EMPLOYEES SOCIAL

SECURITY LAWS
-Employees Social Security Act 1969 (SOCSO)
-Objectives & functions
-Schemes
-Workmens Compensation Act 1952

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INTRODUCTION
Most countries governments have established system
of ensuring the social security of its citizens.
The social security functions to make certain
arrangements in the event of any financial problem
that might be faced by the employees in future or to
deal with any eventualities & probabilities that will
occur.
This system is basically designed to provide financial
protection for reasons such as unemployment, post-
retirement, accident or serious illness and even death.
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CONT.
In 1969, the Employees Social Security Act (ESSA)
was introduced to provide compensation & financial
assistance to workers who are unable to work either
temporarily or permanently as a result of work-related
accident or illness.
This funds may support the workers & their family
during the period of time.
Other than ESSA, EPF is also another system to
assist the workers after retirement.
While Workmens Compensation Act 1952 is another
similar security specially for foreign workers.
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The purpose of having ESSA is to establish an
insurance system so that employees involved in an
accident at work or who develop work-related
illness, will be provided with compensation &
financial assistance
Employers are responsible for registering their
employees as members of SOCSO & for remitting
the mandatory monthly contributions (Third
Schedule).
Both employer & employee must pay for
contribution.
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SCOPE OF THE ACT
ESSA applies thruout Msia & in all industries in the
private sector.
SOCSO's coverage is only for employees who are
Malaysian citizens and who are permanent residents.
Those who earn less than RM3,000 is compulsory to
contribute for SOCSO. And even if the wages has
raised above RM3,000, the worker remains a member
of SOCSO due to the principle of once in always in
that applies to employee members.
Those who earn above RM3,000 can opt to become
member but with approval of the employer (who must
agree to contribute on his behalf).
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EMPLOYER'S LIABILITY
The principal and immediate employer who employs
one or more employees is required to register and
contribute monthly to SOCSO for all employees under
the ESSA, 1969.
The principal employer is also liable to ensure all
employees employed by the immediate employer have
been registered and their contributions have been paid.
PRINCIPAL EMPLOYER - an employer who has employed an
employee directly to work for him. The employer is responsible for the
payment of wages and all the service matters of the employee.
IMMEDIATE EMPLOYER - an employer who works for a principal
employer or undertakes part of the work of the principal employer by
way of a sub-contract. The immediate employer has direct control of
the employees employed by him.



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EMPLOYEE
An employee is defined as a person who has been
employed by an employer under a contract of
service or apprenticeship.
Employees monthly earning at RM3,000 or less
must contribute to SOCSO.
Employees monthly earning more than RM3,000
who never registered or contibute to SOCSO are
given an option to be covered under the Act
provided both the employer and employee have
agreed upon the coverage.


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CATEGORIES OF EMPLOYEES EXEMPTED
FROM SOCSO'S COVERAGE

Government employees
Domestic servants
Self-employed persons
Foreign workers
Business owner and spouses of sole-proprietorship
or partnership

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CONTRIBUTIONS
The principal employer must pay monthly contribution
for each eligible employee
The amount of contribution is based on the SOCSO
Contribution Schedule i.e. Third Schedule of the Act.
Categories of Contributions:
First Category (Employment Injury Scheme And Invalidity
Pension Scheme)
Below 60 years
Second Category (Employment Injury Scheme Only)
above 60 years
above 55 years of age when first registered and contributed to
SOCSO
an Insured Person receiving Invalidity Pension who is still working
and receiving wages which is less than 1/3 of the average monthly
wage before invalidity.
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WAGES UNDER SOCSO
All remunerations payable in money to an employee
which includes:
Salary
Overtime payments
Commission
Payments for leave such as annual, sick and maternity
leave, rest day, public holidays
Allowances such as incentive, good behavior, cost of living
(COLA)
Service Charge

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SOCSO PROTECTION SCHEMES
Two schemes
Employment Injury Insurance Scheme (EIIS);
provides protection to employees who are involved in
accidents arising out of and in the course of his
employment occupational diseases and also commuting
accident.
Invalidity Pension Scheme (IPS).
provides twenty four (24) hours coverage for workers
from invalidity or dies irrespective of the cause of death.
The other objective is to ensure payments are made to
workers and dependants when an unexpected incident
occurs.

