SOCSO Calculation 2025: What You Need to Know and Prepare For

Every job comes with its risks, whether it is fieldwork or an office job. These risks can include workplace injuries, disabilities, job loss, and more.

That is why SOCSO was created by the government to protect employees from unexpected challenges.

As 2025 approaches, it is important to understand SOCSO, its recent updates, and what you need to prepare for the coming year. Let’s dive into the details in this article.

Overview SOCSO

SOCSO manages two key laws to protect employees:

• The Workers’ Social Security Act 1969 (Act 4): Provides coverage for injuries or disabilities related to work or any other causes.

• The Employment Insurance System Act 2017 (Act 800): Offers financial support and job-search help for workers who lose their jobs.

SOCSO requires both employers and employees to contribute.

This contribution goal is to create a safety net for workers and help maintain stability in the workforce if something unwanted happens.

What Has Changed?

Starting October 1, 2024, a major update will happen in the wage ceiling, which becomes higher.

The maximum wage used to calculate SOCSO and EIS contributions increased from RM5,000 to RM6,000.

This means employees earning above RM5,000 will now have their contributions calculated based on the new RM6,000 limit, with contributions capped at that amount.

Changes to the Workers’ Social Security Act 1969

• First category contributions: This includes both the Employment Injury Scheme and the Invalidity Scheme, with the contribution costs shared between employers and employees.

• Second category contributions: This covers only the Employment Injury Scheme, with the employer fully responsible for paying the entire contribution.

Updates to the Employment Insurance System Act 2017

• Expanded coverage: This includes Malaysian citizens and permanent residents working under a formal employment contract.

• Updated contribution rates: Employers and employees now share the contribution equally, with the contributions calculated based on a maximum wage limit of RM6,000.

Eligibility To Claim Benefits

Employees under SOCSO are eligible for several benefits tailored to their specific needs:

• Employment Injury Scheme: Provides support for injuries or illnesses caused by work-related activities.

• Invalidity Scheme: Offers financial assistance for permanent disabilities, whether or not they are work-related.

• EIS Benefits: Helps with job search support, retraining programs, and financial aid during periods of unemployment.

Eligibility depends on factors like the type of employment, contribution records, and the reason for the claim.

Impacts on Employers and Employees

While the increased wage ceiling offers improved social security benefits, it also introduces new financial considerations. What are the impacts for both employers and employees?

For Employers

• Employers will need to pay more for employees earning between RM5,000 and RM6,000 due to the increased contribution rates.

• Payroll systems must be updated to correctly calculate the new contribution amounts and ensure compliance.

• Employers should account for the additional payroll costs in their financial plans.

For Employees

• The increased wage ceiling means employees can access more comprehensive benefits.

• Employees will see a small increase in SOCSO deductions, leading to a marginal reduction in take-home pay.

For example, an employee earning RM6,000 will now contribute RM29.75 (up from RM24.75), while the employer contributes RM104.15.

How to Prepare for the Update

Employers can take the following steps to smoothly adapt to SOCSO’s updated contribution rules:

Update payroll systems

Make sure to update your payroll and accounting systems to match the new RM6,000 wage ceiling and updated contribution rates.

Automating these updates can help ensure calculations are accurate and reduce the chance of mistakes. 

It is also a good idea to test your payroll system using different employee salary examples. This allows you to verify compliance with the new rules and identify any potential issues.

Inform employees 

Keep employees informed about the updates.

Organize meetings or townhalls, or send detailed emails to explain the changes and highlight how the adjustments improve their benefits under SOCSO.

To make it clearer, provide personalized pay summaries that show how the new rates affect each employee individually. 

Plan financially

Review your company’s payroll budget to include the higher contributions for employees earning between RM5,000 and RM6,000.

Planning for these extra costs in advance helps confirm your business stays on track without impacting other important expenses.

Ensure compliance

Meeting deadlines is crucial to avoid fines.

You can submit contributions through approved methods such as the ASSIST portal, internet banking, or selected bank counters.

To stay on track, consider setting up reminders or automating the payment process to make sure contributions are submitted on time every month.

Updated SOCSO Contribution Rates 2025

Then, how about the SOCSO's contribution rates for 2025? Let’s take a look at the overview of the updated contribution rates from PERKESO and Central HR:

Update on Contribution Amount for Act 4 and Act 800 by the Increment of the Wage Ceiling Limit

In the revised SOCSO contribution table, both employees and employers are required to contribute a percentage of the employee's monthly salary, capped at a maximum wage limit of RM6,000.