Losing a job can create immediate financial pressure. It can also make it harder for someone to focus on finding suitable work. Malaysia’s Employment Insurance System, commonly known as EIS, provides temporary income support and practical reemployment assistance to eligible workers who lose their jobs.
Accurate EIS deductions form part of broader payroll compliance in Malaysia, which also covers salary payments, tax deductions, payslips, and statutory submissions.
This guide explains how EIS Malaysia works, who must contribute, what benefits are available, how employees can submit a claim, and what employers should do to remain compliant.
What is EIS in Malaysia?
The Employment Insurance System is a social protection scheme administered by PERKESO under the Employment Insurance System Act 2017, also known as Act 800.
EIS began operating on 1 January 2018. Its purpose is not limited to paying unemployment benefits. The system combines temporary financial support with employment services, job matching, career counselling, and approved training.
An eligible insured person who loses employment may receive income replacement while looking for a new job. The person must also participate in the reemployment process, which normally includes registering with MYFutureJobs and working with a PERKESO Employment Services Officer.
In Malay, EIS is called Sistem Insurans Pekerjaan, or SIP. PERKESO also presents the programme under the name LINDUNG KERJAYA.
Who is Covered by EIS Malaysia?
EIS generally covers eligible Malaysian citizens and permanent residents who work in the private sector under a contract of service or apprenticeship.
Coverage normally applies to employees from the age of 18 until 60. An employee who reaches the age of 57 and has never contributed to EIS before that age is generally excluded from the scheme.
Companies planning to convert a contractor into a full time employee should review whether EIS registration and contributions will become mandatory after the change.
People who are generally outside EIS coverage include:
- Self employed individuals
- Foreign workers
- Domestic workers
- Certain public sector employees
- Business owners who do not work under a contract of service
Coverage can depend on the person’s legal employment status rather than their job title. Employers should review the actual working relationship whenever there is uncertainty about whether someone is an employee or an independent contractor.
How Much is The EIS Contribution in Malaysia?
EIS is funded jointly by the employer and employee. The standard contribution is approximately 0.2% of the employee’s insured monthly wages from each party, for a combined contribution of approximately 0.4%.
The exact amount must follow the contribution table in the Second Schedule of Act 800. Employers should therefore use the official schedule or PERKESO payroll calculations instead of relying only on a percentage formula.
From 1 October 2024, the monthly wage ceiling for EIS contributions increased from RM5,000 to RM6,000. Wages above RM6,000 are subject to the maximum contribution band.
| Monthly wage | Employer contribution | Employee contribution | Total contribution |
| More than RM5,000 up to RM5,100 | RM10.10 | RM10.10 | RM20.20 |
| More than RM5,500 up to RM5,600 | RM11.10 | RM11.10 | RM22.20 |
| More than RM5,900 up to RM6,000 | RM11.90 | RM11.90 | RM23.80 |
| More than RM6,000 | RM11.90 | RM11.90 | RM23.80 |
These examples show the upper contribution bands. The official contribution schedule contains the amount for every wage range.
Example of an EIS contribution
Suppose an employee earns RM6,500 a month. Since the contribution ceiling is RM6,000, the employer contribution is RM11.90 and the employee contribution is RM11.90. The total monthly EIS payment is RM23.80.
EIS is separate from Employees Provident Fund and other SOCSO contributions. Each statutory contribution should appear correctly in payroll records and the employee’s payslip.
What Counts as Loss of Employment Under EIS?
An employee must experience a qualifying loss of employment to claim EIS benefits. PERKESO lists the following situations as examples:
- Normal retrenchment or redundancy
- A voluntary separation scheme or mutual separation scheme
- Closure or bankruptcy of the employer’s business
- Closure of the workplace because of a natural disaster or another force majeure event
- Constructive dismissal
- Resignation caused by sexual harassment or threats at work
- Resignation after the employee is ordered to perform dangerous duties outside the job scope
EIS benefits are separate from any severance package or termination payment the employee may receive from the employer.
When is an Employee Not Eligible to Claim EIS?
