07 August 2017

What is "Employment Insurance Scheme" and how would it impacting us ???

The new bill has been tabled in parliament for first reading a few days ago. Whether you like it or not, this will affect all the employees in the country once it was being passed. Yup, it's everyone and every employer also!



Let's unveil the amazing Employment Insurance Scheme (EIS)...

What's the objective of EIS ???

  1. To provide financial assistance to private workers who lost their jobs until they find new employment
  2. Retrenched workers will also be given help to search for new jobs, career counseling, and training.

How much premium and who's going to pay for it?

The premium rate will be based on the monthly salary of the employee at around 1.5%. And, employer and employee have to share the cost equally. Example, for an employee with RM3,000 salary, the premium is RM45 monthly shared equally by both parties.


Can it be by a way of salary reduction/adjustment?

Clause 24 (1) of the Bill states: “[The] Employer shall not, solely by reason of his liability for any contributions payable under this Act, directly or indirectly, reduce the wages of any employee, or discontinue or reduce benefits payable to the employee under the conditions of service which are similar to the benefits conferred by this Act except as provided for in any other written law”.

Employers who violate the rule and are found guilty can be punished with a jail term of up to two years and fined a maximum RM10,000. (Source: The Malay Mail Online)


How much will be the payout for a retrenched employee?

  • 1st month, claim 80% of salary
  • 2nd month, claim 50% of salary
  • 3rd & 4th month, claim 40% of salary
  • 5th & 6th month, claim 30% of salary
A claim must be made within 60 days after the said employee being retrenched.

What if still working, but with reduced salary?
  • 1st month, claim 80% of salary
  • 2nd month, claim 50% of salary
  • 3rd & 4th month, claim 40% of salary
  • 5th & 6th month, claim 30% of salary

When will the cover take effect?
Can claim every year? ☺☺☺

Don't think too much. The first claim can only be made after 24 months of consecutive contributions. Please refer table below. And, the maximum number of claims is 12 times for a lifetime.



Who will handle this money and claim?
Social Security Organisation (SOCSO) will be responsible on this EIS, if being implemented. 

There is a report done by Taxpayer.com about
the negative implications of EIS in Canada
Training allowance?
Yes. A daily allowance will be given to those retrenched employees to attend the training. It was ranging from between RM10 to RM20 per day, or 25% of monthly salary, whichever is lower.

What kind of unemployment being excluded from EIS payout?

  1. Voluntary Resignation
  2. Retired
  3. End of employment contract
  4. Both employee and employer agreed to end the employment
  5. Sacking due to inappropriate/bad working attitude/behavior

Source: Various news portal


Anyway, at the time of writing, there is a strong debate on the implementation of EIS and many parties urged the cabinet to review the proposal. Stay tuned!

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