Malaysia Statutory and Private Employee Benefits, 2023 Update

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Malaysia Statutory and Private Employee Benefits Market Overview

Malaysia is a growing, state-oriented, and industrialized economy. The government plays an important role in guiding the country’s economic activity through economic planning and policy. It has one of the highest standards of living in Southeast Asia, largely due to the expansion of its industrial sector.

The Malaysian Social Security System is based on two pillars: The Employees Provident Fund (EPF) and the Social Insurance System. Pensions in Malaysia are covered by the Employees Provident Fund, which acts as a fundamental support to the Malaysian pension system and deals with the provision of extensive social security functions. The social insurance system is administered by the Social Security Organization (SOCSO) and provides financial assistance to insured employees and their dependents in the event of accidents that may result in death, disability or illness, or an occupational disease. SOCSO provides two types of insurance schemes to employees: the employment injury scheme and the disability scheme.

The Malaysia employee benefits report provides in-depth industry analysis, information, and insights into employee benefits, an overview of the state and compulsory benefits, detailed information about the private benefits, insights on various central institutions responsible for the administration of the different branches of social security and the regulatory framework of the employee benefits in Malaysia.

Key Regulations ·       Employees’ Social Security Act, 1969

·       Provident Fund Act, 1999

·       The Employment Act, of 1955, the main law on employment and labor

·       Children and Young Persons (Employment) Act, 1966, prohibits children from working near hazardous and poisonous places

·       Factories and Machinery Act, 1967 gives protection to workers against health and safety hazards

·       Employment (Restriction) Act, 1968

·       Occupational Safety and Health Act, 1994

·       Minimum Retirement Age Act, 2012

·       Minimum Wages Order, 2018

·       Employment Insurance System Act, 2017

·       The Employment (Amendment Bill) 2021

Key State and Compulsory Benefits ·       Retirement Benefits

·       Death in Service

·       Long-Term Disability Benefits

·       Short-Term Sickness Benefits

·       Medical Benefits

·       Workers’ Compensation Insurance

·       Maternity and Paternity Benefits

·       Other Benefits

Key Private Benefits ·       Retirement Benefits

·       Death Benefits

·       Medical Benefits

·       Disability Benefits

·       Accidental Death and Dismemberment Benefits

·       Other Benefits

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Employee Benefits Regulations in Malaysia

The various employee benefits laws that are applicable in Malaysia are:

  • Employees’ Social Security Act, 1969
  • Provident Fund Act, 1999
  • The Employment Act, of 1955, the main law on employment and labor
  • Children and Young Persons (Employment) Act, 1966, prohibits children from working near hazardous and poisonous places
  • Factories and Machinery Act, 1967 gives protection to workers against health and safety hazards
  • Employment (Restriction) Act, 1968
  • Occupational Safety and Health Act, 1994
  • Minimum Retirement Age Act, 2012
  • Minimum Wages Order, 2018
  • Employment Insurance System Act, 2017
  • The Employment (Amendment Bill) 2021

For more insights on employee benefit regulations in Malaysia, download a free report sample

Malaysia Employee Benefits Segmentation by State and Compulsory Benefits

The key state and compulsory benefits offered by employers in Malaysia are retirement benefits, death in service, long-term disability benefits, short-term sickness benefits, medical benefits, workers’ compensation insurance, maternity and paternity benefits, and other benefits.

Death in Service Benefits: Death-in-service benefits are administered by the EPF and Social Security Organization (SOCSO). These benefits are granted under two programs: the provident fund system and the social insurance system. Under the provident fund system, there are two types of accounts for financing survivors’ benefits. A proportion of the Account 1 balance is used for investment with an external manager, and a proportion of Account 2 is used for education, designated critical illnesses, or purchasing of a house.

Workers’ Compensation Insurance: The Employees’ Social Security Act 1969 governs workmen’s compensation benefits. It is a social insurance system administered by SOCSO and covers employees who earn below MYR4,000 ($909) per month. Household workers, spouses of business owners, and self-employed persons are excluded from cover. There are special systems for public-sector employees, foreign workers, and military personnel.

Maternity and Paternity Benefits: In Malaysia, all female employees are provided with maternity benefits in the form of maternity leave and maternity allowance. Female employees in both the public and private sectors are covered during maternity. The right to pay maternity leave is covered under the Employment Act 1955.

To know more about state and compulsory employee benefits in Malaysia, download a free report sample

Malaysia Employee Benefits Segmentation by Private Benefits

The key private benefits offered by employers in Malaysia are retirement benefits, death benefits, medical benefits, disability benefits, accidental death and dismemberment benefits, and other benefits.

Retirement Benefits: In Malaysia, public-sector employees, as well as private-sector employees, are covered by the Employee Provident Fund (EPF) which is the core of Malaysia’s retirement system. The benefits under the EPF system can be availed at the time of retirement or can be withdrawn under any circumstances.

Medical Benefits: Healthcare in Malaysia consists of a two-tier system of public healthcare facilities operated and maintained by the government and private sector facilities. Even though the private healthcare system runs independently from the public system, the Malaysian government has made sizeable financial investments in organizations running private facilities.

