Article 13: Understanding Statutory Payment Due Dates and Penalties in Malaysia
Managing statutory payments is a critical responsibility for employers in Malaysia. Failure to comply with payment deadlines can result in severe consequences, including penalties, legal action, and reputational damage.
1. Employees Provident Fund (EPF)
The EPF is a mandatory retirement savings scheme for employees. Employers are required to contribute a portion of their employees' salaries to the EPF.
2. Social Security Organization (SOCSO)
SOCSO provides social security protection for employees against workplace accidents and illnesses.
3. Employment Insurance System (EIS)
EIS offers temporary financial assistance to employees who lose their jobs.
4. Monthly Tax Deduction (PCB)
PCB (Potongan Cukai Bulanan) is the income tax deducted from employees' salaries.
5. Human Resources Development Fund (HRDF) Levy
The HRDF Levy is mandatory for employers in specific sectors to fund employee training and development.
Consequences of Late Payment
Failing to meet statutory payment deadlines can have serious repercussions for employers, including:
Conclusion
Adhering to statutory payment deadlines is essential for maintaining legal compliance and fostering a positive employer-employee relationship. Employers should prioritize timely payments and implement measures to ensure compliance with Malaysian statutory requirements. For expert assistance, Kindly engage with Alena Consultancy & Services, which specializes in outsourcing payroll and statutory compliance to streamline processes and avoid penalties. We are letting you to focus on what is matter most on your business growth.
Call/Whatsapp: +6018-3755170
Email: hello@alena.com.my
Website: alena.com.my
1. Employees Provident Fund (EPF)
The EPF is a mandatory retirement savings scheme for employees. Employers are required to contribute a portion of their employees' salaries to the EPF.
- Due Date: The 15th of the following month.
- Penalty for Late Payment: Late payments incur a dividend equivalent to the prevailing EPF interest rate plus 1% per annum on the outstanding amount.
2. Social Security Organization (SOCSO)
SOCSO provides social security protection for employees against workplace accidents and illnesses.
- Due Date: The 15th of the following month.
- Penalty for Late Payment: A fine of up to RM4,000 or imprisonment for up to 2 years, or both. Late contributions are also subject to interest at a rate of 6% per annum for each day overdue will be charged
3. Employment Insurance System (EIS)
EIS offers temporary financial assistance to employees who lose their jobs.
- Due Date: The 15th of the following month.
- Penalty for Late Payment: Similar to SOCSO, late payments attract a 6% annual interest for each day overdue amount.
4. Monthly Tax Deduction (PCB)
PCB (Potongan Cukai Bulanan) is the income tax deducted from employees' salaries.
- Due Date: The 15th of the following month.
- Penalty for Late Payment: The fine is a minimum of RM 200 and not more than RM 2,000 or 6 months imprisonment or both. A penalty of 10% is imposed on the overdue amount, with an additional 5% if the amount remains unpaid after 60 days.
5. Human Resources Development Fund (HRDF) Levy
The HRDF Levy is mandatory for employers in specific sectors to fund employee training and development.
- Due Date: The 15th of the following month.
- Penalty for Late Payment:Fine not exceeding RM20,000 (Ringgit Malaysia) or imprisonment for a term not exceeding two (2) years or both (on conviction). Late payments attract a 10% interest on the outstanding amount.
Consequences of Late Payment
Failing to meet statutory payment deadlines can have serious repercussions for employers, including:
- Financial Penalties: As detailed above, late payments often result in fines, interest, or additional charges.
- Legal Action: Persistent non-compliance may lead to prosecution, fines, or imprisonment for company directors or responsible officers.
- Reputational Damage: Delays in statutory payments can harm an employer’s credibility with employees and authorities.
- Operational Disruptions: Legal disputes and enforcement actions may disrupt business operations
Conclusion
Adhering to statutory payment deadlines is essential for maintaining legal compliance and fostering a positive employer-employee relationship. Employers should prioritize timely payments and implement measures to ensure compliance with Malaysian statutory requirements. For expert assistance, Kindly engage with Alena Consultancy & Services, which specializes in outsourcing payroll and statutory compliance to streamline processes and avoid penalties. We are letting you to focus on what is matter most on your business growth.
Call/Whatsapp: +6018-3755170
Email: hello@alena.com.my
Website: alena.com.my
Dec 16,2024