monthly wages according to the contribution schedule.

For employees over 55 years of age but have no prior SOCSO contributions before the age of 55, they will only be eligible for the Employment Injury Scheme. The same is also true for all employees above the age of 60. The rate of contribution is 1.25% of employees’ monthly wages, payable by the employer, based on the contribution schedule.

The Self-Employed Employment Injury Scheme for self-employed taxi drivers or individuals carrying out similar services took effect on 13 June 2017. The contribution is based on options of insurable earnings, at a rate of 1.25% from monthly income. The duration of protection is 12 months from the date and time the contribution is paid and validated by the payment receipt.

A complete table of the contribution rates can be found here.

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“What are the benefits I am eligible for?”

a) Employment Injury Scheme

This scheme provides protection to an employee against accident or an occupational disease arising out of and in the course of his employment. An employee can apply for the following:

  • Free medical treatment (detailed info here)
  • Temporary disablement benefits (detailed info here)
  • Permanent disablement benefits (detailed info here)
  • Constant-attendance allowance (detailed info here)
  • Facilities for physical/vocational rehabilitation (detailed info here)
  • Dependants’ benefits (detailed info here)
  • Funeral benefits (detailed info here)
  • Education benefits for children (detailed info here)

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b) Invalidity Scheme

The scheme provides 24-hour coverage to an employee who suffers from invalidity or death due to any cause and not related to his employment. Invalidity here refers to a morbid condition that is impossible or unlikely to be cured.

The benefits of this scheme are:

  • Invalidity pension (detailed info here)
  • Invalidity grant (detailed info here)
  • Constant-attendance allowance (detailed info here)
  • Survivors’ pension (detailed info here)
  • Funeral benefit (detailed info here)
  • Facilities for physical/vocational rehabilitation and dialysis (detailed info here)
  • Educational benefits for children (detailed info here)

c) Self-Employed Employment Injury Scheme (Taxi)

This Scheme provides protection to self-employed insured persons from employment injuries including occupational diseases and accidents during work-related activities. The duration of protection is 12 months from the date and time the contribution is paid and validated by the payment receipt.

Benefits of this scheme are:

  • Free medical treatment
  • Temporary disablement benefits
  • Permanent disablement benefits
  • Constant-attendance allowance
  • Facilities for physical/vocational rehabilitation and Return to Work (RTW) Programme
  • Dependants’ benefits
  • Funeral benefits
  • Education benefits for children

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