Business
Malaysia — Business: Social Security
Employers must register employees under a Contract of Service or Apprenticeship with EPF, ensuring accurate monthly contributions are deducted and remitted. SOCSO registration is compulsory for all Malaysian/PR employees except Federal/State Government permanent employees, domestic servants, and the self-employed. Contribution calculation rules: employers cannot use exact percentage calculations except for salaries exceeding RM20,000 — total contributions (including cents) must be rounded to the next ringgit. Both EPF and SOCSO have specific exemption categories and wage-ceiling rules that must be applied correctly to avoid underpayment.
Key facts
- EPF registration required for employees under a Contract of Service or Apprenticeship.
- SOCSO is compulsory for Malaysian/PR employees, except government permanent employees, domestic servants, and the self-employed.
- Contribution rounding rule: total contribution (incl. cents) rounds up to the next ringgit; exact-percentage calculation only permitted above RM20,000 salary.
- Employers must apply the correct wage-ceiling and exemption rules per scheme to avoid underpayment.
Steps
- Register employees with EPF — Mandatory for Contract of Service/Apprenticeship employees.
- Register employees with SOCSO — Compulsory except for exempted categories (government permanent staff, domestic servants, self-employed).
- Apply correct rounding and ceiling rules — Round total contributions up to the next ringgit; use exact percentages only above RM20,000 salary.
Common mistakes
- Applying exact-percentage contribution calculations for salaries below RM20,000 — the rounding rule applies below that threshold.