EMPLOYEES’ SOCIAL SECURITY LAWS-Employees’ Social Security Act 1969 (SOCSO)

-Objectives & functions-Schemes

-Workmen’s Compensation Act 19521

INTRODUCTION Most countries’ governments have established

system of ensuring the social security of its citizens.

The social security functions to make certain arrangements in the event of any financial problem that might be faced by the employees in future or to deal with any eventualities & probabilities that will occur.

This system is basically designed to provide financial protection for reasons such as unemployment, post-retirement, accident or serious illness and even death. 2

CONT. In 1969, the Employees’ Social Security Act

(ESSA) was introduced to provide compensation & financial assistance to workers who are unable to work either temporarily or permanently as a result of work-related accident or illness.

This funds may support the workers & their family during the period of time.

Other than ESSA, EPF is also another system to assist the workers after retirement.

While Workmen’s Compensation Act 1952 is another similar security specially for foreign workers.

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The purpose of having ESSA is to establish an insurance system so that employees involved in an accident at work or who develop work-related illness, will be provided with compensation & financial assistance

Employers are responsible for registering their employees as members of SOCSO & for remitting the mandatory monthly contributions (Third Schedule).

Both employer & employee must pay for contribution.

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SCOPE OF THE ACT ESSA applies thru’out Msia & in all industries in

the private sector. SOCSO's coverage is only for employees who are

Malaysian citizens and who are permanent residents.

Those who earn less than RM3,000 is compulsory to contribute for SOCSO. And even if the wages has raised above RM3,000, the worker remains a member of SOCSO due to the principle of “once in always in” that applies to employee members.

Those who earn above RM3,000 can opt to become member but with approval of the employer (who must agree to contribute on his behalf). 5

EMPLOYER'S LIABILITY The principal and immediate employer who employs

one or more employees is required to register and contribute monthly to SOCSO for all employees under the ESSA, 1969.

The principal employer is also liable to ensure all employees employed by the immediate employer have been registered and their contributions have been paid. PRINCIPAL EMPLOYER - an employer who has employed an

employee directly to work for him. The employer is responsible for the payment of wages and all the service matters of the employee.

IMMEDIATE EMPLOYER - an employer who works for a principal employer or undertakes part of the work of the principal employer by way of a sub-contract. The immediate employer has direct control of the employees employed by him.

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EMPLOYEE

An employee is defined as a person who has been employed by an employer under a contract of service or apprenticeship.

Employees monthly earning at RM3,000 or less must contribute to SOCSO.

Employees monthly earning more than RM3,000 who never registered or contibute to SOCSO are given an option to be covered under the Act provided both the employer and employee have agreed upon the coverage.

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CATEGORIES OF EMPLOYEES EXEMPTED FROM SOCSO'S COVERAGE

Government employees Domestic servants Self-employed persons Foreign workers Business owner and spouses of sole-

proprietorship or partnership

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CONTRIBUTIONS The principal employer must pay monthly

contribution for each eligible employee The amount of contribution is based on the SOCSO

Contribution Schedule i.e. Third Schedule of the Act. Categories of Contributions:

First Category (Employment Injury Scheme And Invalidity Pension Scheme) Below 60 years

Second Category (Employment Injury Scheme Only) above 60 years above 55 years of age when first registered and contributed to

SOCSO an Insured Person receiving Invalidity Pension who is still

working and receiving wages which is less than 1/3 of the average monthly wage before invalidity. 9

WAGES UNDER SOCSO All remunerations payable in money to an

employee which includes: Salary Overtime payments Commission Payments for leave such as annual, sick and

maternity leave, rest day, public holidays Allowances such as incentive, good behavior, cost

of living (COLA) Service Charge

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SOCSO PROTECTION SCHEMES Two schemes – Employment Injury Insurance Scheme (EIIS);

provides protection to employees who are involved in accidents arising out of and in the course of his employment occupational diseases and also commuting accident.

Invalidity Pension Scheme (IPS). provides twenty four (24) hours coverage for

workers from invalidity or dies irrespective of the cause of death. The other objective is to ensure payments are made to workers and dependants when an unexpected incident occurs.

