Many Malaysians have lost their jobs or been retrenched during the MCO. If you're one of them, read this guide to learn more about the Employment Insurance System (EIS) or Sistem Insurans Pekerjaan (SIP) and how much you can claim for your unemployment benefits.
There have been various unemployment assistance efforts since the country went on a Movement Control Order (MCO) amid the Covid-19 pandemic. In his latest address, PM Muhyiddin Yassin announced yet another economic stimulus package amounting to RM35 billion to help the country regenerate its economy.
The country is at a needful time for such help, as many have had their rice bowls affected one way or another. Depart of Statistics’ chief statistician Mohd Uzir Mahidin recently shared that Malaysia’s unemployment rate rose to 3.9% (610,000 jobless people) - the highest since June 2010 when the rate was 3.6%. And in more relatable ways, we ourselves know of immediate friends and family who have, in fact, been victims of retrenchment during the MCO/CMCO.
So… what can you do if you find yourself part of this statistic? What should you do after getting retrenched?
Thankfully, most workers are covered by the Employee Insurance Scheme (EIS) by SOCSO (a.k.a. PERKESO). If you’re eligible, you’ll have access to a variety of help, including some financial assistance for up to six months. We’ll dive into this in the next few sections, but first, let’s take a look at the basics.
What is EIS?
The Employee Insurance Scheme (EIS), which is administered by the Social Security Organisation (SOCSO), seeks to provide temporary financial assistance for up to six months to workers who are retrenched or have had some form of loss of income.
This is actually something that the Malaysian government launched not too long ago - October 2017 to be exact. It’s a very helpful initiative for Malaysian workers, and looking at the unemployment statistics, it is now more important than ever.
Wondering where this pool of money comes from? Well, if you take a closer look at your payslips, you’d notice a small deduction for something called your Employee Insurance Scheme.
Monthly EIS deduction as seen in a Malaysian employee's payslip.
Here’s how it works. Both your employer and yourself would contribute 0.2% of your salary to the scheme (total 0.4% monthly). Monthly contributions start from 10 sen for workers earning RM30 a month, while the maximum amount of contribution is capped at RM7.90 for those earning RM4,000 and above.
This means that even if you earn RM20,000 a month, you’ll still contribute RM7.90 to the EIS. (RM15.80 when you include your employer’s contribution.)
Did you know?
The research and planning for the EIS began way back in 2009 after the 2008 financial crisis. (Source: AskLegal.my)
What Are The Benefits of EIS?
There are many benefits that come under this insurance, ranging from monetary aid to job search assistance.
The most popular at the moment would be the Job Search Allowance (JSA). Under this, if you’re eligible, you’ll be able to claim your allowance for up to 6 months.
We’ll dive deeper into the JSA in the sections that follow, but for now, here are some other benefits that the EIS features:
- Reduced Income Allowance (RIA) - for those with multiple jobs, but lost at least one of them. Payment rates and duration of payment is the same as JSA.
- Training Fee - paid-for vocational training of up to six months.
- Training Allowance - incentives for you to attend and finish your training.
- Early Re-Employment Allowance - for JSA recipients to get back into the workforce.
- Re-Employment Placement Programme - job search assisted by SOCSO.
- Career counselling - job search assisted by SOCSO.
Who Is Eligible For EIS In Malaysia?
Before we get into the claimable allowance, you must first know that not everyone is eligible to claim. Here are some of the EIS terms and conditions that apply.
Fundamentally, the EIS covers:
- Malaysian citizens / permanent residents
- Aged 18-60
- Working in the private sector
- Employed based on a contract of service
- Have been contributing to the fund for a minimum number of months within a specified period of time
However, the EIS does NOT cover the following:
- Domestic workers
- Self-employed workers
- Civil servants
- Workers in local authorities and statutory bodies
- Workers aged 57 and above who have never paid contributions before that age (they’re also not required to contribute to the scheme)
Equally important to note is the reason for your job loss. To be eligible, you have to fall into either one of the following:
- Normal retrenchment and redundancy
- VSS/MSS (Voluntary/Mutual Separation Scheme)
- Closure of the company due to natural disasters
- Bankruptcy or closure of the company
- Constructive dismissal
- Resignation due to sexual harassment or threats made in the workplace
- Resignation after being ordered to perform dangerous duties that are not within the job scope
You will NOT be eligible if your job loss is a result of one of the following:
- Dismissal due to misconduct by the employee
- Voluntary resignation
- The expiry of a fixed-term contract
One very important thing to be aware of is also when to claim your EIS benefits. You MUST claim this within 60 days of losing your job! Wait a day longer and you won’t be eligible anymore.
How Much Can You Claim From Your EIS?
