Statutory Contributions

Last updated: June 20, 2026

The statutory contributions are the rules behind the deductions: how EPF, SOCSO, EIS, SKBBK and PCB are each calculated for an employee. Understanding them is understanding why a payslip shows the numbers it does, and the system applies them so you do not have to compute them by hand.

What you will learn
  • How each Malaysian scheme is calculated
  • What drives the tier automatically versus by hand
  • Employee versus employer shares

The schemes

  • EPF (KWSP) – a percentage of wages split between employee and employer, varying by age and citizen class under the Third Schedule. The common case is 11% employee and 13% employer (12% above RM5,000 of wages), dropping to an employer-only 4% from age 60, with flat amounts for non-citizens.
  • SOCSO (PERKESO) – taken from a contribution table by wage band. Category 1 (both sides contribute) covers most employees; Category 2 (employer only) covers those 60 and over, foreigners, and invalidity cases.
  • EIS – employment insurance, a small tiered contribution from both sides, alongside SOCSO.
  • SKBBK – from 1 June 2026, an employee-only 0.75% capped at RM6,000 of wages.
  • PCB (MTD) – monthly income-tax withholding, computed on the official progressive bands, taking marital status and spouse income into account.

How it behaves

Derived tiers, set classifications

Age (from date of birth) and the wage place an employee in the right tier automatically. The classifications the system cannot infer, the EPF citizen class and the SOCSO category, are set per employee in their payroll configuration. Between the two, the contribution is determined without manual table lookups.

Two sides to most schemes

Remember the split: employee contributions reduce take-home pay, while employer contributions are a company cost paid on top. Both appear, but they affect the net and the cost differently.

Edge cases and good practice

  • Keep classifications current – a wrong citizen class or SOCSO category gives a wrong contribution.
  • Mind the SKBBK start date (June 2026) when it becomes mandatory.
  • Read employee and employer shares apart when reconciling cost to take-home pay.

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