EPF, SOCSO, and EIS Employer Contributions in Malaysia (2026 Update)

You may have noticed deductions from your monthly gross salary as stated on your payslip during your time as an employee before starting a company. Now that you are an employer, there are some monthly contributions that you have to make towards Employee Provident Fund (or KWSP in Malay) and Social Security Organisation (or PERKESO in Malay) for your employees' benefits as required by the laws in Malaysia, namely EPF, SOCSO, and EIS.

1. Employees Provident Fund (EPF) contribution

Governed under the Employee Provident Fund Act 1991, EPF is a retirement saving scheme for employees who are liable to contribute EPF in Malaysia in which the savings contributed will be managed and invested under Simpanan Konvensional or Simpanan Shariah. The saving is comprised of the employee’s and employer's monthly contributions and yearly dividends earned.

Monetary payments that are subject to EPF contribution are:

• Salaries
• Payment for unutilised annual or medical leave
• Bonuses
• Allowances (with some exceptions)
• Commissions
• Incentives
• Arrears of wages
• Wages for maternity leave, study leave, half-day leave
• Other contractual payments or otherwise

The following monetary payments are not subject to EPF contribution:

• Service charges such as tips
• Overtime payments, including payments for work carried out on rest days and public holidays
• Gratuity (payment to employee payable at the end of a service period or upon voluntary resignation)
• Payment in lieu of notice of termination of service (payment given when employee’s service is terminated)
• Retirement benefits
• Termination benefits
• Travel allowances
• Director’s fee
• Gifts, including cash payments for holidays like Hari Raya, Christmas, etc.
• Benefits-in-kind and nonmonetary perquisites

Employer's responsibility on EPF contribution

• Register with the EPF as an employer within 7 days upon hiring the first employee.
• Register your employees as EPF members and keep their information updated.
• Provide salary statements to employees.
• Collect your employees’ share of EPF contribution and submit it to the EPF along with the employer's share.

Your employees can volunteer to contribute to EPF even if they are not liable or contribute above the threshold stipulated. In addition, both you and your employees can choose to contribute more than the statutory contribution rate under Voluntary Contribution.

Tax Relief Note: Employee EPF contributions (both mandatory and voluntary) are tax-deductible up to a maximum of RM4,000 per year based on actual contributions made. This means employees can claim the amount they actually contributed, capped at RM4,000 annually.

Mandatory EPF for Foreign Workers (Effective October 2025)

A significant change came into effect in October 2025: foreign workers are now required to contribute to EPF. This marks a major shift from the previous RM5.00 flat-rate employer contribution.

This new requirement applies to all non-Malaysian citizen employees holding employment passes, professional visitor passes, residence passes, and certain other valid work permits. Foreign workers will need to be registered as EPF members, which for most employment pass holders will be done automatically without requiring a visit to an EPF office.

Employer's and employee's contribution rate for EPF (as of 2026)

Important note: The temporary reduction of employee EPF contribution from 11% to 9% (announced in Budget 2021) expired in January 2022. All Malaysian citizens and permanent residents under 60 years old now contribute at the statutory rate of 11%.

Please bear in mind that the contribution amount should be calculated based on the contribution rate as stated in the Third Schedule of the EPF Act 1991, instead of using the exact percentage calculation, except for salaries that are more than RM20,000.00.

When should EPF contribution be paid?

The monthly payment of EPF contribution comprising of both employees' and employer’s share should be paid by the 15th of the month for the salary issued for the previous month. A late payment charge or a dividend will be imposed if the EPF contribution is not paid on time.

How to make EPF payment?

The EPF contribution can be paid through the following channels:

• e-Caruman website or mobile application
• Internet banking
• Bank agents of Bank Simpanan Nasional, Maybank, Public Bank, and RHB Bank
• EPF counters nationwide

Penalties for late or non-payment of EPF

Employers who fail to make timely EPF contributions face significant penalties under the EPF Act 1991. It is crucial to ensure contributions are paid by the 15th of each month to avoid these consequences.

Employers can use the EPF Late Payment Charge Calculator to estimate potential penalties for late contributions.

