Published: August 2025
What’s the update?
Effective 1 October 2024, SOCSO’s salary ceiling for contribution purposes has been raised from RM 5,000 per month to RM 6,000 per month.
This change means that for employees earning above RM5,000, the contributions will now be calculated up to RM6,000 (rather than stopping at RM5,000).
The change was approved by parliament, and impacts about 1.5 million local and foreign employees (approx. 15.5% of contributors).
Why this matters
- It increases the base for calculating contributions under the Employees’ Social Security Act 1969 (Act 4) and the Employment Insurance System Act 2017 (Act 800).
- Employers who have employees earning between RM5,001 and RM6,000 will see a higher SOCSO contribution liability than before.
- Payroll systems, accounting records and payslips must be updated to reflect the new ceiling, and employees must be correctly classified and contributions properly calculated.
- It enhances social security protection for higher-earning employees by ensuring their contributions cover a higher wage base (thus potentially better benefits).
What this means for payroll / accounting teams
- Update your payroll templates and systems
- Adjust your SOCSO contribution calculation to use RM6,000 as the maximum monthly wage for contribution calculation instead of RM5,000.
- Ensure your payslips reflect the correct contribution amount and the capped wage base.
- Budget and cost planning
- For employees earning in the RM5,000‑RM6,000 range, employer contribution costs will increase. You’ll need to review payroll budgets accordingly.
- Assess the financial impact for the remainder of the year and ongoing.
- Communication and compliance
- Inform your HR and payroll teams about the change so that they are aligned and aware of the new ceiling and calculation rules.
- Make sure contributions are submitted timely via the correct portals (e.g., ASSIST) and that records are maintained for audit or inspection.
- Review employment contracts and job classifications
- For employees whose monthly wage is in the upper band, ensure their contribution status is clear and documented.
- Check if any job classifications or wage packages may need adjustment in light of these regulatory changes.
- Training and documentation
- Provide training sessions or briefings for payroll staff and finance teams to explain how the change affects contributions, budgeting and compliance.
- Keep documentation of when the change was implemented, system updates and internal communications.
What it means for employees
- Employees earning above RM5,000 may see marginally higher deductions for SOCSO contributions, but this comes with better alignment of their wage with the contribution base (i.e., capped at RM6,000 instead of RM5,000) meaning improved social security cover.
- Employees should check their payslips and understand that the contribution calculation may now reflect the new ceiling.
- For foreign workers or those on contracts/apprenticeships, ensure they are registered and covered appropriately — the ceiling applies broadly.
Recommended actions for businesses
- Run simulations on payrolls to assess the increased contribution cost for employees earning in the RM5,000–RM6,000 range.
- Update payroll policies and templates to reflect the new ceiling and ensure that payslip descriptions clearly show contribution base and amounts.
- Check your payroll software (e.g., SQL Payroll) for configuration: verify that wage ceiling settings are updated and contributions calculate correctly.
- Inform relevant stakeholders (HR, finance, management) about the change and its impact on payroll cost, compliance and employee communication.
- Maintain compliance records: Keep evidence of when the change was implemented, internal training/instructions and changes in payroll system configuration in case of future audit or inspection.
Final thoughts
The increase in SOCSO’s contribution salary ceiling from RM5,000 to RM6,000 is a significant update for Malaysian businesses, particularly those with higher-earning employees. While it imposes a slightly increased cost for those covered by the higher band, it also ensures better social security coverage and aligns contribution bases with modern wage levels. For payroll and accounting teams, proactive system updates, budgeting, and communication are key to a smooth transition.