The following situations generally do not qualify as loss of employment for EIS purposes:
- Voluntary resignation for personal reasons
- Expiry of a fixed term employment contract
- Termination by mutual consent without a qualifying separation scheme
- Completion of the work stated in a contract
- Retirement
- Dismissal because of employee misconduct
The facts behind the separation matter. For example, an ordinary resignation is different from a resignation caused by workplace threats or sexual harassment. Employees should provide clear evidence when their case involves one of the specific circumstances recognised by Act 800.
What Benefits are Available Under EIS Malaysia?
EIS offers several forms of financial and employment support. Eligibility and payment duration depend on the employee’s contribution record and PERKESO’s assessment.
1. Job Search Allowance
The Job Search Allowance provides temporary income replacement to an eligible employee who has lost their only source of employment income.
PERKESO may pay the allowance for three to six months, depending on the Contributions Qualifying Conditions. The allowance decreases over time because it is intended to support the person during an active job search.
The statutory payment rates are based on the employee’s assumed monthly wage:
| Month of claim | Percentage of assumed monthly wage |
| First month | 80% |
| Second month | 50% |
| Third month | 40% |
| Fourth month | 40% |
| Fifth month | 30% |
| Sixth month | 30% |
The number of payable months depends on how many qualifying contributions the employee has made within the relevant contribution period.
2. Reduced Income Allowance
The Reduced Income Allowance supports an insured person who has more than one job and loses one or more of those jobs, but not all employment income.
Its rates and duration follow the Job Search Allowance rules, but the amount is paid as a lump sum. If a person loses all jobs at the same time, the person may qualify for both the Job Search Allowance and Reduced Income Allowance, subject to PERKESO’s assessment.
3. Early Reemployment Allowance
The Early Reemployment Allowance rewards a Job Search Allowance recipient who finds work before the remaining allowance period ends.
The allowance is paid as a lump sum and is equal to 25% of the Job Search Allowance balance that has not yet been paid. It encourages jobseekers to return to suitable employment as soon as possible.
4. Training Fee
An eligible Job Search Allowance recipient may be referred to approved vocational training after consultation with a PERKESO Employment Services Officer.
EIS can cover approved training costs of up to RM4,000. Training can help the jobseeker gain skills that are more relevant to available roles.
5. Training Allowance
An eligible participant may receive a daily training allowance of RM10 to RM20. The rate depends on the person’s previous assumed monthly wage.
The participant must attend the required training sessions to remain eligible.
6. Reemployment Support
EIS recipients can receive practical support such as job matching, career guidance, and placement assistance. Claimants are generally required to register with MYFutureJobs and take part in the job search process.
How to claim EIS in Malaysia
An eligible employee should act quickly because the application must be submitted within 60 days from the date of loss of employment.
The usual process is as follows:
Step 1: Confirm the reason for job loss
Check whether the separation meets the EIS definition of loss of employment. Keep all documents that explain why the employment ended.
Step 2: Prepare the supporting documents
Commonly requested documents include:
- A copy of the applicant’s identity card
- Proof of loss of employment, such as a termination or retrenchment letter
- Recent payslips
- Bank account information
- The employment contract or offer letter, where requested
- Other evidence relevant to the separation
PERKESO may request additional documents depending on the facts of the case.
Step 3: Submit the application
The employee can apply through the PERKESO LINDUNG KERJAYA portal or follow the application channel specified by PERKESO.
Step 4: Register with MYFutureJobs
Claimants are required to participate in reemployment services. MYFutureJobs helps match jobseekers with suitable vacancies.
Step 5: Attend meetings and report job search activity
The employee should cooperate with the assigned Employment Services Officer, attend required appointments, and provide accurate updates about applications, interviews, job offers, and reemployment.
Step 6: Inform PERKESO after finding work
A claimant who returns to work should report the change promptly. The person may qualify for the Early Reemployment Allowance if the relevant conditions are met.
Employer Responsibilities for EIS Compliance
Employers play a central role in protecting employees and maintaining accurate contribution records.
1. Register eligible employees
Employers must ensure that eligible employees are registered with PERKESO. Registration details should match the employee’s official identification and employment records.
2. Calculate Contributions Using The Correct Wage Band
Payroll teams should use the current Act 800 contribution schedule and the RM6,000 wage ceiling. A flat percentage calculation can create small differences from the statutory table.
