Social Security Organization (SOCSO)

What Is Social Security Organization (SOCSO)?

Social Security Organization (SOCSO) was formed under the Employees’ Social Security Act 1969 as a government department of the Ministry of Labour and Manpower on 1 January 1971. It is entrusted with the administration of two social security schemes, namely the Employment Injury Scheme and the Invalidity Scheme.
The Employment Injury Scheme provides protection for employees against contingencies, including occupational disease and accidents that occur while travelling in the course of employment. The Invalidity Scheme, on the other hand, provides 24 hours coverage against invalidity or death due to any cause.
The objective of both schemes is to guarantee cash payment and benefits in kinds to employees and their dependents in the event of a contingency.
The Social Security Scheme was first introduced in Malaysia in 1958, soon after Malaysia gained its independence. At the same time, the International Labour Organization (ILO) was conducting a study on social security. In 1962, a high-level committee was formed to review the study results. The study by A.N. Ambo through the ILO provided the basis for the drafting of the Employees’ Social Security Bill, which was subsequently passed by the Parliament of Malaysia in April 1969 and named the Employees’ Social Security Act 1969.

Employee Who are Eligible to Contribute Social Security Organization (SOCSO)

An employer shall be liable to pay SOCSO contributions in respect of any person whom he has engaged to work under a Contract of Service or Apprenticeship and includes:
  • Part time, temporary and probationary employees.
  • Directors who receive wages from company.
  • Workers outsourced to third parties.
  • Foreign workers. (Started from 1 January 2019)

Employee Who Are Not Eligible to Contribute Social Security Organization (SOCSO)

Persons stipulated in the First Schedule of the Employees’ Social Security Act 1969 who are exempted from making a contribution are as follows:
  1. Spouse of a Principal or Immediate employer. (Removed from 1 July 2018)
  2. Any person whose employment is of casual nature and who is employed otherwise than for the purposes of the employer’s industry.
  3. Employees who are employed for household related services in a private residence or individual capacity, and not commercially or business based.
  4. A tributer, that is, a person who is permitted to win minerals or produce of any kind from or on the land of another and who, in consideration of such permission, gives a proportion of the minerals or produce so won to that other person or pays to him the value of such proportions.
  5. Any member of Malaysian Armed Forces
  6. Any Police Officer
  7. A person who has been detained in any prison, Henry Gurney School, approved school, detention camp, mental hospital, or leper settlement
  8. In so far, as this Act relating to Invalidity Pension are concerned:
  1. An employee who has attained the age of 60 and in respect of whom no contributions were payable before he attained the age of 55 years; or
  2. An employee who has attained the age of 60 years; or
  3. A certified invalid who is in receipt of Invalidity Pension

Salary / Wages Required To Contribute Social Security Organization (SOCSO)

“Wages” for contribution purposes refers to all remunerations payable in money by an employer to an employee. Among the remunerations are as follows:
  • Basic salary
  • Overtime
  • Commission
  • Payment in lieu of annual leave, medical leave, maternity leave, rest days, off days, public holidays and so forth
  • Allowance (e.g. incentive, good behavior, cost of living and so forth)
  • Service charge
Payments that are not defined as wages are:
  • Any contribution payable by the employer towards to any pension or provident fund
  • Any travelling allowance or concession
  • Any gratuity payable on discharge or retirement
  • Annual bonus

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