Disability Benefits: Standalone short-term and long-term disability plans are not offered in Malaysia. It is also offered as a rider under group life insurance and medical insurance plans or covered under employers’ liability insurance and personal accident insurance. Additional premium needs to be paid for such rider/cover.

To know more about private employee benefits in Malaysia, download a free report sample

Scope

This report provides a detailed analysis of employee benefits in Malaysia –

  • It offers a detailed analysis of the key government-sponsored employee benefits, along with private benefits.
  • It covers an exhaustive list of employee benefits, including retirement benefits, death in service, long-term disability benefits, medical benefits, workmen’s compensation insurance, maternity and paternity benefits, family benefits, unemployment benefits, long-term care benefits, leaves and holidays, and private benefits.
  • It highlights the economic and regulatory situations relating to employee benefits in Malaysia.

Key Highlights

• Ministry of Finance (Kementerian Kewangan), Employee Provident Fund (Kumpulan Wang Simpanan Pekerja, KWSP), Ministry of Human Resources (Kementerian Sumber Manusia), Social Security Organization (SOCSO), and Ministry of Health (Kementerian Kesihatan) organizations are responsible for the functioning of the overall social security system.

• A person’s national insurance contribution is determined based on their income.

• An insured person who is unemployed or unable to work and whose benefits have been exhausted is entitled to a credited contribution.

• In Malaysia, employers provide voluntary retirement benefits to their employees through private retirement schemes and deferred annuity schemes.

Reasons to Buy

  • Make strategic decisions using in-depth information related to employee benefits in the country.
  • Assess employee benefits of the market, including state and compulsory benefits and private benefits.
  • Gain insights into the key employee benefit schemes offered by private employers in the country.
  • Gain insights into key organizations governing the employee benefits market, and their impact on companies.

Table of Contents

  • Table of Contents
  • List of Figures
  • List of Tables

    • 1. Executive Summary
    • 2. Introduction
    • 2.1 What is this Report about?
    • 2.2 Definitions
    • 3. Country Statistics
    • 4. Overview of Employee Benefits in Malaysia
    • 5. Regulations
    • 6. State and Compulsory Benefits
    • 6.1 Retirement Benefits

  • – Introduction
  • – Eligibility
  • – Benefits
  • – Payment options
  • – Contribution

    • 6.2 Death in Service

  • – Introduction
  • – Eligibility
  • – Benefits
  • – Payment options
  • – Contribution

    • 6.3 Long-Term Disability Benefits

  • – Introduction
  • – Eligibility
  • – Benefits
  • – Payment options
  • – Contribution

    • 6.4 Short-Term Sickness Benefits

  • – Introduction
  • – Eligibility
  • – Benefits
  • – Payment options
  • – Contribution

    • 6.5 Medical Benefits

  • – Introduction
  • – Eligibility
  • – Benefits
  • – Payment options
  • – Contribution

    • 6.6 Workers’ Compensation Insurance

  • – Introduction
  • – Eligibility
  • – Benefits
  • – Payment options
  • – Contribution

    • 6.7 Maternity and Paternity Benefits

  • – Introduction
  • – Eligibility
  • – Benefits
  • – Payment options
  • – Contribution

    • 6.8 Other Benefits

  • – Family Benefits
  • – Long-Term Care Benefits
  • – Unemployment Benefits
  • – Leaves and Holidays

    • 7. Private Benefits
    • 7.1 Retirement Benefits
    • 7.2 Death Benefits
    • 7.3 Medical Benefits
    • 7.4 Disability Benefits
    • 7.5 Accidental Death and Dismemberment Benefits
    • 7.6 Other Benefits

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Table

Table 1: Insurance Industry Definitions

Table 2: Malaysia – Country Statistics, 2022

Table 3: Malaysia – Ex-Gratia Death Grant

Table 4: Malaysia – Observance Holidays, 2023

Table 5: Malaysia – Public Holidays 2023

Table 6: Malaysia – Accidental Death and Dismemberment Benefits, 2023

Figures

List of Figures

Figure 1: Malaysia – Main Institutions of Social Security System

Frequently asked questions

  • What are the key regulations guiding employee benefits in Malaysia?

    The key regulations guiding employee benefits in Malaysia are the Employees’ Social Security Act, of 1969, the Provident Fund Act, of 1999, The Employment Act, of 1955, the main law on employment and labor, the Children and Young Persons (Employment) Act, 1966, prohibits children from working near hazardous and poisonous places, Factories and Machinery Act, 1967 gives protection to workers against health and safety hazards, Employment (Restriction) Act, 1968, Occupational Safety and Health Act, 1994, Minimum Retirement Age Act, 2012, Minimum Wages Order, 2018, Employment Insurance System Act, 2017, and The Employment (Amendment Bill) 2021.

  • What are the key state and compulsory benefits for employees in Malaysia?

    The state and compulsory benefits for employees in Malaysia are retirement benefits, death in service, long-term disability benefits, short-term sickness benefits, medical benefits, workers’ compensation insurance, maternity and paternity benefits, and other benefits.

  • What are the key private benefits for employees in Malaysia?

    The private benefits for employees in Malaysia are retirement benefits, death benefits, medical benefits, disability benefits, accidental death dismemberment benefits, and other benefits.

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