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EMPLOYMENT INJURY INSURANCE SCHEME (EIIS)

This scheme entitles the worker to treatment at SOCSO panel clinics or any government hospital which the bills are paid by SOCSO.

Other benefits provided under this scheme such as: If the worker is certified unfit for work for not less

than 4 days, he will be paid with temporary disablement benefit while on medical leave.

If he is permanently disabled as a result of work-related accident, he will get either lump sum payment or a monthly pension (depending on the amount). 12

EIISIf he is severely incapacitated & needs constant

personal attendance of another to look after him, he may claim an allowance for this.

If the accident result in him death, his dependents are entitled for the funeral benefit & also to a monthly benefit for a certain period of time.

SOCSO also provides facilities for physical rehabilitation of injured workers & gives vocational training to help workers who are disabled to find suitable jobs.

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EIIS If accident happens while travelling, it is

deemed to arise out of and in the course of his employment if the accident happens while the insured person – Is travelling on a route between his place of

residence or stay & his place of work; Is travelling on a journey made for any reason

which is directly connected to his employment; or

Is travelling on a journey between his place of work & the place where he takes his meal during any authorised recess.

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CASE Ketua Pengarah PERKESO v Rajaparameswari

a/p Marimuthu [2004] 4 CLJ 528 A factory worker, living in Gelugor, Penang would

go to her daughter’s house every weekend. Each Monday morning she would leave her daughter’s house & travel to the bus station where the company bus would pick her up to work. One day, while travelling from her daughter’s house, she was met with an accident. SOCSO rejected her claim for compensation. She then appealed to the High Court.

Held: The words “residence” & “stay” give different meanings; the former connotes permanency while the latter suggest temporary residence – which what had happened to the insured person in this case. The court allowed the appeal. 15

COVERAGE OF EIIS (1) Accidents which occur while in the

course of the work. Accident which occurs while working at the work

place and was caused by the employee's job. (2) Accidents which occur while

traveling on condition the accident does not occur during

any interruption or deviation of the journey. (3) Accident during an emergency

Accident that occurs during an emergency at the employer's premises while in the course of assisting, rescuing, or protecting other people from disasters such as a fire breakout.

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EIIS (4) Occupational Disease

Disease that results from the occupation. The list of diseases and cause agent can be

found in the Fifth Schedule of the SOCSO Act, 1969.

Examples:• Loss of hearing due to exposure to continuous excessive noise.• Respiratory diseases or industrial asthma as result of exposure to dust for employees in sawmills, powder factories, flour mills and others.

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THE BENEFITS PROVIDED UNDER THE SCHEME (EIIS)

Medical Benefit Temporary Disablement Benefit Permanent Disablement Benefit Constant attendance Allowance Rehabilitation Benefit Dependent's Benefit Funeral Benefit Education Benefit

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INVALIDITY PENSION SCHEME (IPS) Workers are entitle to a pension or other

benefits if they become unable to work for whatever medical reason, provided they have contributed to the SOCSO for certain minimum period.

Invalidity is defined as a serious disablement or morbid condition of a permanent nature that is either incurable or not likely to be cured, as a result of which an employee is unable to earn at least 1/3 of what a normal able person could earn. 19

THE BENEFITS PROVIDED UNDER THE SCHEME (IPS)

Invalidity Pension Invalidity Grant Constant Attendance Allowance Survivor's Pension Funeral Benefit Rehabilitation Benefit Education Benefit

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DETAILS OF THE SCHEMES

Refer to SOCSO (PERKESO) website : http://www.perkeso.gov.my/en/socso-protection-schemes.html

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WORKMEN’S COMPENSATION ACT 1952

WCA covers foreign workers who are paid up to RM500 per month or who are employed as manual workers irrespective of their wages.

The Act is enforced by the Labour Dept. Hence, foreign workers (exception to

domestic servants) who are injured as a result of a work-related accident & who are disabled for a period of 4 days or more are entitled to be paid compensation.

Quantum of compensation is fixed by the Act – depending on the severity of the accident, permanent disablement or not.

Where a death occurs, a maximum lump sum of RM25,000 will be paid. 22