The Bill seeks to establish the Employment Insurance Scheme (“EIS”) for post-exit benefits to affected individuals and to assist with re-employment. A sliding scale percentage of wages may be claimed for up to six (6) months of unemployment for job search purposes. Other claimable allowances include for early re-employment, reduced income and career counselling and training purposes. Under the job search allowance, an unemployed worker will be paid at the following rates:
• 80% of their assumed salary for the 1st month of unemployment
• 50% of their assumed salary for the 2nd month of unemployment
• 40% of their assumed salary for the 3rd and 4th months of unemployment
• 30% of their assumed salary for the 5th and 6th months of unemployment
It is presently anticipated that employers will be required to comply with the EIS requirements from 1 January 2018, with the provisions of benefits to former employees commencing in 2019.
All private sector employers with one or more employees will be required to register under the EIS scheme, and all employees will need to be insured. The EIS will be administered by SOCSO. The EIS contribution total approximately 1.5% of monthly wages, with the employee and employer contributing 50% each. The rate of contribution is subject to a maximum wage cap of RM4,000.
Employers are prohibited from reducing wages and removing or reducing any similar existing benefits in response to their EIS obligations. Failure to comply is a criminal offence, and will subject the employer to a fine of maximum RM10,000 or 2 years’ imprisonment, or both.
Employees who are terminated for misconduct, voluntarily resign, retire or whose fixed-term employment contract expired, will be excluded from the benefits. Those who exit because of force majeure events, through voluntary separation schemes or constructive dismissal, remain eligible.
Any employee meeting the conditions of termination which allows for the insurance to be activated, must submit an application within 60 days from the day the employee loses his/her job. A job search allowance could be paid to the insured person but on condition that the person shall not be under any employment during the job search period.
Source 1: http://www.bakermckenzie.com/en/insight/publications/2017/08/new-compulsory-allowances-and-benefits/
Spurce 2: https://www.thestar.com.my/news/nation/2017/10/25/revised-eis-bill-tabled-govt-hopes-to-make-scheme-lawful-at-current-sitting-says-riot/