Employment Injury Scheme coverage now mandatory for foreign workers

IMPACT – MEDIUM

Important announcement: Employers in Malaysia must register their foreign workers, including expatriates who hold valid documents, with Malaysia’s Social Security Organization (SOCSO) for Employment Injury Scheme (EIS) benefits.

What is the change? The changes went into effect for employers starting with their Jan. 1 payrolls. Their contributions to SOCSO for foreign workers are due on the 15th of every month, starting in February. These employer contributions are mandatory until foreign workers cease their employment in Malaysia.

• Implementation time frame: Immediate.
• Who is impacted: All employers are required to contribute to SOCSO. Foreign workers are not required to make contributions.
• Business impact: Employers are expected to contribute 1.25 percent of each foreign worker’s monthly wage to SOCSO on a monthly basis, subject to the insured wage ceiling of 4,000 Malaysian ringgit (about US$980) per month. These contributions must be submitted separately from the normally required SOCSO contributions.
• Where to Register: At any SOCSO office in Malaysia, online via the Automated SOCSO Integrated System or by submission of the Foreign Worker Registration Form.

What do these benefits include? The EIS benefits offer protection for employees against accident or occupational illness arising out of, or in the course of, employment. This includes medical, temporary/permanent disablement, rehabilitation, and dependent’s benefits; constant attendance allowance; and 6,500 ringgit for repatriation costs.

What is not included? Benefits under the Invalidity Scheme and protection for employees who suffer invalidity or death due to any cause unrelated to employment will not be extended to foreign workers.

Background:  Previously, Malaysia only provided Malaysian citizens or permanent residents with EIS benefits through SOCSO.

Analysis & Comments: The Malaysian government’s decision to require EIS protection for all foreign workers, including expatriates, is in line with the International Labor Organization’s Equality of Treatment (Accident Compensation) Convention, and the Conference Committee on the Application of Standards. With these changes, all foreign workers in Malaysia are now afforded the same EIS benefits as local employees.

Source: Deloitte LLP. Deloitte LLP is a limited liability partnership registered in England and Wales with registered number OC303675 and its registered office at 1 New Street Square, London EC4A 3HQ, United Kingdom.