The Social Security Organisation (SOCSO) in Malaysia has introduced a significant update concerning the Invalidity Scheme coverage for foreign workers. Effective from 1 July 2024, all foreign workers, including expatriates, will now contribute to SOCSO under the same terms as local workers, as stipulated by the Employees’ Social Security Act 1969 (Act 4). This change mandates that both Employee and Employer contributions be made under Category 1.
What’s Changing?
Previously, foreign workers and expatriates contributed under Category 2. With the new regulation, employers must ensure that the contributions for their foreign workers are updated to Category 1 starting from July 2024. This update necessitates changes in the payroll systems of companies employing foreign workers.
Key Points to Note
Employer Obligations
Employers must now ensure that their foreign workers, including expatriates and foreign domestic workers, are covered under the Invalidity Scheme. This scheme provides essential protection and benefits to employees.
Coverage Requirements
For foreign workers to be eligible for SOCSO coverage, they must hold a valid pass or permit issued by the Director General of Immigration for employment in Malaysia. It is mandatory for all employers to contribute to SOCSO on behalf of their foreign workers.
Contribution Categories
SOCSO contributions for foreign workers will now fall under two categories:
• First Category Contribution (Employment Injury Scheme and Invalidity Scheme): This applies to foreign workers who enter the PERKESO scheme for the first time and are under 55 years old.
• Second Category Contribution (Employment Injury Scheme): This is for foreign workers who are 55 years or older when they first enter the PERKESO scheme, and for those who continue to work at 60 years old or beyond.
Benefits of the Invalidity Scheme
The extension of the Invalidity Scheme to foreign workers ensures they receive 24-hour protection. It also covers funeral repatriation costs, providing crucial support in times of need. However, this change will lead to an increase in costs for employers, as the employer’s contribution rate will rise to 1.75% of monthly wages, up from the current 1.25%.
For more detailed information, you can view the Employer’s Circular from SOCSO here.
This update underscores SOCSO’s commitment to ensuring comprehensive social security coverage for all workers in Malaysia, reflecting the evolving workforce and the need for inclusive protection measures.
Need more guidance? Ashton’s team of Company Secretaries are happy to help you. Give us a call or WhatsApp us today.
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