6 Facts about Employment Insurance System in Malaysia

Malaysia was recently voted as one of the top destinations in Asia for remote working in 2024 in a global survey, bagging the 22nd spot for the top 100 cities. The fact that the country has a plethora of benefits for remote working from a robust internet structure to relatively affordable cost of living makes Malaysia an attractive destination for remote workers and employers alike.

For employers looking to expand their businesses to a multicultural Southeast Asian country, factors such as payroll and compliance play an important role. One of the statutory contributions in Malaysia is the Employment Insurance System (EIS).

1. What is EIS in Malaysia?

EIS Malaysia, or Employment Insurance System in Malaysia, was introduced in January 2018 and is managed by the governmental organisation, PERKESO.

The scheme was fundamentally set up to offer financial aid to employees who lost their source of income, with the goal of easing the process of finding new employment and to serve as a source of financial assistance until a new job is found. The EIS scheme requires 2 contributions: one from the employee and another from the employer.¹

2. What is the EIS contribution from employee and employer?

The contribution rate for EIS is 0.2% for the employer and 0.2% for the employee. The amount of contribution is determined from the employee’s monthly salary.²

EIS contribution table can be referred to here. 

3. Who is eligible for the EIS?

The EIS’ contribution required employers to register their employees as Insured Persons (IP). Employees who qualify include:³

• 18 to 60 year olds
• Malaysian citizens or permanent Malaysian residents
• Full-time and part-time employees
• Earning any salary amount

The EIS is not eligible for:

• Government employees
• Domestic employees
• Self-employed employees
• Local authorities and statutory bodies employees
• Those 57 years old and above who do not have prior contributions

4. The difference between EIS, EPF and SOCSO

EPF, SOCSO, and EIS are all components of financial security in Malaysia, however they serve different purposes. Here are what set them all apart:

1. EPF is a retirement fund created to secure employees’  retirement period by helping them save a part of what they earn.⁴
2. SOCSO primarily covers work-related accidents and illnesses.
3. EIS is a dedicated fund to support unemployment.⁵

5. How can employers pay for their employees’ EIS?

Just like EPF, employers are to remit EIS contributions by the 15th day of each month following the salary period. The contributions can be made via the following channels:⁶

• SOCSO’s ASSIST Portal 
• SOCSO counters 
• Bank counters
• Internet Banking

6. What are the benefits under EIS?

Under the EIS Perkeso claim, there are several important benefits:⁷

1. Job Search Allowance (JSA)

This is the main benefit offered under the insurance scheme, and it benefits those who have lost their one and only job. For applicants who are successful in their application for JSA, they will be paid a monthly allowance for a minimum of 3 months and a maximum of 6 months. The amount of allowance monthly will vary depending on the predetermined rated and assumed monthly salary.

2. Early Re-employment Allowance (ERA)

If the applicant manages to return to work while still receiving JSA, they will be given the ERA as a financial incentive. ERA is worth 25% of the sum that the applicant is entitled to under the JSA but has yet to receive, and it will be paid in lump sum amount.

3. Reduced Income Allowance (RIA)

If the applicant has multiple jobs and has lost at least one but not all of them, the RIA can be claimed. The payment rates and duration of payment are the same as those of JSA.

4. Training fee and training allowance job search assistance

Under the EIS scheme, applicants are also entitled to financial assistance for vocational training programmes. This could be training fees paid directly to training service providers and financial incentives paid to encourage attendance to training sessions. 
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1. EIS Malaysia: What is the Employee Insurance System?  ↩︎
2. What is Employment Insurance System (EIS)? ↩︎
3. Employee Insurance Scheme Questions, Answered! 12 Things Every Malaysian Should Know ↩︎
4. Employees Provident Fund (Kumpulan Wang Simpanan Pekerja) in Malaysia: A Complete Guide ↩︎
5. Why EPF, SOCSO, and EIS are essential for your future prosperity ↩︎
6. EIS and SOCSO contribution: A guide for employers in Malaysia ↩︎
7. All you need to know about the Malaysian Employment Insurance System (EIS) ↩︎