It’s a relief to know that you would have some form of allowance in store for you, but as we’ve just mentioned, you won’t be able to rely on this for too long. The allowance allocation can only be claimed for a maximum of 6 months, so you should try looking for a job ASAP to lessen your financial insecurities.
To get your 2nd month's allowance (and other subsequent months), you will also need to provide proof that you’ve been actively trying to look for a job. Without that, you won’t be able to claim for the months that would follow.
Not only that - your allowances will also lessen by the month:
- 1st month: 80% of your assumed salary
- 2nd month: 50% of your assumed salary
- 3rd & 4th month: 40% of your assumed salary
- 5th & 6th month: 30% of your assumed salary
What’s your assumed salary, you ask? This number would be based on your previous salary, and you can check this table to find your assumed salary. Let’s demonstrate with Ali:
|Ali’s last drawn salary before retrenchment||RM3,800|
Ali’s assumed salary according to SOSCO’s table
1st month allowance (80%)
2nd month allowance (50%)
3rd and 4th month allowance (40%)
|5th and 6th month allowance (30%)||
In the previous section, we mentioned that there will be a maximum contribution limit. Likewise, there will be a maximum assumed salary (RM3,950) and allowance too. This means that even if you earn MORE than RM4,000, your maximum assumed salary would still be RM3,950.
Did you know?
Malaysia is one of the latest countries in the region to implement an unemployment insurance scheme. (Source: AskLegal.my)
How To Apply For EIS
If you meet all the requirements highlighted in the earlier section, then now it’s time to start claiming.
To get your EIS benefits, you can either apply online using this link or go straight to the PERKESO office. Don’t forget to bring along these documents:
- A copy of your NRIC
- Proof of Loss of Employment (LOE), e.g. a termination letter
- A copy of your bank account information
- Pay slips for the last 6 months
Here’s a simple, step-by-step guide on how to claim your JSA EIS benefit by SOSCO:
- Register at the EIS Portal and complete your application with the necessary information.
- Wait for the result of your application either via email or using the Portal ID.
- Once approved, complete and submit the Re-Employment Placement Form.
- The payment will then be accredited into your account.
Do note that this is only to get your first month’s allowance of 80%. As highlighted previously, you’ll need to provide proof that you’re actively looking for a job in order to get the benefit for the subsequent months.
The allowance isn’t for relaxation - it’s to help you get back on your feet. Keep looking for jobs in the meantime.
While we couldn’t find any no official guide on the documents needed for this, what you can do is to save job applications, interview appointments, emails, letters - anything else, really - that will show that you have been really trying to get a job. Make sure that the dates are correct, too!
And, just in case… What can you do if your EIS application is rejected? All you need to do is to get an appeal form from the PERKESO office and file an appeal at the Social Security Appellate Board.
Apart from the JSA, you are also eligible to apply for other benefits, such as the Training Fee (TF), Training Allowance (TA), and the Early Re-Employment Allowance (ERA) which we briefly mentioned at the start.
If you’re affected, it’s best to act fast
While the thought of contributing 0.2% monthly to the EIS may look like nothing, from looking at the claimable allowance above, it’s safe to say that the sum is actually surprisingly large in comparison. At the end of the day, any form of financial aid in such trying times would always be of help.
It would be wise to try out different ways to supplement your income, even if it means being self-employed. Many industries are affected and most have frozen their hiring. Turning to your own skills would be the lowest hanging fruit right now.
Thankfully, SOCSO also has programs which cover self-employed Malaysians with NO age limit. It covers 19 different industries, including transporting (e.g. Grab drivers, FoodPanda riders), online businesses, IT, agriculture, F&B, arts, beauty and healthcare… the list goes on.
Under the Self-Employment Social Security Act 2017, with a monthly contribution, you’ll receive protection against injuries, diseases, and accidents during work-related activities. More info here.
And as a last resort, if further assistance is needed, you can also browse through some of the personal loans available to your situation, or extend your credit limit on your credit cards to help bolster your finances temporarily.
Just remember that these applications will mostly require your latest 3 months’ payslip, so you need to act fast if you do decide to do this. More importantly, remember to only take on loans if you have a fool-proof repayment plan - the last thing you need at this point is to take on more than you can manage.
Not wanting to end on a grim note, things do look like they’re eventually recovering as we reach the tail-end (fingers crossed) of this Covid-19 pandemic. In his latest address, PM Muhyiddin added that in March, Malaysia saw an employment rate of 610,000 people. It then rose to 10.2 million in May, and then 12.7 million on 2nd June 2020.
With more and more incentives being put out to encourage employers to hire, the good news is that things are definitely starting to look better… so don’t give up on finding that new job. Your ray of light could be right around the corner.
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