Employer Social Contributions in Malaysia: EPF, SOCSO, EIS, and HRD Levy Contributions

Modified on: Fri, 1 Aug, 2025 at 3:08 PM

TABLE OF CONTENTS

What is the Employee Provident Fund (EPF)?
- EPF Contributions for Non-Malaysian Employees
- EPF Payment Deadlines
How are the contribution amounts calculated?

In Malaysia, employers are required to contribute to 4 mandatory social benefit programs for their employees. These include:

the Employees Provident Fund (EPF), for both local and foreign employees;
Social Security Organization (SOCSO), for both local and foreign employees;
Employee Insurance Scheme (EIS),
and HRD Levy.

For Expats with Employment pass, it is mandatory to contribute to the Social Security Organization (SOCSO) and Employees Provident Fund (EPF) programs.

What is the Employee Provident Fund (EPF)?

The Employees Provident Fund (EPF) is Malaysia’s national retirement savings scheme managed by the EPF Board. It allows employees to accumulate savings through monthly contributions from both themselves and their employers, helping ensure financial security after retirement.

EPF Contributions for Non-Malaysian Employees

As part of a legislative update, EPF contributions are mandatory for non-Malaysian citizen employees working in Malaysia. This expansion takes effect starting with wages earned in October 2025, for the November 2025 contribution month.

Key details of the new regulation

Who’s included?
All foreign employees working in Malaysia who hold a valid passport and an employment pass issued by the Immigration Department of Malaysia.
Contribution rates:
- Employee: 2% of monthly wages
- Employer: 2% of monthly wages
- Effective date: Starting with October 2025 wages

EPF Payment Deadlines

In Malaysia, employers are required to submit and pay all statutory contributions, including EPF, by the 15th of the following month for the previous month’s wages—as stipulated under Malaysian law.

Once the contribution is submitted successfully, it typically takes 3 to 7 working days for the amount to be processed and reflected in the employee’s i-Akaun.

If the contribution has not appeared 10 or more working days after the payment deadline (i.e. beyond the 15th of the following month), employees are advised to contact both their employer and the EPF directly to initiate an investigation and ensure timely resolution.

How are the contribution amounts calculated?

The burden payment amount is based on actual incomes of employee for the month. However, there's a difference - besides the 1% HRD Levy as employer contribution, other burdens are paid based on your income range and the specific amount issued by the authority. Also, some of your income won't be used as the payment base. Please refer to the table below or to Horizon's Cost Simulator.

Employer Burden	Range or Rate	Base Exempted
HRD LEVY	= [(Basic Salary +Fixed allowance] x 1% Levy Calculation Guideline (hrdcorp.gov.my)	Examples of payments excluded from HRD are non-monthly fixed income are: Bonuses and commissions Gratuity on discharge or retirements Fund/scheme contribution to employee benefits or welfare. Travel allowances including petrol and transport allowances Apprenticeship Overtime payment Night work allowance Shift allowance Attendance allowance (monthly variation) Production incentive
EIS	EIS Rate of Contribution ACT (.gov source)	Examples excluded from EIS and SOCSO contributions are: Employer contributions to EPF or pension funds Travel allowances (e.g. mileage reimbursements) Gratuity (e.g. retirement or termination payouts) Expense reimbursements (e.g. meals, transport during work) Annual bonuses Festive gifts (e.g. cash for Hari Raya or Christmas) Payment in lieu of notice Benefits-in-kind (e.g. company car, accommodation
SOCSO	SOCSO Rate of Contribution ACT (.gov source)
EFP	Ref Third Schedule – Section A (kwsp.gov.my)	Examples of payments excluded from EPF are: Overtime payments Gratuity (payment to employee payable at the end of a service period or upon voluntary resignation) Retirement benefits Termination benefits Travel allowances Meal allowance Payment in lieu of notice of termination of service Director’s fee Gifts (includes Cash Payments for holidays like Hari Raya, Christmas, etc.)

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Malaysia