SOCSO & EIS October Updates: What Malaysian SMEs Should Know!
For Malaysian SMEs, Pertubuhan Keselamatan Sosial (PERKESO) is non-negotiable for complying with the latest social security plans set by the Malaysian government. Yet, many Malaysian SMEs often under-contribute the mandatory amount, especially for higher-earning staff, while HR managers do not adhere to the newest EIS allowances. So what is PERKESO? Why is it important to be informed about the newest updates for SOCSO and EIS? Below is a detailed breakdown of updates effective since 1st of October for Malaysian SMEs!
What is PERKESO: A Simple Breakdown
Pertubuhan Keselamatan Sosial (PERKESO), also known as the Social Security Organisation (SOCSO), is a Malaysian government-supported safety net for private sector employees. Unlike a standard savings account like EPF, PERKESO is a mandatory safety net that protects employees from illness, injury, or sudden job loss. Following the latest PERKESO, it ensures employee safety and well-being, which in turn protects the company’s reputation and legal boundaries. Under PERKESO, there are two primary statutory Acts approved by the Parliament of Malaysia:
Employees’ Social Security Act 1969 (Act 4)
This law covers the standard SOCSO protection, including the Employment Injury Scheme (e.g. accidents and injuries at work or commuting) and the Invalidity Scheme (e.g. long-term illness or permanent disability from working). This law requires all private sector employees to be registered and contribute up to the wage ceiling of RM6,000/month (as of October 1st 2026).
Employment Insurance System Act 2017 (Act 800)
This law governs the EIS scheme, which provides a financial cushion (e.g. job search allowance or upskilling options) for employees experiencing job retrenchment or job loss. Contributions are shared between the employee and employer (0.2% each for employees and the employer) up to the RM6,000 monthly ceiling wage.
What Changed Starting October 1st?
As of now, the wage ceiling has increased from RM5,000 to RM6,000 per month across SOCSO (Act 4) and EIS (Act 800) schemes. Such a revision means employee wages are now covered across a wider range, and the maximum protection coverage has increased. To understand who is affected, here is a table to illustrate the effects on different wage brackets:
Table 1: Income brackets and their changes.
For employees earning beyond RM6,000/ month they now need to pay a flat extra RM26.60 per month with the employer (RM19.50 more from the employer and RM7.00 from the employee across SOCSO & EIS combined). Below shows the net difference:
Table 2: Changes in RM6,000 per month earnings.
What Do Upgraded EIS Benefits & Allowances Mean for Employees?
While the raised statutory ceiling has increased monthly contributions for higher-earning staff, it directly offers a stronger financial safety net for the Malaysian workforce. Under this updated EIS framework, retrenched employees, active job seekers or employees undergoing upskilling can receive a cumulative benefit package worth up to RM25,000. A higher wage ceiling also indicates higher pre-entrenchment earning capacities for employees.
Key Benefit & Allowance Upgrades
Alongside the increase in statutory contributions, here are 5 benefit updates for the Malaysian workforce:
Early Re-employment Allowance (EBSA/ ERA): Doubled to 50%
The previous early re-employment allowance was 25%, meaning workers who got a new job quickly forfeited most of the unreceived job search allowance (JSA). Jumping to 50% creates a powerful financial incentive for retrenched workers to find a job as soon as possible.
Mobility Assistance Allowance: New One-Off RM1,000 Support
Eligible workers securing new employment 100 kilometres or further from their current residence can receive a one-off mobility payment of RM1,000. Relocation coverage helps to bridge geographic hurdles and employment matching.
Maximum Training Fee Coverage: Increased to RM7,000
Upgraded from RM4,000 to RM7,000, meaning retrenched employees can receive higher-value or specialised technical certifications directly funded by PERKESO.
Daily Training Allowance: Upgraded to a Flat RM30/day
Allowance for participating in PERKESO-approved training courses has also increased from RM10 to RM20 per day, to a flat RM30 per day. For a 30-day intensive course, attending employees can receive RM900 in living support to cover basic expenses while upskilling career qualifications.
Higher Job Search Allowance (JSA) and Reduced Income Allowance (RIA)
Because JSA and RIA are calculated as a percentage of the worker’s monthly wage, increasing the ceiling cap to RM6,000 directly lifts the monthly payout ceiling. A retrenched executive who previously earned over RM6,000 will now receive 1st month JSA (paid at 80% of assumed wage) calculated at RM6,000 instead of RM5,000. From this example, the final payout will be RM4,800 instead of RM4,000.
How Would This Change Affect Malaysian SMEs? A Salary Breakdown
This section shows a detailed breakdown of how the current statutory setting can directly help an employee earning between RM5,001 and RM6,000. For example, if an employee is earning RM5,800 per month:
Old contribution (capped at RM5,000):
Employer paid RM86.65 (SOCSO) + RM9.90 (EIS) = RM96.55/month.
Updated contribution (RM5,800 wage bracket):
Employer pays RM100.65 (SOCSO) + RM11.40 (EIS) = RM112.05/month.
Difference:
Extra RM15.50/ month per high-earning employee.
*Communicating take-home pay adjustments: small monthly employee deductions (up to RM5 extra for SOCSO and RM2 extra for EIS) should be stated clearly on payslips to avoid confusion among employees.
Common Errors With The October 1st Updates
Besides understanding the latest PERKESO updates, it is also important to avoid these common errors when calculating future statutory deductions:
Sticking to the Old RM5,000 Wage Ceiling
Failing to recalculate updated statutory deductions leads to shortfall penalties (6% per annum) on the unpaid amount. Other issues include claim disputes and delays from injured staff, creating legal liability under the Industrial Relations Act 4 and Act 800, leading up to RM10,000 in fines or imprisonment for up to 2 years.
Missing the13-FieldCombined Text File Format
13-Field is a mandatory text format implemented by PERKESO for employee monthly contributions upload on the ASSIST 2.0 portal. Uploading unformatted batch files onto the PERKESO ASSIST Portal for monthly submissions will cause rejections from the system and salary disbursement delays.
Mishandling the SKBBK (LINDUNG 24 JAM) Setup.
Failing to execute release forms from formal staff or incorrectly deducting employer funds will create unnecessary overhead costs when absorbing the 0.75% SKBBK employee contribution rate.
Excluding Variable or Taxable Allowances from the Wage Definition
Misinterpreting factors categorised as “wages”, such as sales commissions, performance incentives or overtime pay, can make tax deductions unavailable.
How to Stay Compliant With The Latest Changes?
Nearly all common errors happen from a single root cause: reliance on manual processes without an automated system. Such practices allow human errors and make the room for error incredibly small. Hence, HR Teams can consider integrating automated HR systems like ByteHR to adjust statutory rates using cloud storage. By incorporating a system, HR teams can generate PERKESO-ready text files without human errors.
Ask These Questions To Stay Ready!
For a final checklist, ask these questions among your HR teams to identify any potential loopholes when adjusting to the newest PERKESO updates:
Has the payroll software been updated to the latest RM6,000 ceiling?
Have employees been notified about the minor adjustment in statutory deductions for employees earning over RM5,000/month?
Have the HR team been notified of the new RM1,000 mobility allowance and 50% EBSA incentive to support offboarding staff?
Conclusion
Adapting to the latest statutory updates is always a complex but important task for HR teams, helping them avoid penalties while providing the protection every employee needs in Malaysian SMEs. Ready to simplify your HR operations as you adapt to the latest PERKESO updates? Contact ByteHR for a free demo (please contact us via 036 419 5276 or salesmy@byte-hr.com for a free consultation) and start your worry-free HR management journey today!
