EPF, SOCSO & EIS: Your Duties as an Employer in Malaysia
Hiring your first employee turns you into an employer with legal obligations. Three statutory schemes apply to almost every employee in Malaysia — EPF, SOCSO and EIS — and registering and contributing correctly is not optional. This guide explains what each one is, who it covers, and exactly what you must do, plus the tax deduction (PCB) that goes alongside them.
1. EPF / KWSP (Employees Provident Fund)
A retirement savings fund. Both you and your employee contribute a percentage of monthly wages into the employee's EPF account.
2. SOCSO / PERKESO (Social Security Organisation)
Protects employees against work injury and invalidity.
3. EIS / SIP (Employment Insurance System)
Provides temporary financial help and re-employment support to workers who lose their jobs.
A simple employer checklist
Also remember PCB / MTD
On top of these, you generally deduct monthly tax (Potongan Cukai Bulanan / Monthly Tax Deduction) from employees above the tax threshold and remit it to LHDN. Setting this up correctly is part of running payroll properly.
What about part-timers and foreign workers?
Coverage rules differ by worker type and have changed over time — for example, foreign workers' SOCSO coverage and the treatment of part-time and gig workers have been expanded. Don't assume a worker is exempt; confirm the current rules with KWSP and PERKESO for each category you employ.
Get it right from employee number one. Late or missed statutory contributions carry penalties, and unpaid EPF/SOCSO is a debt that follows the business. Setting up payroll properly at the start is far cheaper than fixing it later. If you train your team, you may also be able to claim those costs back — see our HRD Corp levy guide.
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Frequently asked questions
When do I have to start paying EPF and SOCSO for staff?
As soon as you hire an employee. You must register as an employer with KWSP and PERKESO and begin monthly contributions from the first month of employment. Late or missed contributions carry penalties and become a debt that follows the business.
What is the difference between EPF, SOCSO and EIS?
EPF (KWSP) is a retirement savings fund both you and the employee pay into. SOCSO (PERKESO) protects employees against work injury and invalidity. EIS provides temporary help and re-employment support to workers who lose their jobs. All three are mandatory monthly contributions for eligible employees.
Do I need to pay EPF and SOCSO for part-time or foreign workers?
Often yes. Coverage has been expanded over time — foreign workers' SOCSO coverage and the treatment of part-time and gig workers have changed. Do not assume a worker is exempt; confirm the current rules for each worker category with KWSP and PERKESO.
What is PCB or MTD?
PCB (Potongan Cukai Bulanan), also called Monthly Tax Deduction, is the monthly income tax you deduct from employees earning above the tax threshold and remit to LHDN. It is separate from EPF, SOCSO and EIS but part of running payroll correctly.
How do I pay EPF, SOCSO and EIS contributions?
You calculate each employee's contributions monthly, deduct the employee share, add the employer share, and remit through the official portals — i-Akaun for EPF and the ASSIST portal for PERKESO (which covers both SOCSO and EIS) — by each scheme's deadline. Keep payslips and records for audits.
Sources:EPF / KWSPSOCSO / PERKESOLHDN (Inland Revenue Board)
General information only — schemes, rules and requirements change. Always follow the official source(s) and confirm the latest details before acting.
Related guides
Bookkeeping & Record-Keeping for Malaysian SMEs
Good records are a legal duty and the foundation of every tax filing, e-invoice and grant claim. What you must keep, for how long, and how to keep it right — without drowning in paperwork.
Company Income Tax for Malaysian SMEs: A Plain Guide
How company tax actually works in Malaysia — the SME preferential rate, the CP204 tax estimate, what counts as deductible, and the filing deadlines every Sdn Bhd must meet with LHDN.
Business Licences & Permits in Malaysia: What Your SME Needs
Registering with SSM makes your business legal — but it does not let you trade at a location. Most SMEs also need a premise licence, a signboard licence, and sometimes sector permits. Here is what each one is and how to get it.