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Securing social protection for your foreign employees

January 2019
By Lee Shuk Yee (Tax Executive Director), PwC Malaysia 

International migration is defined by the estimated 245 million* people who live and work outside their country of origin in response to the demand for globalised labour markets. Unlike many of their local counterparts, migrant workers face challenges in exercising their rights to social security while employed in their host country due to their status, nationality, or insufficient duration of employment or residence.

Malaysia’s move to standardise labour laws in line with conventions under the International Labour Organisation (ILO) is part of the effort to improve working conditions and social security protection for foreign workers in Malaysia. Under the Employees’ Social Security Act 1969, employers in Malaysia must register their foreign employees with the Social Security Organisation (SOCSO) from 1 January 2019.


Who is eligible for SOCSO?

All legal foreign workers in Malaysia (including expatriates, but excluding domestic servants) who have been issued a valid work permit by the Immigration Department of Malaysia will be eligible for SOCSO registration.

They must be in possession of the following supporting documents:-

NEW foreign workers EXISTING foreign workers
  • Passport;
  • Work Permit; and
  • Special Pass
  • Passport
  • Visitor’s Pass (Temporary Employment); or
  • Employment Pass

Existing foreign workers in Malaysia who are currently covered under the Foreign Workers Compensation Scheme (FWCS) must be registered with SOCSO by their employers a day after the expiration of their respective FWCS, subject to the end of the cooling-off period for FWCS on 31 December 2019. Subsequently, beginning 1 January 2020, all workers should be registered with SOCSO regardless of the validity of their FWCS.


What can employees expect from SOCSO coverage?

Employers will contribute 1.25% of the insured’s monthly wages towards the Employment Injury Scheme, which provides protection to an employee against accident or an occupational disease arising out of and in the course of his employment as well as commuting accidents.

Benefits covered under the Employment Injury scheme:

  • Medical Benefit
  • Temporary Disablement Benefit
  • Permanent Disablement Benefit
  • Dependants’ Benefit
  • Funeral Benefit
  • Constant-Attendance Allowance
  • Rehabilitation (Except for Educational, Vocational, Dialysis treatment and Return To Work Programme)

As employers, what are your immediate actions?

Employers can register their foreign workers online via the Automated SOCSO Integrated System (ASSIST) portal or by completing the Foreign Worker Registration Form and submitting it at the nearest SOCSO office from 1 January 2019. Supporting documents include copies of employees’ passports and employees’ work permits or entry passes.

Payments and contributions can be made online through the ASSIST Portal or internet banking by using the Foreign Workers Social Security Number (FWSS -12 digits) provided by SOCSO during the registration of foreign workers.

As with local employees, contributions for foreign workers are also made monthly and must be paid no later than the 15th day of each succeeding month.


What else?

As you prepare to commence the January payroll processing, keep these items in check:-

  1. Have you registered your foreign employees, and updated their social security numbers for SOCSO contribution processing?
  2. Have you updated your payroll system with the new contribution rates and contribution output format for the handling of deductions and contributions?
  3. Have you defined wages for contribution handling in your payroll system? Wages include overtime payments, commission, service charge, paid annual leave, sick leave, maternity leave, rest day, public holidays, incentive allowances, subsistence, etc.

In the long run, employers would also need to factor in the cost of this contribution as part of the overall employment costs for foreign workers.

As labour laws and employment related regulations evolve and become increasingly sophisticated, employers will find that administrative and regulatory aspects of payroll operations demand a greater proportion of your resources, including time, effort and finances. Payroll doesn’t have to take you away from your core business activities. Speak to us today.


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Lee Shuk Yee

Lee Shuk Yee

Tax Executive Director, PwC Malaysia

Tel: +60 (3) 2173 1626

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