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EPF, SOCSO, EIS, MTD: Understanding Your Payslip As An Employee In Malaysia

Employees pay 11% of their salary to EPF.

 

The Employment Act governs the employment of all private sector employees in the Peninsular Malaysia and Federal Territory of Labuan. 

One of the regulations under the Act is that every employer is to provide details of wages earned to employees in a statement or payslip. 

Read Also: How Much Can You Earn In Malaysia As A Young Graduate (Less Than 5 Years Of Work Experience)  

What Should Be Included In A Payslip? 

An employer has a duty to maintain records of employment and furnish employees with a payslip every month. A wage period should not exceed one month.   

A payslip should consist of the following items:   

  1. Employee’s full name 
  1. Gender 
  1. Identity card number/passport number 
  1. Nationality 
  1. Wage payment method (For example: daily/weekly/monthly) 
  1. Wages/salaries for the period in question 
  1. Wage/salary payment date 
  1. Other payments for the relevant period 
  1.  Amount deducted for EPF contribution 
  1.  Employer registration number 
  1.  The amount paid by the employer, for the employer’s share contribution 
  1.  The full name of the employer/employer’s representative, signature and the date the statement was issued 

When Do Payslips Have To Be Provided To Employees? 

According to the Employment Act, the payment of wages should not be later than the 7th day after the last day of the wage period. Payslips should be given to employees on or before the date of payment of wages.   

In your payslip, you will see the wage payment date and the frequency of payment. Employers can pay you daily, weekly or monthly but not exceeding a month. Aside from wages, other payments may also be included such as allowance.    

Monthly Deductions In Your Payslips  

Employers must furnish wage statements showing Employee Provident Fund (EPF) deductions to employees.   

EPF is a retirement fund set by the government. Every month, you make contribution to your EPF account through salary deduction. Your employer is required to make a matching contribution, which is also detailed on your payslip.  

Here are the contribution rates for employee and employer: 

Salary  Employee below 60 years old  Employee above 60 years old 
RM5,000 and below 
  • Employee’s rate: 11% 
  • Employer’s rate: 13% 
 
RM5,000 and above 
  • Employee’s rate: 11% 
  • Employer’s rate: 12% 
 
No limit   
  • Employee’s rate: 0% 
  • Employer’s rate: 4% 

 

Read Also: Malaysia EPF: How Dividend Yield Is Derived And Calculated 

Additionally, you will also need to make monthly contribution to the Social Security Organisation (SOCSO) by the Ministry of Human Resources through salary deduction. SOCSO provides protection to you should you experience injury at work or loss of employment through the Employment Insurance System (EIS). 

You can view the contribution amounts for employers and employees to SOCSO and EIS in this table. 

Finally, employers have to make monthly tax deduction (MTD) from employee’s salary to pay for their income tax.    

Individuals who earn an income exceeding the threshold of RM34,000 need to pay an annual tax. As paying a lump sum amount at the end of the year can be overwhelming, monthly deductions from salary are made instead beforehand.  

You can use this calculator to find out how much MTD you should be paying.   

Why Are Payslips Important? 

Employees can refer to their payslips for their wage calculation and check its accuracy. Payslips can also be useful for preventing disputes between an employer and employee as all variations in salary are detailed in the payslip.   

Additionally, payslips serve as a proof of income, which may be required when applying for loans and credit cards. 

Read Also: Malaysians’ Guide To Finding Employment In Singapore  

 

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