Employers are legally required to contribute EPF for all payments of wages paid to the employees.
Rate of Contributions
The current rates are 11% for the employee and 12% for the employer, but employers are advised to keep abreast with changes which may take place from time to time.
In accordance with the proposal made in the Budget 2012, the contribution rate for staff earning less than RM5,000 will be 11% for the employee and 13% for the employer, with effective from 1 January 2012.
The amount of contributions must be rounded up to the next Ringgit, and contributions for a particular month must be paid before or on the 15th of that month.
Example:
- Employee A, whose wages for a month is RM1,000, the rate of contributions is RM110.00 for the employee’s share and RM130 for the employer’s share.
- Contributions for the month of February which is deduction from the January wages must be received by the EPF together with the Form EPF 6 (Form A) for February before or on 15 February.
Deduction of salary for the employee’s share of EPF contribution can only be made at the time when his/her wage is paid.
Late Contributions
Late contributions are contributions for a certain month which are received by the EPF after the 15th of that month. They include arrears of contributions and contributions for a certain month/period that have been under paid.
For payment of arrears of contributions, employers are required to use the Form EPF 7 (Form E) and Form EPF 8 (Form F) except for contributions in respect of salary revision which are required to be paid together with the current monthly payment by using the same Form EPF 6 (Form A).
Late payment of contributions is subject to penalties.
Making Payments
Payment for EPF contributions can be made at KWSP counters; through Banks that have been appointed as collection agents; through the Internet; or by mail.
Wages that subject to EPF Deductions
Generally, all wages paid to your staff / employee / workers are subject to EPF deductions. The payments by the employers subject to deductions are:
- Wages
- Wages in lieu of notice of termination of employment
- Payment for unutilised leaves (including annual & medical leave)
- Bonuses
- Allowances
- Commission
- Incentive
- Arrears of wages
- Wages for maternity leave
- Wages for study leave
- Wages for half pay leave
- Arrears for wages arising from salary revision
- Other payments under services contracts or otherwise.
- Service charges
- Overtime payment
- Gratuity
- Retirement benefits
- Retrenchment, temporary and lay-off
- Any travelling allowances or the value of any travelling concession
- Director’s fees
- Any other remuneration or payment as may be exempted by the Minister
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May I know, what type of allowance that will need to include in EPF deduction. As I am from factory base, we have many type of allowance. For example attendance allow., morning allow. etc.
Can you please more specific ….
Thank you..
Hi Atie, all allowances are in fact subject to EPF deduction. (as all of it are connected to the job performance).
May we know what is the definition of monthly wages to determine
whether the employee is less than or more than 5,000?
As the statement mentioned employee <55 years old:
"monthly wages 5,000, the calculation of ER contribution shall be calculated at the rate of 13% (instead of 12%)
I am aware that EPFable Wages includes all payment such as monthly salary/monthly fixed allowances/ Bonus/
Commission/ incentives.
Hi Mrs Ng, thanks for your visit and comment, hope the following is useful to you:
Wage as defined in Section 2, EPF Act 1991 is:
…all remuneration in money, due to an employee under his contract of service or apprenticeship whether agreed to be paid monthly, weekly, daily or otherwise and includes any bonus, commission or allowance payable by the employer to the employee.
For more details about this changes, you may visit this link:
http://www.nbc.com.my/blog/faq-13-employer-epf-contribution-from-1-jan-2012/
Thank you for your post, it is very informative & solve my problems.
Welcome, Encik Arifin. Free to visit us again.
Does the monthly wages of RM5,000 includes only epfable wages or total gross wages including overtime and travelling allowance?
Thanks in advance for your clarifications.
@Peter Kuan, total wages that subject to EPF. Overtime is not counted.
I am working in a company with a salary of 1500, but i do not get EPF since i am thr only staff can you please advice
Preeti, you are entitled for EPF contribution by your employer regardless any number of staff in your company and amount of salary.
Talk to your company & request them to contribute EPF for you. Failing to do so will result in KWSP taking legal action towards your company.
The EFP&SOCSO contribution is a MUST for employer to contracted lorry driver? If we just pay him salary per day when we need him to pick up something. It is on n off…So contribution is a MUST?
If the lorry is hired, then no issue.
If the lorry belong to the company and you hire the driver lorry, technically, whether it is partime or full time, yes, it is a must.
If the company is providing benefits such as housing allowance, car allowances, petrol allowances as part of benefits, will these be considered for EPF deduction as well?
does company need to contribute epf on travelling allowance pay to employees?
example.
basis salary 5000 (company need to pay 12% for example)
travel allow 700 (company need to pay ???)
Chong, travelling allowance is not subject to EPF contribution/deduction. So the 700 will be EPF free.
However, you need to consider PCB for travelling allowance if this is not for business purposes.
Karen, all allowances are subject to EPF deductions except for travelling allowance.
Does company need to contribute epf for handphone allowance, traveling allowance and commission as my company does contribution for epf for all above.
Thank you
I agreed to pay a fixed rate of RM400 to my supervisor as car maintenance allowance as he is fetching workers on and off site.
He is claiming on Fuel Consumption only.
So, may I know whether this RM400 is subject to EPF deduction?