SOCSO and EIS Contributions Malaysia: Who Pays, How Much, and Are They Tax-Deductible?

Every Malaysian employee sees two small deductions on their payslip labelled SOCSO and EIS. The employer also contributes on top of your salary. Together, these social-protection levies cover you for workplace injuries, disabilities, and job loss, and since October 2024 they apply to a wider range of salaries. Here is a clear breakdown of who pays, how much, and whether those contributions save you money at tax time.

For related coverage in this cluster, see our tax and government money hub. If you want to understand how your mandatory salary deductions fit together, our guide on Malaysia income tax reliefs explained is a good companion read.

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What are SOCSO and EIS?

SOCSO (Social Security Organisation), known locally as PERKESO, was established under the Employees’ Social Security Act 1969 (Act 4). It provides two categories of protection:

• Employment Injury Insurance Scheme (First Category): Covers industrial accidents, occupational diseases, and commuting accidents. Both employer and employee contribute.
• Invalidity Pension Scheme (Second Category): Covers total permanent disability and death from any cause, not just workplace incidents. Both employer and employee contribute.

EIS (Employment Insurance System), governed by the Employment Insurance System Act 2017 (Act 800), is the newer fund managed by PERKESO. It provides short-term financial assistance and job-placement support if you are retrenched. Contributions are shared equally between employer and employee.

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Who must contribute?

SOCSO (Act 4)

All private-sector employees and domestic workers earning any amount are covered, with three exceptions:

1. Employees who have reached 60 years of age (they continue under First Category only until exit from the workforce)
2. Self-employed individuals (voluntary coverage is available under a separate scheme)
3. Federal and state government employees covered by their own pension scheme

Foreign workers were brought under SOCSO coverage progressively. Those earning above a certain threshold may be covered; check with PERKESO directly for the current ruling on foreign worker contributions.

EIS (Act 800)

EIS covers Malaysian citizens and permanent residents in private-sector employment. Foreign workers are explicitly excluded from Act 800. Employees aged 57 and above who have never contributed to EIS are also exempt.

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SOCSO and EIS contribution rates (effective October 2024)

PERKESO raised the monthly wage ceiling from RM5,000 to RM6,000 effective 1 October 2024, with a six-month grace period ending 31 March 2025 (source: PERKESO, October 2024). This means employers and employees earning between RM5,001 and RM6,000 per month now pay contributions based on their actual wage rather than the capped RM5,000 figure.

SOCSO (Act 4) rates

The combined rate for employees covered under both schemes is 1.75% employer + 0.5% employee of monthly wages, calculated against the contribution schedule in the Third Schedule of Act 4. The amounts are not a straight percentage of salary; they follow a banded contribution table. The table below shows representative mid-band examples.

Monthly Wage Band (RM)	Employer Contribution (RM)	Employee Contribution (RM)	Total (RM)
Up to 300	0.60	0.20	0.80
301 to 400	0.85	0.25	1.10
501 to 600	1.25	0.40	1.65
1,001 to 1,100	2.40	0.80	3.20
2,001 to 2,100	4.45	1.50	5.95
3,001 to 3,100	6.50	2.20	8.70
4,001 to 4,100	8.55	2.90	11.45
5,001 to 5,100	10.60	3.55	14.15
5,901 to 6,000 (ceiling)	12.50	4.20	16.70

For employees earning above RM6,000, contributions are calculated at the RM6,000 ceiling. Actual contribution amounts for each salary band are defined in the official PERKESO contribution schedule at perkeso.gov.my.

EIS (Act 800) rates

EIS contributions are set at a flat 0.4% of monthly wages, split equally:

Party	Rate	Example: RM3,000 wage
Employer	0.2%	RM6.00
Employee	0.2%	RM6.00
Combined	0.4%	RM12.00

The wage ceiling for EIS also follows the RM6,000 cap effective October 2024. An employee earning RM10,000 per month pays EIS as if earning RM6,000, meaning the maximum employee EIS deduction is approximately RM12.00 per month and the maximum employer contribution is also approximately RM12.00 per month.

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What benefits do you actually receive?

From SOCSO

• Medical benefits: Full medical treatment costs for work-related injuries at government hospitals, and where approved, private hospitals.
• Temporary Disablement Benefit: 80% of your daily wage if you are temporarily unable to work due to a work injury.
• Permanent Disablement Benefit: A lump sum or pension depending on the degree of disability.
• Invalidity Pension: A monthly pension if you become permanently disabled (regardless of work cause) and are under 60 with fewer than 60 monthly contributions.
• Survivors’ Pension: Paid to dependants if the covered employee dies.
• Funeral Benefit: RM2,000 (as of the current PERKESO schedule) to assist with burial costs.