3. Deduct and Pay Contributions On Time
The employee’s share should be deducted correctly from wages. The employer must add its share and submit the total contribution to PERKESO within the required payment timeline.
4. Maintain Complete Payroll Records
Employers should retain payroll calculations, payslips, contribution files, payment confirmations, employee records, and documents relating to employment termination.
These records support internal audits, employee enquiries, and any review by PERKESO.
5. Give Employees Accurate Separation Documents
When employment ends, the termination letter should clearly state the effective date and reason. Vague or inconsistent wording can delay an employee’s EIS application.
6. Review Payroll Changes Promptly
Salary adjustments, unpaid leave, new hires, employee departures, and status changes can affect payroll reporting. Employers should update their systems before the next contribution cycle.
Common EIS payroll mistakes to avoid
Even a small administrative error can affect an employee’s contribution history or delay a future claim.
Common mistakes include:
- Continuing to use the old RM5,000 wage ceiling
- Treating the contribution as exactly 0.2% without checking the statutory schedule
- Failing to register a new eligible employee
- Misclassifying an employee as an independent contractor
- Deducting the employer’s share from the employee’s wages
- Recording the wrong identity number or wage amount
- Submitting contributions late
- Giving an employee an unclear or inaccurate termination letter
A monthly payroll checklist and regular reconciliation against PERKESO records can reduce these risks.
Why EIS compliance matters when hiring in Malaysia
EIS may appear to be a small payroll item, but it forms part of an employer’s broader statutory responsibilities. Incorrect registration or contributions can expose the company to compliance issues and leave employees without the contribution record they need when claiming support.
The challenge becomes greater for an overseas company that hires in Malaysia without an established local HR and payroll team. The company must coordinate compliant employment contracts, statutory registrations, monthly payroll, employee deductions, employer contributions, payslips, and termination processes.
An Employer of Record can employ Malaysian talent on a company’s behalf and manage local payroll and statutory contributions, including EIS, while the company directs the employee’s day to day work.
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Frequently asked questions about EIS Malaysia
Is EIS the same as SOCSO?
No. PERKESO, also known as SOCSO, administers several social protection schemes. EIS is the employment insurance scheme established under Act 800. Other SOCSO contributions provide different forms of protection, such as coverage for employment injury and invalidity.
Is EIS compulsory in Malaysia?
Yes. Employers and employees who fall within the scope of Act 800 must contribute. It is not an optional employee benefit.
What is the EIS contribution rate?
The employer and employee each contribute approximately 0.2% of insured monthly wages. The exact contribution must follow the official Act 800 schedule. The current wage ceiling is RM6,000 per month.
What is the maximum monthly EIS contribution?
For wages above RM6,000, the employer contributes RM11.90 and the employee contributes RM11.90. The total is RM23.80 per month.
Can an employee claim EIS after resigning?
An ordinary voluntary resignation generally does not qualify. However, PERKESO recognises certain circumstances, including resignation caused by sexual harassment, workplace threats, or an order to perform dangerous duties outside the employee’s job scope. Each claim is assessed based on its facts and evidence.
Can a dismissed employee claim EIS?
An employee dismissed for misconduct generally does not qualify. A person who has been retrenched, constructively dismissed, or affected by another recognised loss of employment may qualify if all contribution and application conditions are met.
How long does an employee have to apply?
The employee must apply within 60 days from the date of loss of employment. Applying early gives the claimant more time to resolve any missing document or record issue.
How long can EIS benefits be paid?
The Job Search Allowance may be paid for three to six months. The exact duration depends on the employee’s contribution history and the applicable Contributions Qualifying Conditions.
Can foreign employees contribute to EIS?
Foreign workers are generally not covered by EIS. Employers should still review the other Malaysian social security rules that may apply to foreign employees.
Conclusion
EIS Malaysia gives eligible employees both financial breathing room and practical help after an unexpected job loss. For employers, it creates a clear obligation to register covered employees, apply the correct contribution table, make payments on time, and maintain reliable records.
The most important compliance update is the RM6,000 monthly wage ceiling that has applied since 1 October 2024. Employers should also remember that EIS calculations follow statutory wage bands, while employees must submit a claim within 60 days of losing employment.
Accurate payroll processes protect the business and help ensure employees can access support when they need it most.
