If you work in Malaysia or run a business here, you’ve heard of SOCSO. But beyond the monthly payroll cuts how much do we know about SOCSO, its importance, and how it has an impact on both employers and employees?
SOCSO also known as PERKESO (Pertubuhan Keselamatan Sosial), has a bigger role than most people think. It’s not just about following rules—it’s about creating a safety net to protect millions of Malaysian workers and their families when they need it.
This blog takes a close look at SOCSO’s background, roles, payment rates, perks, and why it’s key for companies to handle it right.
A Quick Look at SOCSO’s Past
SOCSO came to be under the Employees’ Social Security Act 1969 and began work on 1 January 1971. Its main goal was clear and strong: to shield workers from money troubles caused by job accidents, inability to work, or loss of life.
Through the years, SOCSO has grown its reach. What began as a plan for factory staff, now covers,
- Office employees (including staff and professionals).
- Contract workers in various industries.
- Self-employed individuals such as taxi and e-hailing drivers, under the Self-Employment Social Security Scheme (SESSS).
This change shows how SOCSO adjusts to Malaysia’s shifting workforce—covering not just traditional jobs but also the gig economy.
Why SOCSO Is Important for Every Worker
At its core, SOCSO provides protection and dignity. Think about being unable to work due to an accident or illness. Without SOCSO many families would face huge medical costs and income loss.
With SOCSO:
- Medical costs are paid for.
- Pay is substituted with benefits while healing.
- Families get money if a worker dies.
- Programs to help workers heal and learn new skills assist employees in going back to work.
This setup lets workers heal without money worries. For companies, it builds trust, makes workers more loyal, and helps staff feel more secure.
The Two Main SOCSO Schemes
SOCSO protection is split into two key plans each with its own goal:
1. Employment Injury Scheme
- Gives employees protection against accidents at work or while traveling to and from work.
- Includes job-related illnesses resulting from workplace hazards.
- Offers help like medical treatment, payments for short-term or long-term disabilities money for dependents, and burial costs.
2. Invalidity Scheme
- Covers employees who become disabled or die, whether it’s job-related or not.
- Includes sicknesses such as cancer, stroke, or heart problems that stop someone from working.
- Gives out pensions money for constant care, and school support for dependents.
SOCSO uses these two plans together to make sure workers have protection both at work and in their personal lives.
SOCSO Contribution Rates: How It Works
SOCSO’s core feature has an influence on the monthly contributions that employers and employees share.
Category 1: Employees Under 60 Years Old
- Employer: 1.75% of employee’s monthly wages.
- Employee: 0.5% of monthly wages.
- Total contribution: 2.25%.
Covers both Employment Injury and Invalidity schemes.
Category 2: Employees Over 60 or First-Time Contributors After 55
- Employer: 1.25% of monthly wages.
- No deduction from employee’s salary.
- Covers Employment Injury Scheme.
Example Calculation:
If an employee earns RM3,000 per month (under 60 years old):
- Employer contributes: RM52.50
- Employee contributes: RM15.00
- Total SOCSO contribution = RM67.50
These contributions are added to SOCSO’s fund, which pays benefits to employees when they need them.
Benefits Employees Can Get from SOCSO
SOCSO doesn’t just collect contributions—it gives back through many benefits:
- Medical Benefits – This covers visits to doctors, operations, and hospital stays.
- Temporary Disability Benefit – You get a daily sum while you recover.
- Permanent Disability Benefit – You receive a monthly payment if you can’t do your old job anymore.
- Dependents’ Benefit – Your family gets money support if you die.
- Rehabilitation Services – This helps workers get back to work through physical, job, and social support.
- Education Benefit – Kids of insured people can get money to study.
This shows SOCSO does more than just pay for immediate health costs—it aims to support families for the long haul.
SOCSO and Malaysia’s Gig Economy
In recent years, Malaysia has experienced a rising gig in transport and delivery services. To address this, SOCSO launched the Self-Employment Social Security Scheme (SESSS).
While this program remains optional, it comes recommended for self-employed drivers and riders. By making a small payment, they gain access to health coverage, disability benefits, and protection for their dependents.
This move marks a significant stride forward ensuring that Malaysia’s social safety net covers all workers.
The Employer’s Duty
Businesses must follow SOCSO rules. Employers need to:
- Sign up all workers who qualify for SOCSO within 30 days of hiring them.
- Pay monthly contributions on time.
- Maintain accurate payroll records to ensure correctness.
- File accident reports when workplace incidents happen.
Companies that don’t follow these rules might face fines legal consequences, and damage to their reputation. This explains why many businesses now depend on HR & Accounting Software to handle SOCSO calculations and submissions .
Our blog on Common Payroll Compliance Pitfalls in Malaysia covers this topic in depth.
How HR & Accounting Software Makes SOCSO Easier
Many companies small and medium-sized ones, struggle not with knowing they need SOCSO, but with managing it well. Hand-done payroll math often leads to mistakes when you throw in EPF, EIS, and PCB (Income Tax).
This is where HR & Accounting Software, steps in:
- It does the SOCSO math for you.
- It adapts to new law changes.
- It creates reports for checks and filings.
- It puts SOCSO, EPF, EIS, and payroll on one screen.
By making compliance easy, bosses save time, make fewer mistakes, and keep their workers covered without hold-ups.
Check out our guide on Payroll Outsourcing vs. In-House Payroll to see how software stacks up against external providers.
SOCSO at a Glance: Quick Reference Table
| Aspect | Details |
| Governing Act | Employees’ Social Security Act 1969 |
| Managed by | Social Security Organisation (PERKESO) |
| Schemes | Employment Injury Scheme & Invalidity Scheme |
| Contribution (Below 60) | Employer 1.75% + Employee 0.5% = 2.25% |
| Contribution (Above 60) | Employer 1.25% |
| Benefits | Medical, Disability Dependents’, Rehabilitation, Education Aid |
| Coverage | Employees, contract workers, self-employed (under SESSS) |
| Employer’s Duty | Sign up workers, make monthly payments, notify about incidents |
Final Thoughts
SOCSO isn’t just another payroll cut. It serves as a social safety net to provide security, dignity, and resilience for Malaysian workers. Employees gain peace of mind. Employers fulfill their legal and moral duties.
In today’s rapidly shifting job market where traditional roles blend with gig work, SOCSO adapts to stay useful.
The right HRMS & Accounting Software allows businesses to manage SOCSO payments while growing. Protecting your team isn’t just about following rules—it makes good business sense.
Want to make SOCSO, EPF, and payroll easier in your company? Check out our HR & Accounting Software for Malaysia now.
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