top of page
  • Admin

New SOCSO and EIS Contribution Ceiling Increase to RM6,000 Starting October 1, 2024: What Employers Need to Know


Effective October 1, 2024, the Social Security Organisation (SOCSO) and the Employment Insurance System (EIS) in Malaysia will see an increase in the salary ceiling for contributions from RM5,000 to RM6,000 per month. This new regulation affects both employers and employees, and it’s crucial for businesses to understand its implications to ensure compliance and maintain accurate payroll processes.


This blog post will walk you through the key aspects of the new salary ceiling, its impact on businesses, and what employers should do to comply with the updated regulations.


Understanding the New Salary Ceiling for SOCSO & EIS Contributions


Under the current system, contributions to SOCSO and EIS are capped at a salary ceiling of RM5,000 per month. This means that both employer and employee contributions were calculated based on a maximum salary of RM5,000, regardless of whether an employee earned more. From October 1, 2024, the salary ceiling for SOCSO and EIS contributions will be increased to RM6,000 per month.


This change means that:


• Employers and employees will now be contributing to SOCSO and EIS based on a maximum salary of RM6,000, instead of RM5,000.

• Employees earning more than RM5,000 but less than RM6,000 will now see their contributions increase.

• For those earning above RM6,000, contributions will be capped at the new RM6,000 ceiling.


How Will This Impact Employers?


The increase in the salary ceiling will primarily affect businesses with employees earning between RM5,000 and RM6,000 per month. Here are the key ways it will impact employers:


1. Increased Contribution Costs: Employers will need to adjust their payroll systems to accommodate the new salary ceiling, which means a slight increase in the amount they contribute to SOCSO and EIS for higher-earning employees. The contributions are calculated as a percentage of the employee’s salary, and since the ceiling has increased, the overall contribution amount will rise.

2. Payroll Adjustments: Employers will need to update their payroll systems to reflect the new salary ceiling. Payroll software and systems should be reconfigured to ensure contributions are calculated accurately from October 1, 2024, onwards. Failure to adjust these systems could lead to underpayments or miscalculations, resulting in penalties or additional administrative burdens later on.

3. Budgeting Considerations: For businesses with a large workforce earning near or above RM5,000 per month, the increased contributions could have a noticeable impact on operating costs. It is important to review your company’s budget and ensure that provisions are made to cover the increased contributions starting from the implementation date.


What Should Employers Do to Comply?


To ensure compliance with the new regulations, employers should take the following steps:


1. Update Payroll Systems: Make sure your payroll systems are updated to reflect the new salary ceiling of RM6,000 for SOCSO and EIS contributions. Most modern payroll software providers will release updates to accommodate this change, but it is essential to verify that the system is properly configured.

2. Communicate with Employees: Inform your employees about the new salary ceiling and how it will affect their contributions. While the increase in contribution amounts may be minimal, it’s important to keep employees informed of any changes to their deductions to avoid confusion.

3. Review Employment Contracts: If your employment contracts or company policies mention specific SOCSO or EIS contribution rates, these may need to be reviewed to reflect the new salary ceiling. Ensuring that your employment documents are up-to-date is critical for maintaining compliance with employment laws.

4. Plan for Additional Costs: For companies with a significant portion of their workforce earning close to the RM6,000 range, it’s wise to plan for the increased costs that will arise from the higher salary ceiling. Review your budget and forecast any financial impacts these increased contributions may have.



The increase in the SOCSO and EIS salary ceiling to RM6,000 is an important regulatory change that all employers in Malaysia need to be aware of. By understanding how this change affects your contributions and taking proactive steps to update your payroll systems, you can ensure that your business remains compliant with the law.


For businesses in Malaysia, compliance with SOCSO and EIS regulations is not just about avoiding penalties, but also about safeguarding the welfare of employees and maintaining a responsible business operation. If you need help navigating these updates or managing payroll adjustments, consider seeking professional assistance from a company secretarial firm to ensure a smooth transition. Give us a call for a quote and a free consultation, 016 324 0990.

0 views0 comments

Comments


bottom of page