Running payroll in Malaysia means navigating three mandatory contribution schemes: EPF (KWSP), SOCSO (PERKESO), and EIS. Get one wrong and you face penalties from LHDN, KWSP, or PERKESO. This guide covers every rate, table, and calculation you need for 2026 — plus a practical overview of PCB (Monthly Tax Deduction) to round out your payroll knowledge.
Quick Tip
Use our free EPF/SOCSO Calculator to instantly compute all Malaysian statutory contributions for any salary.
EPF (KWSP) — Employees Provident Fund
EPF is Malaysia's mandatory retirement savings scheme, managed by Kumpulan Wang Simpanan Pekerja (KWSP). Every employer must register with EPF and contribute for all eligible employees.
EPF Contribution Rates 2026
EPF rates depend on the employee's age and monthly wages. Here are the standard rates for Malaysian citizens and permanent residents:
| Category | Employee Rate | Employer Rate | Total |
|---|---|---|---|
| Age 60 and below, wages > RM 5,000 | 11% | 12% | 23% |
| Age 60 and below, wages ≤ RM 5,000 | 11% | 13% | 24% |
| Age above 60, wages > RM 5,000 | 0% (optional 5.5%) | 4% | 4% |
| Age above 60, wages ≤ RM 5,000 | 0% (optional 5.5%) | 6.5% | 6.5% |
Important: EPF uses a contribution table system — contributions are based on wage brackets, not exact percentages. The rates above are effective rates; the actual ringgit amount is looked up from KWSP's Third Schedule table. In practice, this means the exact contribution may be a few sen different from a simple percentage calculation.
EPF Wage Ceiling
As of 2026, there is no maximum wage ceiling for EPF contributions. Employers must contribute EPF on the employee's entire monthly wages, regardless of how high the salary is. This is a key difference from Singapore's CPF, which has the OW ceiling.
EPF Calculation Example
Employee age 35, monthly salary: RM 6,000
Employee EPF (11%): RM 6,000 × 0.11 = RM 660
Employer EPF (12%): RM 6,000 × 0.12 = RM 720
Total EPF: RM 1,380
* Actual amount follows KWSP Third Schedule rounding
Employee age 35, monthly salary: RM 3,500
Employee EPF (11%): RM 3,500 × 0.11 = RM 385
Employer EPF (13%): RM 3,500 × 0.13 = RM 455
Total EPF: RM 840
* Note: employer rate is 13% because wages ≤ RM 5,000
SOCSO (PERKESO) — Social Security Organisation
SOCSO provides coverage for employment injuries, invalidity, and occupational diseases. All employees earning wages in Malaysia must be covered, with two categories:
- Category 1 (Employment Injury + Invalidity): For employees aged below 60
- Category 2 (Employment Injury only): For employees aged 60 and above, or those who were already receiving invalidity pension before employment
SOCSO Contribution Rates 2026
| Category | Employee Rate | Employer Rate | Total |
|---|---|---|---|
| Category 1 (below 60) | 0.5% | 1.75% | 2.25% |
| Category 2 (60 and above) | — | 1.25% | 1.25% |
SOCSO Wage Ceiling
SOCSO contributions are subject to a maximum insurable wage of RM 6,000 per month. This means even if your employee earns RM 15,000, SOCSO is only computed on the first RM 6,000. The contributions follow PERKESO's contribution table — a stepped table with specific ringgit amounts for each wage bracket.
SOCSO Calculation Example
Employee age 35, monthly salary: RM 6,000
SOCSO-insurable wages: RM 6,000 (at the cap)
Employee SOCSO (Cat 1): ~RM 29.65
Employer SOCSO (Cat 1): ~RM 103.80
* Exact amounts from PERKESO contribution table
Employee age 35, monthly salary: RM 10,000
SOCSO-insurable wages: RM 6,000 (capped)
Employee SOCSO (Cat 1): ~RM 29.65 (same as above — capped)
Employer SOCSO (Cat 1): ~RM 103.80 (same as above — capped)
EIS — Employment Insurance System
Introduced in 2018, EIS provides temporary financial assistance to workers who lose their jobs, along with re-employment placement and training. It is administered by PERKESO alongside SOCSO.
EIS Contribution Rates 2026
| Contributor | Rate |
|---|---|
| Employee | 0.2% |
| Employer | 0.2% |
EIS wage ceiling: RM 5,000 per month. Contributions are only computed on the first RM 5,000 of wages. Like SOCSO, EIS uses a contribution table with specific amounts per wage bracket.
Who is covered: All employees aged 18 to 60 (Malaysian citizens and permanent residents). Employees above 57 who have never contributed to EIS are exempted. Foreign workers are not covered.
EIS Calculation Example
Employee age 30, monthly salary: RM 4,000
EIS-insurable wages: RM 4,000 (below cap)
Employee EIS (0.2%): ~RM 7.90
Employer EIS (0.2%): ~RM 7.90
* Exact amounts from PERKESO EIS contribution table
PCB (Potongan Cukai Bulanan) — Monthly Tax Deduction
PCB is Malaysia's Pay-As-You-Earn (PAYE) income tax system. Employers are required to deduct income tax from employee salaries monthly and remit it to LHDN (Inland Revenue Board).
