SOCSO (PERKESO) in Malaysia: Employer Registration and Contribution Rates

When you hire an employee in Malaysia, part of your responsibilities as an employer is to make contributions to SOCSO (or PERKESO in Malay). It is a critical safety net that protects both your employees and your organization from the financial fallout of workplace accidents, disabilities, and unemployment.

All private‑sector employers with at least one employee must register with PERKESO and make monthly contributions. This applies to eligible staff including Malaysian citizens, permanent residents, and foreign workers with valid permits. Failure or late payment can trigger penalties, including 6% annual interest on overdue amounts, fines up to RM10,000, and possible imprisonment for serious non‑compliance.

In this guide, we will break down the steps on how to register your business as an employer with SOCSO, contribution rates, and the latest regulatory changes. 

What is SOCSO (PERKESO)?

Established under the Employees’ Social Security Act 1969, SOCSO is a government-run insurance scheme designed to provide social security protection to employees in Malaysia.

Its primary objective is to provide financial assistance and medical benefits to employees who suffer from workplace injuries, occupational diseases, or invalidity. As the employer, SOCSO acts as an essential risk-mitigation tool. By contributing a small percentage of wages, the responsibility for employee injury compensation is transferred to the state.

SOCSO manages two main insurance schemes:

1. Employment Injury Scheme: protects employees against accidents or occupational diseases arising out of and in the course of their employment. This includes "commuting accidents" that happen while traveling to or from work.
2. Invalidity Scheme: This provides 24-hour coverage against invalidity (permanent disability) or death due to any cause, even if the cause is not related to their job.

SOCSO (PERKESO) Contribution Rates in Malaysia

SOCSO contributions are shared between the employer and the employee. The exact rates are based on the employee’s monthly wages, subject to a specific "wage ceiling."

As of October 1, 2024, the Malaysian government increased the SOCSO wage ceiling from RM5,000 to RM6,000. This means that if an employee earns more than RM6,000 a month, their contribution is capped as if they earned exactly RM6,000. This change ensures that higher-earning employees receive better protection and higher benefit payouts.

Employees fall under two categories depending on their age: 

Below is an example of how the contributions differ between the two categories at various salary levels under the new RM6,000 ceiling.

Note: These figures are based on the official SOCSO contribution rate table. For Category 2, the employee contributes RM0.00.

Who Needs to Register for SOCSO?

Every employer who employs at least one employee is required to register their business and their employees with SOCSO. Under the Social Security Act, an “employee” is any person employed for wages under a contract or apprenticeship. Essentially, the following employees need to be registered with SOCSO:

• Full-time staff.
• Part-time staff.
• Contractual workers.
• Probationary employees.
• Malaysian citizens and Permanent Residents (PRs).
• Foreign workers

SOCSO Employer Registration Process

Registration with SOCSO is a streamlined digital process through the PERKESO Assist Portal. 

1. Registering your Company with SOCSO

New employers must register their business within 30 days of hiring their first employee. You would need to submit an Employer Registration Form (Form 1) and identification (copy of NRIC or passport of the director, owner, or authorized employer representative. 

Depending on your business structure, you need to submit the following:

• For Private Limited Companies (Sdn Bhd):
• For Sole Proprietorships and Partnerships:
• For Professional Bodies (Lawyers, Clinics, etc.):
• For Societies or NGOs:

2. Registering Employees

Once your business is registered with SOCSO, you must register every eligible employee using Form 2 (Employee Registration Form). This is a mandatory requirement regardless of whether the employee has contributed to SOCSO under a previous employer. 

Here’s what you will need:

• Employee Information: Full name (exactly as stated on their ID), NRIC, nationality, gender, and date of birth. Foreign workers need a scanned copy of their valid passport and current Work Permit or Employment Pass.
• Employment Details: Their exact start date with your company and their job title or designation.
• Salary Indicators: You must specify if the employee's monthly wages exceed RM3,000, as this can affect historical contribution tracking.
• EIS Integration: In tandem with SOCSO, you must also submit Form SIP 2 for the Employment Insurance System, as both registrations are typically handled simultaneously through the portal.

3. The Assist Portal

To manage your monthly contributions efficiently, you should set up an account on the Assist Portal. This portal allows you to update your employee list, calculate monthly contributions automatically, and make payments via FPX or credit card.

By digitizing these interactions, SOCSO has significantly reduced the administrative burden on employers. For instance, the portal automatically calculates contribution amounts based on the salary data you input, minimizing the risk of calculation errors that could lead to non-compliance. 

Furthermore, the portal acts as a permanent record-keeper for your business, storing historical data on employee registrations, resignations, and past payments. This information is vital during audits or when processing employee benefit claims.

The Employment Insurance System (EIS)

In addition to the standard SOCSO schemes, employers must also contribute to the Employment Insurance System (EIS), or Sistem Insurans Pekerjaan (SIP).

The EIS was introduced in 2018 to provide temporary financial assistance to workers who have lost their jobs through no fault of their own (such as retrenchment). It also provides job-seeking assistance and re-skilling programs to help them get back on their feet.

The EIS contribution is much smaller than the standard SOCSO rate:

• Employer: 0.2%
• Employee: 0.2%
• Total: 0.4%

The wage ceiling for EIS also follows the RM6,000 limit. For an employee earning the ceiling amount, the total EIS contribution would be RM23.80 (split equally between employer and employee).

Simplifying Compliance with RecruitGo

Navigating SOCSO and EIS is a fundamental part of operating in Malaysia. As an employer, it’s your responsibility to register your business with SOCSO, and remit contributions in a timely manner.

To streamline this process, RecruitGo’s global payroll service can help you unload all these administrative tasks. Instead of having an inhouse team, you can outsource payroll with us. Better yet, if you don’t have a legal entity in Malaysia, you can still expand your team in the country with our Employer of Record service. 

As the legal employer, we will manage all the administrative processes for hiring employees. This includes onboarding, payroll, and record-keeping for your staff in Malaysia. 

Contact our local compliance experts in Malaysia for more information with a free first-time consultation.