Social security
in Malaysia.

SALARY PAYMENT IN Malaysian Ringgit (MYR, RM)

CONTRACT LANGUAGES Malay / English

PAYROLL TAX 13.22%

PAYROLL CYCLE Monthly

TIME TO HIRE 24 hours
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Malaysia

Social security in Malaysia – Overview

Malaysia has a fairly comprehensive social security system offering universal healthcare, a pension program, unemployment, and more. Both employees and employers contribute to social security in Malaysia, with each contribution a percentage of the employee’s gross salary at each pay period. Read below for details about Malaysia’s social security program.

What does the social security system in Malaysia cover?

Malaysia’s system of social security covers for various economic risks like loss of income due to sickness, unemployment, old age, invalidity or death.

Key elements of the social security system in Malaysia include:

The Social Security Organization/SOCSO which covers for the Employment Injury Insurance Scheme/EIIS and the Invalidity Pension Scheme/IPS. Only Malaysian citizens and permanent residents are eligible to contribute to, and benefit from, SOCSO.
The Employee Provident Fund/EPF – Malaysia’s compulsory pension scheme which is mandatory for local nationals & permanent residents of Malaysia but voluntary for expats.
The Employment Insurance System/EIS funds employment-related benefits and Malaysia’s reemployment placement program.

What are the mandatory contributions for employees to social security in Malaysia?

Mandatory employee contributions to social security include:

11% to the Employees Provident Fund/EPF. Note this is mandatory for local nationals & permanent residents but voluntary for expatriates.
0.2% to the Employment Insurance System/EIS.

For employees, mandatory contributions to social security in Malaysia total 11.2%.

What are the mandatory contributions for employers to social security in Malaysia?

Mandatory employer contributions to social security in Malaysia include:

A maximum contribution of 1.25% to the Social Security Organization/SOCSO as part of the Employment Injury Insurance Scheme/EIIS and the Invalidity Pension Scheme/IPS.
13% (or 12% if monthly salary is below RM5,000) to the Employee Provident Fund/EPF.
0.2% to the Employment Insurance System/EIS.

For employers, mandatory contributions to social security in Malaysia total a maximum of 14.45%.

How do mandatory contributions compare to the surrounding countries?

In Malaysia, mandatory contributions for employers total 14.45%. Compare this figure to the mandatory social security contributions of employers in nearby countries;

Thailand – 5% of an employee’s basic salary

Vietnam – 22% with a maximum contribution of VND14,600,000

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Your business can easily hire employees in Malaysia without opening a local entity. We handle local employment law, complex tax regulations, and international payroll in 180+ countries worldwide. All you need to do is focus on your business.

FAQs

How much do employers need to contribute to social security in Malaysia?

The employer contribution to social security in Malaysia totals 14.45% of the employee’s monthly salary

What situations does social security cover for employees in Malaysia?

Economic risks resulting from loss of income due to sickness, unemployment, old age, invalidity or death.

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