2. Social Security Organization (SOCSO) contribution

There are 2 schemes that are governed under the Employees' Social Security Act 1969 – the Employment Injury Scheme that protects an employee against occupational accident or disease, and the Invalidity Scheme that insures an employee who is unable to work due to incurable or unlikely to be cured condition or death. It is compulsory for all Malaysian and permanent resident employees to register with SOCSO except for Federal and State Government permanent employees, domestic servants, and those who are self-employed. Foreign workers are protected under SOCSO as well since January 2019.

Monetary payments that are subject to SOCSO contribution are:

• Salaries
• Overtime payments
• Commissions
• Wages for maternity leave, study leave, half-day leave
• Other contractual payments or otherwise

The following monetary payments are not subject to SOCSO contribution:

• Any contribution payable by the employer towards any pension or provident fund
• Gratuity (payment to employee payable at the end of a service period or upon voluntary resignation)
• Any sum paid to cover expenses incurred by the employee in the course of his duties
• Bonuses
• Travel allowances
• Gifts, including cash payments for holidays like Hari Raya, Christmas, etc.

Employer's responsibility on SOCSO contribution

• Register yourself as an employer within 30 days upon hiring the first employee.
• Register your employees as SOCSO members and keep their information updated.
• Report all work-related accidents that befall their workers within 48 hours.
• Maintain a monthly record of employees' information and keep the information updated.
• Collect your employees’ share of SOCSO contribution and submit it to the SOCSO along with the employer's share.

Employer's and employee's contribution rate for SOCSO

*The contribution rates stated in this table are not applicable to new employees who are 55 years old and above who have no prior contribution. They are covered under the Employment Injury Scheme only. Employees who are 60 years old and above do not need to contribute to the employee's share to SOCSO.

Please bear in mind that the contribution amount should be calculated based on the contribution rate as stated in the Rate of Contribution table on the SOCSO website, instead of using the exact percentage calculation. As of October 2024, the monthly contribution is capped at a monthly salary of RM6,000 (increased from RM4,000).

When should SOCSO contribution be paid?

The monthly payment of SOCSO contribution comprising of both employees' and employer's share should be paid by the 15th of the month for the salary issued for the previous month.

How to make SOCSO payment?

The SOCSO contribution can be paid through the following channels:

• PERKESO ASSIST portal
• Internet banking
• Cheque, money order, or postal order
• Bank counters
• Bank agents of Maybank, RHB Bank, and Public Bank
• SOCSO counters nationwide

3. Employment Insurance System (EIS) contribution

Governed under the Employment Insurance System Act 2017 and administered by SOCSO as well, this insurance protects employees aged 18 to 60 who have lost their employment except in the case of voluntary resignation, expiry of the contract, unconditional termination of the contract, completion of a project specified in a contract, retirement, and dismissal due to misconduct.

Employer's responsibility

You only need to register your employees once as SOCSO members and they are automatically entitled to EIS.

Employer's and employee's contribution rate for EIS

*The contribution rates stated in this table are not applicable to new employees who are 57 years old and above who have no prior contribution.

Please bear in mind that the contribution amount should be calculated based on the contribution rate as stated in the Second Schedule of the Employment Insurance System Act 2017, instead of using the exact percentage calculation. As of October 2024, the monthly contribution is capped at a monthly salary of RM6,000 (increased from RM4,000).

When should EIS contribution be paid?

The EIS contribution for employees' and employer’s share is paid together with SOCSO contribution.

How to make EIS payment?

The EIS contribution can be paid through the same channels as the SOCSO contribution.

Malaysia Payroll Calculator (2026)

Calculate EPF, SOCSO, EIS contributions and estimated income tax (PCB/MTD) instantly with our interactive calculator based on 2026 Malaysian regulations.

Frequently Asked Questions (FAQ)

Here are answers to common questions employers have about EPF, SOCSO, and EIS contributions in Malaysia.

Compliance Summary: Key Deadlines and Penalties

Staying compliant with EPF, SOCSO, and EIS regulations requires understanding key deadlines and potential penalties. Here's a quick reference guide:

Need Help Managing Your Payroll & Statutory Contributions?

Last updated: January 2026. Contribution rates and regulations are subject to change. Always verify current requirements with EPF and SOCSO official sources.