Employers and employees are required to contribute 0.2% each of an employee’s salary, this means that the total contribution would be 0.4% of an employee’s monthly salary. To help you understand better, do refer to the table below:
The minimum eligible monthly salary is RM300, where the 0.4% will see them contributing RM1.20 per month. However, the maximum eligible monthly salary contribution is capped at RM5,000. This means that if your employee is earning more than RM5,000 a month, the contribution from you and your employee is fixed at 0.4% of RM5,000, leading to the maximum amount of contribution capped at RM19.80 per month.
For better clarity, refer to the EIS Contribution Rate table. 😁
Understanding Categories of Income Subjected to EIS Contribution in Malaysia
Here are the categories of income that are subjected to EIS contribution, as well as some payments that are exempted from this contribution.
Categories of Income Subjected to EIS Contribution:
Salary: The primary income earned by employees in the form of regular wages is subjected to EIS contribution. This includes the basic salary agreed upon in the employment contract.
Overtime: Any additional payment received for working beyond regular working hours is also considered part of the income subjected to EIS contribution.
Commission and Service Charges: If employees receive commissions or service charges as part of their compensation, these earnings are included in the EIS contribution.
Allowance and Incentives: Various types of allowances and incentives provided by employers to employees are also considered income subjected to EIS contribution.
These might include housing allowances, meal allowances, and performance-based incentives.
Payment for Leave: Payments made to employees during periods of leave, such as annual leave, sick leave, maternity leave, rest days, and public holidays, are part of the income subject to EIS contribution.
Payments Exempted from EIS Contribution:
Bonus and Director Fee: Payments categorized as bonuses and director fees are exempt from EIS contribution. These payments are typically additional earnings beyond regular salary and are not considered part of the contribution base.
Expenses Claim: Reimbursements made to employees for business-related expenses are not subjected to EIS contribution. These reimbursements are intended to cover out-of-pocket expenses incurred for work purposes.
Mileage Claims and Traveling Allowance: Payments provided to employees to cover transportation costs, such as mileage claims and traveling allowances, are exempt from EIS contributions.
EPF Contribution: Employee Provident Fund (EPF) contributions, which are meant for retirement savings, are not considered part of the income subject to EIS contribution.
Gratuity or Payment for Dismissal/Retrenchment: Payments made as gratuity or in cases of dismissal or retrenchment are exempt from EIS contribution. These payments are often one-time settlements given under specific circumstances.
Benefit in Kind: Non-monetary benefits provided to employees, often known as "benefit in kind," such as company-provided accommodations or transportation, are not subjected to EIS contribution.
Useful Links:
More on EIS is detailed here. Also, learn how to enable EIS for each employee in Talenox - https://help.talenox.com/en/articles/2807768-what-is-eis
Learn how to register SOCSO/PERKESO for EIS here - https://help.talenox.com/en/articles/2808595-steps-to-register-with-perkeso-for-employment-insurance-system-eis