What Is Social Security Organization (SOCSO)?
The inception of the Social Security Organization (SOCSO) under the Employees’ Social Security Act 1969 marked a significant milestone in Malaysia’s social welfare landscape. Established as a governmental entity within the Ministry of Labour and Manpower on 1 January 1971, SOCSO administers two fundamental social security schemes: the Employment Injury Scheme and the Invalidity Scheme.
The Employment Injury Scheme serves as a safety net for employees, providing coverage against occupational diseases and accidents arising during work-related travel. Conversely, the Invalidity Scheme offers round-the-clock protection, extending benefits in cases of invalidity or death resulting from any cause.
The overarching goal of both schemes is to ensure timely cash payments and benefits in kind to employees and their dependents during times of need.
The genesis of Malaysia’s Social Security Scheme can be traced back to 1958, a pivotal period post-independence. Coinciding with this, the International Labour Organization (ILO) embarked on a comprehensive study on social security. In 1962, following the study’s conclusion, a distinguished committee convened to review its findings. A.N. Ambo’s seminal report, facilitated through the ILO, laid the groundwork for the formulation of the Employees’ Social Security Bill. This bill, subsequently ratified by the Parliament of Malaysia in April 1969 as the Employees’ Social Security Act 1969, solidified the nation’s commitment to fostering social welfare and security for its workforce.
Employee Who are Eligible to Contribute Social Security Organization (SOCSO)
Employers are mandated to pay SOCSO contributions for individuals engaged under a Contract of Service or Apprenticeship, which encompasses various categories, including:
1. Part-time, temporary, and probationary employees: Regardless of their employment status or duration, individuals engaged under these terms are covered by SOCSO contributions.
2. Directors receiving wages from the company: Directors who receive remuneration from the company are also subject to SOCSO contributions.
3. Workers outsourced to third parties: Employees outsourced to third-party entities by their employer remain eligible for SOCSO coverage.
4. Foreign workers: Since 1 January 2019, employers are required to contribute to SOCSO for foreign workers employed under a Contract of Service or Apprenticeship within Malaysia.
Employee Who Are Not Eligible to Contribute Social Security Organization (SOCSO)
Individuals exempted from making contributions under the Employees’ Social Security Act 1969, as outlined in the First Schedule, include:
1. Spouse of a Principal or Immediate employer. (This exemption was removed from 1 July 2018)
2. Individuals employed in a casual capacity, not directly related to the employer’s industry.
3. Employees engaged in household-related services within a private residence or individual capacity, without commercial or business purposes.
4. Tributers, individuals permitted to extract minerals or produce from another’s land in exchange for a proportion of the yield or its value.
5. Members of the Malaysian Armed Forces.
6. Police Officers.
7. Individuals detained in prisons, Henry Gurney Schools, approved schools, detention camps, mental hospitals, or leper settlements.
Regarding Invalidity Pension provisions:
- Employees who have attained the age of 60 and for whom no contributions were payable before the age of 55; or
- Employees who have reached the age of 60;
- Certified invalids receiving Invalidity Pension benefits.
Salary / Wages Required To Contribute Social Security Organization (SOCSO)
“Wages” for contribution purposes encompass all monetary remunerations disbursed by an employer to an employee. These remunerations include:
- Basic salary
- Overtime pay
- Commission
- Payments in lieu of annual leave, medical leave, maternity leave, rest days, off days, public holidays, etc.
- Allowances (e.g., incentive, good behavior, cost of living, etc.)
- Service charges
Payments not classified as wages are:
- Employer contributions to any pension or provident fund
- Traveling allowances or concessions
- Gratuity payments upon discharge or retirement
- Annual bonuses
Social Security Organization (SOCSO) Online Videos
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