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EMPLOYMENT INJURY INSURANCE SCHEME
(EIIS)
This scheme entitles the worker to treatment at
SOCSO panel clinics or any government hospital
which the bills are paid by SOCSO.
Other benefits provided under this scheme such as:
If the worker is certified unfit for work for not less than 4
days, he will be paid with temporary disablement benefit
while on medical leave.
If he is permanently disabled as a result of work-related
accident, he will get either lump sum payment or a
monthly pension (depending on the amount).
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EIIS
If he is severely incapacitated & needs constant personal
attendance of another to look after him, he may claim an
allowance for this.
If the accident result in him death, his dependents are
entitled for the funeral benefit & also to a monthly benefit
for a certain period of time.
SOCSO also provides facilities for physical
rehabilitation of injured workers & gives vocational
training to help workers who are disabled to find
suitable jobs.

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EIIS
If accident happens while travelling, it is deemed to
arise out of and in the course of his employment if
the accident happens while the insured person
Is travelling on a route between his place of residence
or stay & his place of work;
Is travelling on a journey made for any reason which is
directly connected to his employment; or
Is travelling on a journey between his place of work &
the place where he takes his meal during any
authorised recess.

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CASE
Ketua Pengarah PERKESO v Rajaparameswari a/p
Marimuthu [2004] 4 CLJ 528
A factory worker, living in Gelugor, Penang would go to
her daughters house every weekend. Each Monday
morning she would leave her daughters house & travel to
the bus station where the company bus would pick her up
to work. One day, while travelling from her daughters
house, she was met with an accident. SOCSO rejected
her claim for compensation. She then appealed to the
High Court.
Held: The words residence & stay give different
meanings; the former connotes permanency while the
latter suggest temporary residence which what had
happened to the insured person in this case. The court
allowed the appeal.

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COVERAGE OF EIIS
(1) Accidents which occur while in the course of
the work.
Accident which occurs while working at the work place
and was caused by the employee's job.
(2) Accidents which occur while traveling
on condition the accident does not occur during any
interruption or deviation of the journey.
(3) Accident during an emergency
Accident that occurs during an emergency at the
employer's premises while in the course of assisting,
rescuing, or protecting other people from disasters such
as a fire breakout.
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EIIS
(4) Occupational Disease
Disease that results from the occupation.
The list of diseases and cause agent can be found in
the Fifth Schedule of the SOCSO Act, 1969.

Examples:
Loss of hearing due to exposure to continuous
excessive noise.
Respiratory diseases or industrial asthma as result of
exposure to dust for employees in sawmills, powder
factories, flour mills and others.
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THE BENEFITS PROVIDED UNDER THE
SCHEME (EIIS)

Medical Benefit
Temporary Disablement Benefit
Permanent Disablement Benefit
Constant attendance Allowance
Rehabilitation Benefit
Dependent's Benefit
Funeral Benefit
Education Benefit
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INVALIDITY PENSION SCHEME (IPS)
Workers are entitle to a pension or other benefits if
they become unable to work for whatever medical
reason, provided they have contributed to the SOCSO
for certain minimum period.

Invalidity is defined as a serious disablement or
morbid condition of a permanent nature that is either
incurable or not likely to be cured, as a result of which
an employee is unable to earn at least 1/3 of what a
normal able person could earn.

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THE BENEFITS PROVIDED UNDER THE
SCHEME (IPS)

Invalidity Pension
Invalidity Grant
Constant Attendance Allowance
Survivor's Pension
Funeral Benefit
Rehabilitation Benefit
Education Benefit
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DETAILS OF THE SCHEMES
Refer to SOCSO (PERKESO) website :
http://www.perkeso.gov.my/en/socso-protection-
schemes.html

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WORKMENS COMPENSATION ACT 1952
WCA covers foreign workers who are paid up to
RM500 per month or who are employed as manual
workers irrespective of their wages.
The Act is enforced by the Labour Dept.
Hence, foreign workers (exception to domestic
servants) who are injured as a result of a work-
related accident & who are disabled for a period of
4 days or more are entitled to be paid
compensation.
Quantum of compensation is fixed by the Act
depending on the severity of the accident,
permanent disablement or not.
Where a death occurs, a maximum lump sum of
RM25,000 will be paid.
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