This report covers Malaysia’s requirement that foreign workers be registered with the social security system and contribute to the employment injury scheme.
To subscribe to GMS Flash Alert, fill out the subscription form.
Effective 1 January 2019, employers in Malaysia that hire foreign workers (excluding domestic servants), including expatriates, with valid documents, must register their employees with SOCSO (the country’s Social Security organisation) and contribute to the Employment Injury Scheme. Under the Employment Injury Scheme, foreign workers, including expatriates, are eligible for medical benefits, temporary/permanent disablement benefits, constant-attendance allowance, dependent’s benefits, and rehabilitation. However, benefits from the Invalidity Scheme do not extend to foreign workers, including expatriates.
Prior to 2019, SOCSO was not mandatory for expatriates. With implementation of the new rules, companies registered in Malaysia are required to register all their expatriates with SOCSO. This step will mean additional administration for employers of such expatriates.
The extension of SOCSO coverage to expatriate employees will however have minimal impact on the cost of international assignments as the contributions is cap at MYR 49.40.
In Malaysia, the Social Security Organisation (SOCSO) covered only employees who are Malaysian citizens or permanent residents for the benefits listed below1:
The contribution to SOCSO consists of two portions: employer’s contribution and employee’s contribution.
Effective 1 January 2019, employers in Malaysia who hire foreign workers (excluding domestic servants), including expatriates, with valid documents must register their employees with SOCSO and contribute to the Employment Injury Scheme only.2 Under the Employment Injury Scheme, foreign workers, including expatriates, are eligible for medical benefits, temporary/permanent disablement benefits, constant-attendance allowance, dependent’s benefits and rehabilitation. However, benefits from the Invalidity Scheme do not extend to foreign workers, including expatriates.
For foreign workers, including expatriates, only employers are required to contribute to SOCSO. Employees are not required to make a contribution.
Employers are required to contribute 1.25 percent of an employee’s monthly wages to SOCSO on a monthly basis (subject to the insured wage ceiling of MYR 4,000 per month and capped at MYR 49.40).
All foreign workers must register to obtain the Foreign Worker Social Security No. (12-digit KSPA No.), which is compulsory for the submission of the employee’s contribution record. This 12-digit KSPA No. must be referred to when dealing with SOCSO on all matters related to foreign workers despite any subsequent changes to the worker’s passport details, valid working permit, or equivalent document in the future.
1 For more information, see the Web site for Malaysia’s Social Security Organisation (Pertubuhan Keselamatan Sosial).
2 To see “Employer’s Circular No. 3 Year 2018 Employees’ Social Security Act, 1969,” click Social Security Organization (PDF 78.3 KB)
MYR 1 = USD 0.2458
MYR 1 = EUR 0.2167
MYR 1 = GBP 0.188
MYR 1 = AUD 0.343
The information contained in this newsletter was submitted by the KPMG International member firm in Malaysia.
© 2021 KPMG PLT, a limited liability partnership established under Malaysian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.
KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.
Flash Alert is an Global Mobility Services publication of KPMG LLPs Washington National Tax practice. The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.