Employer Guide to Employment Insurance System (EIS)
- Harshiney
- Aug 8
- 5 min read
Updated: 6 days ago
The Employment Insurance System, or EIS, is something every employer in Malaysia has come across. As an employer, you probably already know that EIS is mandatory. But do you know what it is actually for? How much you need to contribute? What happens if you overpay or underpay?
This guide walks you through the essentials, so you can manage EIS with clarity, avoid common errors, and stay confidently compliant.
What is EIS?
The Employment Insurance System is designed to help employees who lose their jobs by providing temporary support while they search for new opportunities.
Through EIS, affected employees can receive:
Temporary financial assistance
Job placement support
Career counselling and retraining programmes
It’s important to know that EIS does not replace retrenchment or severance pay. If you are letting someone go, you still need to follow the correct procedures under Malaysian labour laws. EIS simply offers your employee an added layer of support as they move toward their next job.
Why Was EIS Introduced in Malaysia?
EIS was introduced to strengthen Malaysia’s social safety net and provide much-needed support to employees who are retrenched or let go due to factors beyond their control.
Before EIS, many had no fallback when they lost their jobs. Today, it offers temporary financial support, job matching services, and access to career counselling or retraining to help ease the transition.
For employers, contributing to EIS is more than just fulfilling a requirement. It is a way to build a more resilient and adaptable workforce that is ready to respond to change in today’s fast-changing job market.
Who Needs to Contribute to EIS?
EIS contributions are split between employer and employee, with each putting in about 0.2% of the employee’s monthly wages. That adds up to roughly 0.4% in total, and it applies to private sector employees who are Malaysian or permanent residents in Malaysia between the ages of 18 and 60.
For the exact rates, you can always refer to the contribution table provided by PERKESO.
However, not everyone needs to contribute. EIS does not apply:
Government employees (civil servants)
Domestic workers (e.g. maids or gardeners)
Self-employed individuals
There are also some age-related rules. If an employee was already contributing before turning 57, the contributions must continue until they turn 60. If they were never registered before turning 57, then EIS is not required.
As for directors, it depends on how they are paid. If a director only receives director’s fees and is not employed under a contract with a monthly salary, then there is no need to contribute to EIS.
Read more: SOCSO & EIS Updates, Effective October 2024
What’s Considered an Employee’s Monthly Wage for EIS?
When calculating EIS contributions, “monthly wages” include more than just an employee’s basic salary.
Under PERKESO’s definition, wages cover:
Basic salary
Overtime pay
Allowances
Commissions and bonuses
Payments for annual leave, sick leave, maternity leave, and other paid leave
The following are not counted as wages for EIS purposes:
Travel or mileage allowances
Reimbursements/claims for expenses
Being clear on what counts as wages helps ensure your calculations are correct and avoids the risk of underpayment or overpayment.
How to make Payments for EIS?
Making EIS contributions is straightforward once you are set up. You do not need a separate account for EIS as everything goes through the PERKESO Assist Portal, which is the same platform you use for SOCSO contributions.
If you are still using iPERKESO, you can continue until PERKESO announces otherwise.
To get started with the Assist Portal, you first need to download the Assist Portal Enrolment Form. Submit it by email to idportal@perkeso.gov.my or deliver it to your nearest PERKESO branch. Once your registration is approved, you will receive your username and a temporary password by email. When you log in for the first time, you will be prompted to create your own password.
Your EIS payment is due together with your SOCSO payment each month, making it a natural part of your regular payroll routine.
What happens if EIS is overpaid or underpaid?
Mistakes in contributions can happen. Here’s how to fix them quickly and keep everything on track:
If You Overpaid:
Prepare Appendix A (the checklist) and Appendix B (the PKS(K)50 SIP form).
Gather any supporting documents related to the overpayment.
Submit all documents in person at the nearest PERKESO counter.
Wait for PERKESO to review and process your refund request.
If You Underpaid:
Log in to the PERKESO Assist Portal.
Select “Add Contribution.”
Choose “Arrears or Short Contribution.”
Update the employee details and contribution amount.
Submit the correction and pay the outstanding amount as calculated.
Important to Note:
Interest may be charged at 6% per year on any outstanding underpayment, and serious or repeated underpayments could result in fines or legal action by PERKESO.
FAQs
1. When was EIS introduced?
EIS was launched in January 2018 under the Employment Insurance System Act 2017. It was created in response to rising retrenchments and the need for a proper safety net to support workers during job loss.
2. What situations qualify employees for EIS benefits?
Your employees can claim EIS benefits if they lose their jobs involuntarily. This includes situations such as retrenchment, redundancy, company closure, or early contract termination. However, employees who resign voluntarily, retire, or are dismissed due to misconduct are not eligible.
3. Are EIS and SOCSO the same?
While both EIS and SOCSO are managed by PERKESO, they serve different purposes. SOCSO provides protection for employees against workplace injuries, illnesses, or disabilities. EIS provides temporary financial assistance for employees who have lost their jobs. It is important to understand the difference so you can support your employees properly and stay compliant.
4. Are Allowance and Overtime Payment Subject to EIS?
Yes, allowances and overtime pay are subject to EIS contributions. This means your employee’s wages for EIS include not only their basic salary but also overtime pay, regular allowances, commissions, service charges, and payments for leave such as annual or sick leave, as long as these are part of their regular monthly pay.
However, travel or mileage allowances are exempt from EIS calculations and do not need to be included.
Need help navigating the Employment Insurance System (EIS)?
If you have questions about EIS or need assistance with registration, calculating contributions, or managing payments, Synergy Outsourcing is here to support you. We handle the complex details and communicate with statutory bodies on your behalf so you can focus on growing your business and taking care of your people.
📞 Call us at +6 010-277 0718📩 or email us at info@synergy-outsourcing.com for a free consultation.
Let us make EIS simple and stress-free for your business.
