Let’s dive into an essential topic for every business owner in Malaysia: Employees Provident Fund (EPF / KWSP) and Social Security Organisation (SOCSO / PERKESO) contributions. As a business owner, are you required or even eligible to contribute to both?
Many business owners are unaware, confused, or simply too busy generating revenue to look into compliance details. However, understanding your statutory obligations is crucial because, at the end of the day, you are also an employee of your own company.
1. EPF (KWSP) Contributions
Under Section 43(1) of the Employees Provident Fund Act 1991:
“Subject to the provisions of Section 52, every employee and every employer of a person who is an employee within the meaning of this Act shall be liable to pay monthly contributions in respect of the amount of wages for the month at the rate respectively specified in the Third Schedule.”
Pay close attention to the key phrase: “employer of a person who is an employee.”
In a Sendirian Berhad (Sdn Bhd) setup, directors who receive a salary or remuneration are treated as employees of the company. Therefore, statutory EPF contributions are mandatory for both the employer and employee portions. For Enterprise owners (Sole Proprietorships/Partnerships), profit drawdowns are generally not subject to mandatory EPF, though voluntary self-contributions are permitted. For specific scenarios, it is always recommended to consult EPF directly.
2. SOCSO (PERKESO) Contributions
The rules for SOCSO coverage vary based on your business structure:
- For Enterprise Owners (Sole Proprietorship / Partnership): If your name is registered with SSM, you qualify under the Self-Employed Social Security Scheme (SPS / Skim Keselamatan Sosial Pekerjaan Sendiri). Payments can be made on a monthly or annual basis across four flexible plan options directly via PERKESO’s official MATRIX Portal.
- For Sendirian Berhad (Sdn Bhd) Owners / Directors: Even though you are listed as a Director in SSM, if you receive a salary from the company, you can and should make monthly SOCSO contributions just like any other employee, based on PERKESO’s established contribution rate table.
Categories Exempted from Standard SOCSO Coverage
For general reference, individuals exempted from the standard Employees’ Social Security Act 1969 include:
- Permanent Federal and State public servants.
- Domestic servants.
- Self-employed individuals (except self-employed taxi/e-hailing drivers and bus operators).
- Sole proprietors or partners in a registered business enterprise.
Note: Categories 3 and 4 are covered separately under the Self-Employed Social Security Scheme (MATRIX).
We hope this guide helps clarify your statutory responsibilities as a business owner in Malaysia!
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