Which payment is subjected to SOCSO

Payments Subject to SOCSO Contribution

Contribution "wage" refers to the monetary compensation paid by an employer to an employee. This include: 

  • Basic Salaries
  • Overtime payments
  • Commissions
  • Payments in respect of leave
  • Service charges

Payments Exempted From SOCSO Contribution

The following payments are not considered "wage" and are not included in the monthly deduction calculation: 

  • Contributions payable by the employer to the pension or fund
  • Travel allowance
  • Allowance paid at the time of employee retirement or retirement
  • Amount paid to cover costs incurred by employees in the course of their duties
  • Annual bonus
  • Gifts (eg cash payments for holidays such as Hari Raya and Christmas)

Ceiling wages increased to RM5,000, effective 1 September 2022

Following amendments to the Employees Social Security Act 1969 (Act 4) and the Employment Insurance System Act 2017 (Act 800), the ceiling limit for employees’ monthly salary has now been increased from RM4,000 to RM5,000. 

Meaning, employees who earn monthly salaries between RM4,000 and RM5,000 must now make increased SOCSO and EIS contributions (refer to PERKESO’s latest contribution rates here).

The new changes must be reflected in 2022 September’s payroll onwards.