From EIS

If you are retrenched (not resigned or terminated for misconduct), EIS pays:

• Job Search Allowance: 80% of your assumed monthly wage for the first month, reducing over subsequent months (up to five months total).
• Reduced Income Allowance: If you take a lower-paying job during your search period.
• Training Allowance: While enrolled in approved retraining programmes through PERKESO’s SIP (Social Intervention Programme).
• Early Re-employment Allowance: A one-off incentive if you find a new job before your job-search allowance period ends.

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Are SOCSO and EIS contributions tax-deductible?

This is one of the most common questions Malaysian employees ask, and the answer is nuanced.

For employees

Your SOCSO and EIS contributions deducted from salary do not qualify as a separate personal relief line item in the LHDN personal income tax form (Form BE or Form B). They are not listed in the official YA 2025 tax relief schedule published by LHDN (source: hasil.gov.my).

However, SOCSO and EIS contributions are classified as deductible employment income deductions at the point of Monthly Tax Deduction (PCB/MTD) calculation by your employer’s payroll system. In practice, your employer’s payroll system reduces your gross taxable income before computing PCB, so the contributions do reduce the tax withheld each month indirectly. When you file your annual tax return, you declare your net employment income already net of statutory deductions.

Bottom line for employees: You do not need to enter SOCSO or EIS as a separate relief on your tax return. The reduction has already flowed through your employer’s PCB calculation. Do not double-claim them.

For employers

Employers’ contributions to SOCSO and EIS are a fully deductible business expense under the Income Tax Act 1967. They are treated as staff costs and reduce the company’s adjusted income, the same way EPF employer contributions are deductible. No special claim is needed; they flow through normal business expense accounting.

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Common misconceptions

“If I earn above RM6,000 I am not covered.” Not true. Coverage continues regardless of salary. Only the contribution amount is capped at the RM6,000 wage-ceiling level.

“Self-employed individuals cannot get SOCSO protection.” Since 2017, self-employed individuals in certain sectors can voluntarily register under the Self-Employment Social Security Scheme. Contributions and coverage differ from the mandatory employee scheme.

“Foreign workers do not need SOCSO.” Foreign employees may still be covered under Act 4 (SOCSO) depending on their employment category. They are, however, excluded from EIS (Act 800).

“Resigning entitles me to EIS job-loss benefits.” EIS benefits apply only to involuntary job loss (retrenchment, closure, constructive dismissal). Voluntary resignation does not qualify.

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Key takeaways

• SOCSO covers workplace injuries and permanent disability. EIS covers retrenchment. Both are managed by PERKESO.
• Employees pay 0.5% of wages to SOCSO and 0.2% to EIS. Employers pay 1.75% to SOCSO and 0.2% to EIS.
• Since October 2024, contributions are calculated up to a monthly wage ceiling of RM6,000, up from the previous RM5,000.
• SOCSO and EIS deductions reduce your PCB (monthly tax withholding) through payroll. They do not appear as a separate personal relief line in your annual LHDN tax return.
• Employer contributions to SOCSO and EIS are fully deductible as business expenses.
• Foreign workers are excluded from EIS but may be covered under SOCSO Act 4.
• Self-employed individuals can opt into voluntary SOCSO coverage under a separate scheme.

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Frequently asked questions

Q: My salary is RM8,000. How much do I pay in SOCSO and EIS each month?

Both contributions are capped at the RM6,000 wage ceiling. At RM6,000, your employee SOCSO deduction is approximately RM4.20 per month (per PERKESO’s banded table) and your EIS deduction is 0.2% of RM6,000, which is RM12.00. Total employee deduction: roughly RM16.20 per month. Your employer contributes a further RM12.50 (SOCSO) and RM12.00 (EIS).

Q: I just started my first job. When does my SOCSO coverage begin?

Coverage begins from the first day of your employment, as long as your employer registers and remits contributions on time. PERKESO requires employers to register new employees within 30 days of joining and to remit contributions by the 15th of the following month.

Q: Can I claim a personal tax relief for SOCSO contributions in my Form BE?

No. There is no standalone SOCSO or EIS personal relief line in the YA 2025 LHDN tax return. Your payroll system already factors these into your PCB calculation. See the full LHDN relief list at hasil.gov.my.

Q: What happens if my employer does not register me with SOCSO?

It is a legal offence. Unregistered employees are still entitled to benefits if an injury occurs, and PERKESO can recover unpaid contributions with a surcharge from the employer. Report non-registration to PERKESO at 1-300-22-8000 or via their online portal.

Q: Is the EIS job-search allowance taxable income?

EIS benefits received from PERKESO are not listed as taxable income under the Income Tax Act 1967. They are social security payments, not employment income. However, confirm the current ruling with LHDN for your specific situation if you receive a large benefit amount.