Job security is a concern for many Malaysians, especially in today’s unpredictable economic and geopolitcal landscape. Whether it’s a company downsizing or industry restructuring, the risk of sudden unemployment can leave many grappling with financial uncertainty.
That’s where the Employment Insurance System (EIS), also known as Sistem Insurans Pekerjaan (SIP), steps in as a safety net. Managed by the Social Security Organisation (SOCSO), the EIS provides financial assistance and employment services to eligible workers who have lost their jobs.
But how much can you actually claim?
What is the Employment Insurance System (EIS)?
Launched in 2018, the EIS is a government initiative aimed at helping retrenched employees bridge the gap in between jobs. It provides a temporary financial relief, training opportunities, and job placement services to ensure workers can get back on their feet.
The EIS is compulsory for employees aged 18 to 60 who are working in the private sector. Both employers and employees contribute 0.2% of the employee’s monthly salary, capped at $5,000, to the fund, and totals up to a combined contribution of 0.4%.
These contributions are collected by SOCSO and pooled into the EIS fund – supporting those who become unemployed.
Read Also: EPF, SOCSO, EIS, MTD: Understanding Your Payslip As An Employee In Malaysia
What is the EIS contribution rate?
The EIS contribution rate in Malaysia, as of 1 September 2022, is capped at an insured salary of RM5,000 monthly, aligning with the revised Wage Ceiling Limit under Act 4 and Act 800.
Employers and employees collectively contribute 0.4% of the employee’s wages, with each party contributing 0.2%. For example, if wages fall between RM4,000 and RM4,100, both employer and employee contribute RM8.10 each, totalling RM16.20. If an employee’s wage is above RM5,000, the maximum contribution is RM10 each, or RM20 combined.
Contributions are deducted from income sources, including wages, overtime, commissions, service charges, allowances, incentives, and leave emoluments. However, specific categories like travel allowances, EPF contributions, expense claims, dismissal payments, benefits in kind, and bonuses are exempt from EIS contributions as outlined by PERKESO.
Who is Eligible for EIS?
Not everyone is automatically eligible to claim benefits under the EIS. To qualify, you must meet the following criteria:
- Loss of Employment: You must have experienced a genuine job loss. This includes retrenchment, voluntary or mutual separation, company closure, or redundancy. However, resignation, misconduct, or voluntary retirement do not qualify.
- EIS Contributions: You must have made sufficient contributions to the EIS fund. The minimum requirement is 12 months of contributions over a 24-month period before losing your job.
- Age Limit: Employees over 60 years old are not eligible, as EIS coverage stops once you reach this age.
How Much Can You Claim?
The financial assistance provided under the EIS comes in the form of a Job Search Allowance (JSA), which is calculated based on your last drawn monthly salary. The JSA amount decreases over time to encourage job seekers to actively seek new employment. For instance, 80% for the first month, 50% for the second month, 40% for the third and fourth month, and 30% for the fifth and sixth months.
The maximum claim period is six months, and the total amount you receive will depend on your prior salary. However, there is an upper limit, the maximum insurable salary is RM4,000, meaning your benefits will be capped even if you earned more than this amount.
For illustration:
- If your last drawn salary was RM3,000, your first JSA payment would be RM2,400 (80% of RM3,000).
- If your last drawn salary was RM5,000, your first JSA payment would be capped at RM3,200 (80% of the RM4,000 limit).
What Other Benefits Does EIS Offer?
Beyond financial assistance, the EIS is designed to help individuals return to the workforce. Here’s how its benefits stack up:
- Early Re-Employment Allowance: If you secure a new job before exhausting your JSA entitlement, you’ll receive 25% of your remaining allowance as a bonus. This incentivises faster job placements.
- Training Fees: The EIS covers the cost of skills training courses, up to a maximum of RM4,000 per individual. This helps unemployed workers improve their employability.
- Training Allowance: While attending a training program, you can claim an additional allowance of RM10 per day.
- Reduced Income Allowance: For workers whose salaries are reduced due to being placed in lower-paying jobs after retrenchment, the EIS provides an additional allowance to make up for part of the shortfall.
- Job Placement Services: SOCSO assists claimants with finding new employment through job-matching services, career counselling, and labour market insights.
When faced with the uncertainty of job loss, the EIS serves as a critical safety net, offering financial relief and resources to help Malaysians navigate tough times. While it may not replace your full income, the scheme provides a much-needed cushion, enabling you to focus on securing your next opportunity.
Whether you’re an employee contributing to the EIS or someone considering its benefits, understanding how the scheme works empowers you to make informed decisions about your financial future.
With the right approach, the EIS can be a stepping stone toward new opportunities and a brighter career ahead.
Read Also: What’s The Median Salary In Malaysia (At Every Age, Gender, Race And State)?
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