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SOCSO –What is it?, Employer/Employee Responsibilities and more

Hann Liew
SOCSO – Types of Contribution and Benefits

Wondering what happens to your SOCSO contribution every month? Read SaveMoney.my’s guide to see what SOCSO is and how it may or may not be enough to cover workplace accidents!

What is the SOCSO / PERKESO?
The Social Security Organization (SOCSO) or Pertubuhan Keselamatan Sosial (PERKESO) is an organization established in 1971 to provide insurance coverage against job-related injuries and disabilities, workplace accidents, occupational diseases and death. SOCSO receives monthly contributions from employers and employees; these contributions are used to build up a fund which will pay out social security benefits when such accidents or illnesses occur.

What are Employers / Employees responsibilities?
An employer must register any employees employed under a contract of service or apprenticeship and earning monthly wages of RM3,000 and below. For employees earning RM3,000 and above, registration is optional and must be agreed upon by both employer and employee (except if said employee has registered with SOCSO in their previous employment, under the ‘Once In Always In’ policy, in which case contribution is mandatory).

Employers and registered employees have to contribute a percentage of earned wages to SOCSO regardless of the employment status whether it is permanent, temporary or casual in nature.

What kind of Coverage do Employees get?
SOCSO provides protection to eligible employees through two schemes:

Employment Injury Insurance Scheme
This scheme provides protection to employees who suffer from an an accident or an occupational disease arising out of, and in the course of, his employment. It covers accidents occurring while at work, accidents while travelling, accidents during emergency situations, and diseases caused by the nature of work (e.g. loss of hearing due to prolonged noise exposure). The organization will provide medical benefits, temporary disablement benefit, permanent disablement benefits, daily care allowance, rehabilitation benefits, family liability benefits, funeral benefits, and education benefits.

Invalidity Pension Scheme
This scheme provides protection to employees who suffer any invalidity due to causes not connected to their employment, permanent or not (or is unlikely to recover), which results in an employee being incapable of earning at least one-third of a employee at normal capacity. The benefits available under this scheme are invalidity pension, daily care allowance, funeral benefits, rehabilitation benefits, education benefits, and invalidity help.

In the latest 2013 Budget Announcement, free health checks for SOCSO members have also been included.

What Types of Income are Included for SOCSO Deductions?
All remuneration payable in money to an employee is taken into account as wages for the purposes of SOCSO contributions. These include the following payments:

  • Salary

  • Overtime payments

  • Commission

  • Payments for leave such as annual, sick, and maternity leave; rest days; public holidays

  • Allowances such as performance incentives, good behaviour, cost of living (COLA)

  • Service Charges

Payments not liable for SOCSO deductions:

  • Payments by employer to any pension or provident fund for employees

  • Mileage claims

  • Gratuity payment(s) for dismissal or retrenchment

  • Annual bonus

*Hann Liew is the Founder and Editor-in-chief of SaveMoney.my, an online consumer advice portal which aims to help Malaysians save money through smart (and most of the time painless) savings in their daily banking, technology, and lifestyle spending habits.