What Is Social Security Organization (SOCSO)?
The Social Security Organization (SOCSO) was established on 1 January 1971 under the Employees’ Social Security Act 1969. It operates as a government agency under the Ministry of Labour and Manpower, responsible for managing Malaysia’s social security system. SOCSO provides financial protection and support to employees through two main schemes:
- Employment Injury Scheme – Covers workplace accidents, occupational diseases, and accidents that occur while commuting for work.
- Invalidity Scheme – Provides 24-hour coverage for employees in cases of invalidity or death due to any cause.
Both schemes aim to ensure financial security by providing cash benefits and other forms of assistance to employees and their dependents in times of need.
The History of SOCSO in Malaysia
Malaysia’s social security system began in 1958, soon after independence. In 1962, a high-level committee reviewed a study by the International Labour Organization (ILO), which helped shape the country’s social security framework.
With key contributions from ILO expert A.N. Ambo, the Employees’ Social Security Bill was drafted. In April 1969, the Malaysian Parliament passed the Employees’ Social Security Act, leading to the establishment of SOCSO in 1971.
Today, SOCSO continues to protect workers and their families, offering financial security against accidents, illnesses, and disabilities.
Who Is Eligible to Contribute to SOCSO?
Employers are required to contribute to SOCSO for all employees working under a Contract of Service or Apprenticeship. This includes:
- Company directors who receive wages
- Full-time, part-time, temporary, and probationary employees
- Workers outsourced to third-party companies
- Foreign workers (Effective from 1 January 2019)
All eligible employees are entitled to SOCSO protection, ensuring financial security in case of workplace accidents, illnesses, or disabilities.
Employees Who Are Not Eligible to Contribute to SOCSO
According to the First Schedule of the Employees’ Social Security Act 1969, the following individuals are exempted from SOCSO contributions:
a. Members of the Malaysian Armed Forces
b. Police officers
c. Individuals detained in institutions such as prisons, Henry Gurney School, approved schools, detention camps, mental hospitals, or leper settlements
d. Casual workers – Individuals employed on a non-regular basis and not directly related to the employer’s industry
e. Household workers – Employees providing domestic services in a private residence (e.g., maids, personal assistants) rather than for commercial or business purposes
f. Tributers – Individuals permitted to extract minerals or produce from another person's land in exchange for a share of the produce or payment
g. Spouse of a principal or immediate employer (Removed from exemption on 1 July 2018)
h. Exemptions related to Invalidity Pension:
- Employees aged 60 and above who had never contributed to SOCSO before age 55
- Employees aged 60 and above
- Individuals receiving an Invalidity Pension due to certified disability
These exemptions mean that the individuals listed above are not required to make SOCSO contributions.
Salary or Wages Subject to SOCSO Contribution
For SOCSO contributions, “wages” refer to all forms of monetary remuneration paid by an employer to an employee. These include:
- Basic salary
- Commission
- Overtime payments
- Allowances – Such as incentives, good behavior allowances, cost of living allowances, and similar payments
- Service charges
- Payments in lieu of leave – Includes compensation for unused annual leave, medical leave, maternity leave, rest days, off days, and public holidays
Payments Excluded from SOCSO Contributions
- Gratuity payments – Lump-sum payments made upon discharge or retirement
- Annual bonuses
- Employer contributions to any pension or provident fund
- Travelling allowance or concessions
Conclusion
SOCSO protects Malaysian workers against accidents, illnesses, disabilities, and death, ensuring financial security for employees and employers.
For more details, visit the official SOCSO website or check with your employer.
SOCSO Benefits Explained: What Every Malaysian Worker Should Know