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Malaysia - Social Security and Welfare
Rules and Regulations Around Social Security & Welfare in Malaysia
Malaysia’s social security system is known as SOCSO or PERKESO. In Malay, it is known as Pertubuhan Keselamatan Sosial. Just like at home, the system provides assistance in terms of regular payments from the government in the event of unemployment, sickness or death.
To be entitled to payment, an expat has to be a Mykad holder. In Malaysia, the department of employment makes it the responsibility of the employer to ensure their employees are signed up to the system and contributions are made from both the employer and the employee. The system by which these payments are managed is the SOCSO and it is compulsory for citizens to be signed up for this. The contributions from both are based on the earnings of the employees. There is no national set standard.
There are certain sections of the workforce who are exempt from paying these contributions. These are the following:
- Business Owners
- Foreign Workers
- Government workers
Foreign workers are not covered by the national social security system; however, they are covered by a contributory insurance scheme for employment injury. The employer is required by law to submit these contributions and under no circumstance must they deduct this charge from the worker’s salary. This will cover health service expenses in the event of an injury occurring during the course of employment. Because an employer has a legal obligation to ensure all employees are safe and properly trained, accidents in the work place are taken highly seriously. Companies have to adhere to strict legislation in this regard and penalties are harsh if any breach is found.
This link gives more information about registration and social security in Malaysia.
Malaysia operates bi-lateral agreements with other Asian countries only. Singapore, Pakistan, Sri Lanka and Thailand are the only countries where there is a bi-lateral agreement on social security matters. Therefore expats from other countries such as the UK and the USA have to make their own arrangements for periods of unemployment. There is no recourse to public funds.
Expats & Social Security Contributions
expats who are not Malaysian citizens, (non-holders of a Mykad) are not obliged by law to pay contributions into the SOCSO scheme. However, there is a hospitalization and sickness scheme which is for foreign workers and again, employers have to make the contributions. This scheme is called SKHPPA and is for foreign employees between the ages of 18 & 59.
Expat Insurance Policies
There are a number of expat insurance policies which will pay out in the event of unemployment where there have been no dismissal issues. These policies are widely available throughout Malaysia as the insurance branches out into Malaysia on the increase of immigrants from western countries. These are policies specifically designed for expats and some are underwritten by global insurance companies. It is wise to look into this alongside your employment package. Remember, your employment contract could offer benefits such as healthcare insurance and sickness insurance.
Malaysia has made monumental leaps with its social security system to improve the lives of its workforce. With the introduction in 1952 of the Foreign Workers Act (SKHPP) the Malaysian government is open to its emerging status as being one of the Asian countries to move to. Without a doubt, Malaysia is proving to be an attractive place for workers to emigrate to. The increasing economy is calling for more services to be available to all and this increases the possibilities of jobs for overseas workers. Investments are being made into the country and as the economy grows it can only improve for foreigners.