EPF (KWSP): Employees Provident Fund
EPF is Malaysia's mandatory retirement savings scheme, administered by Kumpulan Wang Simpanan Pekerja. Both you and your employee contribute each month.
For employees earning RM5,000 or below, the employer contributes 13%. For employees earning above RM5,000, the employer contributes 12%. Employees contribute 11% regardless of salary.
Payment is due by the 15th of the following month. Late payments attract a dividend charge on the unpaid amount.
- Employee contribution: 11% of gross salary
- Employer contribution: 13% (salary ≤ RM5,000) or 12% (salary > RM5,000)
- Due date: 15th of the following month
- Applies to: Malaysian citizens and permanent residents
SOCSO (PERKESO): Social Security Organisation
SOCSO provides protection against work-related accidents and invalidity. It covers two schemes: the Employment Injury Scheme and the Invalidity Scheme.
Contributions are capped at a monthly wage ceiling of RM5,000 for calculation purposes. The employer bears the larger share at 1.75% while the employee contributes 0.5%.
SOCSO applies to Malaysian citizens and permanent residents. Foreign workers are covered under a separate scheme called PERKESO Protect.
- Employee contribution: 0.5% (capped at RM5,000 wage ceiling)
- Employer contribution: 1.75% (capped at RM5,000 wage ceiling)
- Due date: 15th of the following month
- Applies to: Malaysian citizens and permanent residents
EIS (SIP): Employment Insurance System
EIS was introduced in 2018 under the Employment Insurance System Act. It provides temporary financial assistance to employees who lose their jobs through retrenchment or company closure.
Both employer and employee contribute equally at 0.2% each, calculated on the same RM5,000 wage ceiling used for SOCSO.
EIS is administered by PERKESO alongside SOCSO, and contributions are typically submitted together.
- Employee contribution: 0.2% (capped at RM5,000 wage ceiling)
- Employer contribution: 0.2% (capped at RM5,000 wage ceiling)
- Due date: 15th of the following month
- Applies to: Malaysian citizens and permanent residents aged 18–60
PCB / MTD: Monthly Tax Deduction
PCB stands for Potongan Cukai Bulanan, also known as Monthly Tax Deduction (MTD). It is an estimated income tax deducted from your employee's salary each month and remitted to LHDN on their behalf.
The amount deducted depends on the employee's monthly salary, tax residency status, and any declared tax reliefs (such as spouse or children). LHDN provides an official PCB calculator that employers must use.
PCB is due by the 15th of the following month, submitted via e-PCB or payroll software integrated with LHDN.
- Amount: varies based on salary, residency status, and declared reliefs
- Due date: 15th of the following month
- Submission: via LHDN e-PCB portal or integrated payroll software
- Employer's obligation: deduct correctly and remit in full
Common Mistakes to Avoid
Late submission is the most common issue. All four contributions share the same 15th-of-the-month deadline, and penalties apply quickly.
Using the wrong contribution rate (especially for EPF when salary crosses the RM5,000 threshold) is another frequent error. Underpayment creates a shortfall that the employer is liable to top up.
Not registering with EPF and SOCSO before your first employee starts is also a problem. Both registrations should be done before or on the day of the employee's first day.
How Payroll Management Helps
Managing all four deductions manually across multiple employees is repetitive and error-prone. A payroll service calculates the correct amounts for EPF, SOCSO, EIS, and PCB each month, prepares payslips for each employee, and produces a monthly payroll summary so you always know your exact liability before the deadline.