In our previous articles, we have covered some important things about Payroll in Malaysia along with our dearest MTD, EPF, and SOCSO. So now let's take a look at the last statutory requirement – Employee Insurance System (EIS).
In Malaysia, there are four (4) compulsory deductions and contributions included in payroll processing. They are Monthly Tax Deduction, Employee Provident Fund, Social Security Organization, and Employee Insurance System.
What is Employee Insurance System?
Employee Insurance System (EIS) is also known as Sistem Insurans Perkerjaan (SIP). Similar to SOCSO, it is a collection of funds deducted from employees’ monthly salaries and is also managed by PERKESO. Established on 1st January 2018, EIS is aimed to provide financial assistance to retrenched employees for a maximum span of six (6) months depending on the recipient’s contribution qualifying conditions.
EIS provides three (3) types of financial allowance, including Job Search Allowance, Reduced Income Allowance, and Early Re-Employment Allowance. Check out the details of these financial allowances here.
Who is eligible for this protection plan?
EIS covers all employees who are:
Malaysian citizens / Permanent residents / Temporary residents
Aged 18 to 60 years old
Working in the private sector and have contributed to EIS
Working under a contract of service.
How do we process it?
EIS contribution is compulsory for both employers and employees. All employees aged 18 to 60 are required to contribute. However, employees aged 57 and above who have NO prior contributions are NOT covered by ACT 800 and hence they are NOT required to contribute.
As of 2022, the current contribution rate is as follows:
Note: The monthly contribution is capped at a monthly salary of RM 4,000.
If you need more information, check out this EIS contribution table provided by PERKESO.
What if I do not comply?
Similar to SOCSO, employers are liable for all their employee’s EIS deductions and submissions. If the employers fail to comply, the employers may be prosecuted and shall be punishable with imprisonment for a term which may extend to 2 years, or with a fine not exceeding 10 thousand Ringgit, or with both.
What if my submission is late?
EIS contribution submission should be paid by the 15th day of each succeeding month. A late payment interest rate of 6% per annum will be charged for each day of contribution not paid.
Want to be sure about what you are doing with EIS? Check out how we can help you or just book a chat with us.