EIS To Enhance Employee Protection

Employment Insurance System (EIS) To Enhance Employee Protection

The Malaysia Employment Insurance System (EIS) will be implemented effective 1 January 2018. The Bill has been passed by the Dewan Negara recently. The EIS is intended to act as a safety net for employees in the event of retrenchment or unemployment due to bankruptcy or any other reasons for insolvency of employers.

This system is applicable to the private sector which is estimated to benefit 6.6 million workers. The EIS will be operated and administered by the Social Security Organisation (SOCSO) together with an Employment Insurance Committee that is established to advise SOCSO on all matters related to the system and investments made via funds raised from the EIS.

Based on the EIS Bill 2017, contributions are made by employees and employers in equal proportions based on monthly wages, in accordance with the schedule provided in the Bill. There are four schedules in total which allows the Minister – by the Order published in the Gazette – to determine which rate schedule will be applied, every three years (under the provisions of Section 18 (3) & (4) of the Bill). The average contribution is expected to be around 0.2% contributed by both employees and employers, based on wages and the level of wages.

Under the initial bill, employers and employees will contribute RM0.10  each for those with monthly wages of not more than RM30, and RM19.75 each for employees with monthly wages of more than RM4,000.

Rates for contribution in the revised bill has been slashed by more than half to RM0.05 each for those with monthly wages of up to RM30, and RM7.90 each for employees with monthly salaries exceeding RM4,000.


Based on the Bill, “Wages” refers to all remunerations payable in money by an employer to an employee including any payment in respect of leave, holidays, overtime and extra work on holidays but excludes:

  • any contributions payable by the employer to any pension fund, social security fund or provident fund
  • any traveling allowances
  • any sum paid to the employee to pay for special expenses incurred as a result of his employment
  • any gratuity payable on discharge or retirement;
  • any annual bonus
  • any benefit under any other written law administered by the Organisation, and
  • any other remuneration as prescribed.


The benefits for employees under the EIS cover are as follows:

  • Job search allowance

A monthly payment for a period of three to six consecutive months to assist an insured person (employee) who has lost his employment during the period he is seeking for an employment.

  • Early re-employment allowance

An incentive paid in lump sum to an insured person for accepting an offer of employment from any employer and commencing the employment within the *waiting period or the period of receiving the job search allowance.

  • waiting period means the period of seven days from the date of approval of a claim for benefits.
  • Reduced income allowance

Refers to a lump sum payment to assist an insured person who has two or more employment and has lost one or more of his employments.

  • Training allowance

Means a monthly payment to an insured person for a period of not more than six months for attending any training in Malaysia, provided by an authorised training provider.


The following is the extracted Schedule from the Bill that is the lowest contribution rates and most likely this will be the Gazette contribution rates that will be implemented effective from 1 January 2018:-

Amount of Wages Contribution by Employer Contribution by Employee Total Contribution
1 Wages up to RM30 … … … 5 sen 5 sen 10 sen
2 When wages exceed RM30 but not exceed RM50 10 sen 10 sen 20 sen
3 When wages exceed RM50 but not exceed RM70 15 sen 15 sen 30 sen
4 When wages exceed RM70 but not exceed RM100 20 sen 20 sen 40 sen
5 When wages exceed RM100 but not exceed RM140 25 sen 25 sen 50 sen
6 When wages exceed RM140 but not exceed RM200 35 sen 35 sen 70 sen
7 When wages exceed RM200 but not exceed RM300 50 sen 50 sen RM1.00
8 When wages exceed RM300 but not exceed RM400 70 sen 70 sen RM1.40
9 When wages exceed RM400 but not exceed RM500 90 sen 90 sen RM1.80
10 When wages exceed RM500 but not exceed RM600 RM1.10 RM1.10 RM2.20
11 When wages exceed RM600 but not exceed RM700 RM1.30 RM1.30 RM2.60
12 When wages exceed RM700 but not exceed RM800 RM1.50 RM1.50 RM3.00
13 When wages exceed RM800 but not exceed RM900 RM1.70 RM1.70 RM3.40
14 When wages exceed RM900 but not exceed RM1,000 RM1.90 RM1.90 RM3.80
15 When wages exceed RM1,000 but not exceed RM1,100 RM2.10 RM2.10 RM4.20
16 When wages exceed RM1,100 but not exceed RM1,200 RM2.30 RM2.30 RM4.60
17 When wages exceed RM1,200 but not exceed RM1,300 RM2.50 RM2.50 RM5.00
18 When wages exceed RM1,300 but not exceed RM1,400 RM2.70 RM2.70 RM5.40
19 When wages exceed RM1,400 but not exceed RM1,500 RM2.90 RM2.90 RM5.80
20 When wages exceed RM1,500 but not exceed RM1,600 RM3.10 RM3.10 RM6.20
21 When wages exceed RM1,600 but not exceed RM1,700 RM3.30 RM3.30 RM6.60
22 When wages exceed RM1,700 but not exceed RM1,800 RM3.50 RM3.50 RM7.00
23 When wages exceed RM1,800 but not exceed RM1,900 RM3.70 RM3.70 RM7.40
24 When wages exceed RM1,900 but not exceed RM2,000 RM3.90 RM3.90 RM7.80
25 When wages exceed RM2,000 but not exceed RM2,100 RM4.10 RM4.10 RM8.20
26 When wages exceed RM2,100 but not exceed RM2,200 RM4.30 RM4.30 RM8.60
27 When wages exceed RM2,200 but not exceed RM2,300 RM4.50 RM4.50 RM9.00
28 When wages exceed RM2,300 but not exceed RM2,400 RM4.70 RM4.70 RM9.40
29 When wages exceed RM2,400 but not exceed RM2,500 RM4.90 RM4.90 RM9.80
30 When wages exceed RM2,500 but not exceed RM2,600 RM5.10 RM5.10 RM10.20
31 When wages exceed RM2,600 but not exceed RM2,700 RM5.30 RM5.30 RM10.60
32 When wages exceed RM2,700 but not exceed RM2,800 RM5.50 RM5.50 RM11.00
33 When wages exceed RM2,800 but not exceed RM2,900 RM5.70 RM5.70 RM11.40
34 When wages exceed RM2,900 but not exceed RM3,000 RM5.90 RM5.90 RM11.80
35 When wages exceed RM3,000 but not exceed RM3,100 RM6.10 RM6.10 RM12.20
36 When wages exceed RM3,100 but not exceed RM3,200 RM6.30 RM6.30 RM12.60
37 When wages exceed RM3,200 but not exceed RM3,300 RM6.50 RM6.50 RM13.00
38 When wages exceed RM3,300 but not exceed RM3,400 RM6.70 RM6.70 RM13.40
39 When wages exceed RM3,400 but not exceed RM3,500 RM6.90 RM6.90 RM13.80
40 When wages exceed RM3,500 but not exceed RM3,600 RM7.10 RM7.10 RM14.20
41 When wages exceed RM3,600 but not exceed RM3,700 RM7.30 RM7.30 RM14.60
42 When wages exceed RM3,700 but not exceed RM3,800 RM7.50 RM7.50 RM15.00
43 When wages exceed RM3,800 but not exceed RM3,900 RM7.70 RM7.70 RM15.40
44 When wages exceed RM3,900 but not exceed RM4,000 RM7.90 RM7.90 RM15.80
45 When wages exceed RM4,000 RM7.90 RM7.90 RM15.80
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