5 Facts you need to know about the Employment Insurance Scheme

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When it was announced that Dewan Rakyat has passed the bill on implementing the Employment Insurance System in October 2017. Employees in the private sector are required to contribute 0.2 percent of an employee’s base salary towards the EIS starting in Jan 2018.

That said, there are still a lot of Malaysian workers who are completely unaware about EIS, and they don’t exactly know the purpose of this system, so here are the 5 facts about the scheme that you should be aware of:


  1. 50,000 Malaysians may be laid off this year

A total number of 37,699 Malaysian employees were laid off in 2016 and 38,499 lost their jobs in 2015. This is due to the culmination of several factors that will significantly affect the job market and make the job hiring scene even more challenging. With the job-loss coverage scheme, any workers that lost their jobs are entitled to the temporary financial assistance while finding a new job for up to six months.


  1. Only employees in the private sector are eligible

Only workers aged between 18 to 60 years old are only qualified to the scheme. That said this scheme is only applicable for those who lost their job due to retrenchment or related reasons. That means you can’t simply get the money when you resign, contract expired, retired or got terminated due to valid reasons.


Related: Future of Work: Essential Skills for Success


  1. The second phase of EIS

On the 1st January 2019, the second phase offers retrenchment payouts known as a job search allowance and support services. Depending on the duration of the period, Malaysian employees are able to receive a percentage of their last drawn salary for three to six months. As the months go by, the percentage gradually decreases from 80% to 30% until the sixth month of finding a job, or as early as the individual manage to find a job.


  1. Benefits for those who are eligible for the EIS scheme

Workers that are laid off can only start making claims if they are only retrenched in 2019 onwards. Besides getting paid upon job loss, Malaysians are entitled to the following with each perks taking up a percentage of their claim:

  • Career counseling support
  • Education and employment-related training allowance(EL)
  • Reduced earnings allowance(EPB)
  • Re-employment allowance(EBSA)
  • Job-hunting support
  • Training fees(FL)


  1. Employers play a significant role as well

With the EIS, employers will have more resources to upgrade their business in terms of technology your automation as they lay-off workers that are eligible for the scheme. Employers that comply with the scheme are forbidden from reducing an employee’s salary indirectly or directly owing to contributions made on the EIS.





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