MALAYSIAN INDUSTRIAL RELATIONS

1
MALAYSIAN INDUSTRIAL RELATIONS EMPLOYMENT LAW
Author Maimunah Aminuddin

• Chapter Three
• The Social Security Laws

2
Preview

• Purpose of social security systems
• The Employees Provident Fund social security
  for old age
• Contributions required by both employer and
  employee
• The Employees Social Security Act compensation
  in event of occupational accident or disease
• Contributions required by both employer and
  employee
• Workmens Compensation Act

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Social security systems

• Social security systems are designed to reduce
  financial stress in the event of loss or
  reduction of income.
• Social security may protect income when people
  are faced with
• Unemployment
• Post-retirement
• Accident or serious illness
• Child birth
• Death of income earner

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Social security for post-retirement

• Options to ensure elderly have sufficient
• income after retirement
• Voluntary savings investment
• State provided pensions
• Employer provided pensions
• Joint employer-employee contribution saving
  schemes

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The Employees Provident Fund

• The EPF is a compulsory savings scheme for
  employees so that they will have sufficient funds
  in their post-retirement years.

Simpanan Hari Tua Anda
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The Employees Provident Fund, cont.

• Membership
• Compulsory for
• All Malaysian employees working in private sector
• Voluntary for
• Public sector employees on pension scheme
• Foreign employees
• Domestic servants
• Self-employed persons

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The Employees Provident Fund, cont.

• Contributions
• Employer responsible to contribute 12 of
  employees wages and deduct 11 from employees
  wages and send both contributions to the EPF
  every month.

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The Employees Provident Fund, cont.

• Definition of wages under EPF Act
• All remuneration in money, due to an employee
• under his contract of service or apprenticeship
  and
• includes any bonus or allowance payable by the
• employer to the employee but does not include
• Service charge
• Overtime payment
• Gratuity or retirement benefit
• Retrenchment or termination benefit
• Travelling allowance

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The Employees Provident Fund, cont.

• Failure by an employer to remit EPF contributions
  as
• required by the law is a serious offence.
• Offenders are prosecuted and may be punished as
• follows
• The money owing must be paid
• The employer may be fined or jailed (RM10,000
  and/or 6 months)
• Assets of employer may be seized and
• Directors of company may be prevented from
  leaving the country until payment made.

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Employees Social Security Act (SOCSO)

• Purpose of the Act is to establish an insurance
  scheme which ensures employees involved in a
  work-related accident, or who contract a
  work-related disease receive compensation.

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Employees Social Security Act (SOCSO), cont.

• Monthly contributions are made to SOCSO by
  employers and employees.
• Scheme is compulsory for Malaysian employees in
  the private sector, earning up to RM3,000 per
  month.
• Once-in, always in!

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Employees Social Security Act (SOCSO), cont.

• Definition of wages
• All remuneration payable in money by the
• employer to the employee, including any
• payment in respect of leave, holidays,
• overtime and extra work on holidays but does
• not include
• Travelling allowance

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Employees Social Security Act (SOCSO), cont.

• Annual bonus
• Reimbursement for employment related expenses
• Gratuity paid on retirement or end of contract

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Workmens Compensation Act

• Employers who employ foreign workers must
• purchase an insurance policy to provide
• compensation in case of work-related accident or
• work-related disease.
• The insurance policy must be paid for by the
• employer.

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Review

• Purpose of social security systems
• The Employees Provident Fund social security
  for old age
• Contributions required by both employer and
  employee
• The Employees Social Security Act compensation
  in event of occupational accident or disease
• Contributions required by both employer and
  employee
• Workmens Compensation Act