How PCB Works
- Calculation method: PCB can be computed using the Computerised Calculation method (e-PCB) or the Scheduler method (tables from LHDN).
- Factors affecting PCB: Gross salary, EPF deduction, marital status, number of children, tax reliefs (e.g., disabled dependents), and MTD category.
- Filing deadline: PCB must be remitted to LHDN by the 15th of the following month.
- Year-end form: Employers must issue Form EA to each employee by the last day of February, and submit Form E by 31st March.
PCB Quick Example
Employee monthly salary: RM 6,000
EPF deduction (employee): RM 660
Net taxable income: RM 6,000 − RM 660 = RM 5,340
Estimated PCB: ~RM 200–300/month (varies by category and reliefs)
* Exact PCB depends on employee tax profile — use LHDN e-PCB calculator or payroll software
Complete Payroll Calculation Example
Let's put it all together. Here's a complete payroll breakdown for a typical Malaysian employee:
Full Example: Employee Age 30, Monthly Salary RM 5,500
Employee Deductions
EPF (11%): RM 605
SOCSO (Cat 1): ~RM 27.15
EIS (0.2%): ~RM 9.90
PCB (est.): ~RM 180
Total deductions: ~RM 822
Take-home: ~RM 4,678
Employer Costs
Salary: RM 5,500
EPF (12%): RM 660
SOCSO (Cat 1): ~RM 96.20
EIS (0.2%): ~RM 9.90
Total employer cost: ~RM 6,266
That's ~14% above the base salary
Contribution Deadlines and Penalties
| Contribution | Due Date | Late Penalty |
|---|---|---|
| EPF (KWSP) | 15th of following month | RM 10,000 fine and/or 3 years imprisonment |
| SOCSO (PERKESO) | 15th of following month | 6% per annum on outstanding amounts |
| EIS | 15th of following month | RM 10,000 fine and/or 2 years imprisonment |
| PCB (LHDN) | 15th of following month | 10% penalty on outstanding amount |
Common Mistakes Malaysian SMEs Make
1. Using Wrong Employer EPF Rate
The employer EPF rate is 13% for wages ≤ RM 5,000 and 12% for wages above RM 5,000. Mixing these up is the most common payroll error in Malaysia.
2. Forgetting to Cap SOCSO and EIS
SOCSO caps at RM 6,000/month and EIS at RM 5,000/month. When an employee gets a raise that pushes them above these caps, the contribution amounts should stop increasing — but manual calculations often miss this.
3. Not Updating PCB When Circumstances Change
When an employee gets married, has a child, or their spouse starts/stops working, their PCB changes. Employees need to submit updated TP1 forms, and employers must adjust the deduction.
4. Missing the 15th Deadline
All four contributions (EPF, SOCSO, EIS, PCB) are due by the 15th. With different portals and submission methods, it's easy to miss one — especially EIS, which many SMEs forget about entirely.
5. Incorrect Treatment of Bonuses and Allowances
Certain allowances (like travel allowances under a specific limit) may be exempt from EPF. But most payments — including bonuses, commission, and overtime — are EPF-liable. Misclassifying these leads to under-contributions.
Automate Malaysian Payroll with KerjaPay
Keeping track of EPF tables, SOCSO caps, EIS wage ceilings, and PCB calculations manually is a recipe for errors and late penalties. KerjaPay automates all of this:
- Automatic EPF computation using the official KWSP Third Schedule table
- SOCSO and EIS calculations with proper wage ceiling enforcement
- PCB calculation via the computerised method (e-PCB compatible)
- Deadline reminders for all four contributions
- Multi-country support — run Singapore and Malaysia payroll from one platform
Run compliant Malaysian payroll in minutes
KerjaPay handles EPF, SOCSO, EIS, and PCB automatically. Multi-country payroll from SGD 8/month.
Try KerjaPay free for 14 daysFrequently Asked Questions
Do foreign workers need to contribute to EPF?
Foreign workers are not required to contribute to EPF, but they can opt in. If they do, the employee contributes 11% and the employer contributes RM 5 per employee. SOCSO and EIS also do not apply to foreign workers.
What if my employee earns below RM 1,500?
EPF still applies — there's no minimum wage threshold for EPF. SOCSO and EIS also apply from the first ringgit of wages. The contribution amounts will simply be lower based on the wage bracket.
Can I submit all contributions through one portal?
Currently, EPF, SOCSO/EIS, and PCB use separate portals (i-Akaun employer, PERKESO Assist, and e-PCB/e-Data PCB respectively). Payroll software like KerjaPay can generate submission-ready files for all three, saving significant admin time.
What about Sabah and Sarawak?
EPF, SOCSO, and EIS rates apply uniformly across Malaysia including Sabah and Sarawak. However, certain state-level considerations may affect overtime calculations and public holidays.
Last updated: March 2026. This guide is for informational purposes. Always verify rates with KWSP, PERKESO, and LHDN for the latest official figures.