The Social Security Organisation (PERKESO / SOCSO) has released an important circular announcing an increase in the maximum insurable salary for both the Social Security (SOCSO) and the Employment Insurance System (EIS) schemes.
Effective from the September 2025 salary (for the October 2025 contribution month), the insurable monthly salary ceiling will be raised from the current RM5,000 to RM6,000. This widely anticipated adjustment aims to strengthen the social safety net for employees by providing more comprehensive coverage. However, it also means that both employers and higher-earning employees will see an increase in their monthly contributions.
Key Details of the New Policy Explained
- New Insured Salary Ceiling: Increased from RM5,000/month to RM6,000/month.
- Effective Date: Applies starting from the salary for the month of September 2025.
- Who is Affected?: All Malaysian employees earning over RM5,000 per month, and their employers. For employees earning RM5,000 or less, their contribution amounts remain unchanged.
What Does This Change Mean for You?
For Employees:
- Better Protection: This is good news. Although employees earning over RM5,000 will have a slightly higher monthly deduction for SOCSO and EIS, your social security coverage will increase accordingly. This means you will be eligible for higher benefit and compensation payments in the event of an employment injury, disability, or job loss.
- A Stronger Safety Net: This adjustment ensures that the social security system keeps pace with rising wages, providing a more robust safety net for you and your family.
For Employers:
- Increased Payroll Costs: For every employee earning over RM5,000, the company’s share of SOCSO and EIS contributions will increase. This will lead to a direct rise in overall payroll costs.
- Mandatory Payroll System Updates: This is the most critical action required. You must ensure your payroll system is updated with the latest PERKESO Contribution Schedule to accurately calculate the new contribution amounts for the September 2025 salary cycle.
A Practical Look at the Contribution Changes
To understand the financial impact, here is a clear breakdown:
For employees earning a monthly salary of RM5,000 or less, there is no change to their contribution amounts for either SOCSO or EIS.
The key change affects employees earning above RM5,000 per month. Previously, their contributions were capped at the RM5,000 salary level. With the new ceiling raised to RM6,000, any employee earning RM6,000 or more will now contribute based on this higher amount.
For an employee earning RM6,000 or more per month, the new maximum monthly contributions will be:
- SOCSO: RM104.15 (Employer’s share) and RM29.75 (Employee’s share).
- EIS: RM11.90 (Employer’s share) and RM11.90 (Employee’s share).
(Note: These amounts are based on the official PERKESO contribution schedule. Please always refer to the latest circulars for exact figures.)
What Should Employers Do Now?
- Budget Planning: Immediately re-evaluate your payroll budget for the second half of the year and beyond to account for this increase in costs.
- Update Payroll Systems: Before processing your September payroll, it is crucial to update your payroll software or calculation spreadsheets to adopt the new rates. Incorrect calculations can lead to arrears and potential penalties.
- Inform Your Employees: It is advisable to issue an internal memo to affected employees, clearly communicating this new policy and explaining why their payslip deductions will increase from September onwards. This helps to prevent misunderstandings.
How SMONE Can Help
Ensuring your payroll system is 100% accurate and compliant with the latest regulations is an ongoing challenge. SMONE’s Payroll & HR Compliance service is designed to free you from this burden.
Our systems are always kept up-to-date with the latest requirements from PERKESO, EPF, and LHDN. When new policies like this are announced, we handle all the necessary adjustments seamlessly for you.
Contact us today for a worry-free payroll solution, so you can focus on what matters more—leading your team and growing your business.
(Disclaimer)
This article is for general informational purposes and summarizes recent official announcements from PERKESO. It does not constitute legal or financial advice. We recommend consulting with a professional HR or tax advisor for your specific situation.