Malaysia - Responsibility of Employer to Register for EPF with KWSP in Malaysia

Statutory Body: Kumpulan Wang Simpanan Pekerja (KWSP)

Employee’s Provident Fund (EPF)

1) Obligation As an Employer

a)	Employer	Manager, agent or person responsible for the payment of wages to ’employee’
		Group of persons whether statutory or non-statutory or incorporated
		Government, government department, statutory body, local authority or other bodies as specified in the Second Schedule to the EPF Act 1991
b)	Employee, Contract of Service or Apprenticeship	An employee is defined as a person who is employed under a contract of service or apprenticeship. The contract of service or apprenticeship can be written or oral, expressed or implied.
		“Contract of Service” is an agreement in which a person agrees to employ another person as an employee and the other person agrees to serve his employer as an employee.
		“Contract of Apprentice” means a written contract made by a person with an employer who pledge to employ the person and train or cause him to be systematically trained for a work during a specified period of time approved by the employer who in the course of the exercise the apprentice is bound to working in the service of the employer.
		Minimum age: Employment age is subject to Children and Young Persons (Employment) Act 1966.
		Maximum Age: 75 years
c)	Wages	Wages are all remuneration in money due to your employee under his contract of service or apprenticeship whether it was agreed to be paid monthly, weekly, daily or otherwise.– Payments liable for EPF contribution, such as:i. Salary ii. Payment for unutilized annual or medical leave iii. Bonus iv. Allowance v. Commission vi. Wages for half day leave vii. Incentive viii. Arrears of wages ix. Wages for maternity leave x. Wages for study leave xii. Other payments under contract of service or otherwise

2) Registration

Employers are required to register with the KWSP within 7 days from when they first hire as an employee refer to Section 41(1), EPF Act 1991.

Registering Your Employees

Compile and prepare the documents required, and visit the nearest EPF Counter to register as an EPF Employer. Documents need :-– Form KWSP 1 – Copy of the Director/Head of Department’s identification (MyKad/Passport) – Form 49/Superform -Copy of Certification of Company/Business Registration from SSMOR– Section 15 – Notice of Registration – Section 14 – Application For Registration Of A Company – Section 17 – Certificate Of Incorporation Of Private Company

What You Will Get

Employer’s Reference Number
Notice of employer registration
Employer’s Registration Certificate (to be displayed at employers’ premises)

Registering Your Employees

Part of your responsibility as an employer is to register your previously unregistered employees before the first contribution is made. There are various ways to register your employees.

Employee Registration via i-Akaun (Employer)
Auto Register via Monthly Contribution Form (Form A)
Form
Employee Mykad

3) Contribution

a) Responsibility

As an employer, your responsibilities include paying EPF contributions in respect of any person you have engaged to work under a Contract of Service or Apprenticeship. You have to ensure accurate monthly contributions are deducted from your employees’ salary and remitted to KWSP.Subject to the provisions of section 52, every employee and every employer of a person who is an employee within the meaning of this Act shall be liable to pay monthly contributions on the amount of wages at the rate respectively set out in the Third Schedule. Section 43(1), EPF Act 1991.Employer must make monthly payment on or before 15th of the month. Example: Salary for January 2018 Therefore, the Contribution Month is February 2018 and it has to be paid either before or on 15 February 2018. The employer needs to pay both the employees’ and the employer’s share to the EPF. Employers may deduct the employee’s share from their salary.

Contribution Rate

Employee’s Status	Monthly Salary Rate	Stage 1	Stage 2
Employee’s Status	Monthly Salary Rate	(Below 60 years old)	(Age 60 and above)
i. Malaysian	No limit		Applicable for (i) only
ii. Permanent Residents (PR)			Employees share: 0%
iii. Non-Malaysians (registered as member before 1 August 1998)			Employer’s share: 4%
			(Ref Contribution Rate – Section E)
	RM5,000 and below	Employees share: 7%	Applicable for (ii) and (iii) only
		Employer’s share: 13%	Employees share: 5.5%
		(Ref Contribution Rate – Section A)	Employer’s share: 6.5%
			(Ref Contribution Rate – Section C)
	More than RM5,000	Employees share: 7%	Applicable for (ii) and (iii) only
		Employer’s share: 12%	Employees share: 5.5%
		(Ref Contribution Rate – Section A)	Employer’s share: 6%
			(Ref Contribution Rate – Section C)
Non-Malaysians (registered as member from 1 August 1998)	No limit	Employees share: 7%	Employees share: 5.5%
		Employer’s share: RM5.00	Employer’s share: RM5.00
		(Ref Contribution Rate – Section B)	(Ref Contribution Rate – Section D)

Note:

Employers are not allowed to calculate the employer’s and employee’s share based on exact percentage EXCEPT for salaries that exceed RM20,000.00. The total contribution which includes cents shall be rounded to the next ringgit.
Effective from April 2020 salary/wage up to December 2020 (May 2020 contribution month up to January 2021).

b) e-Caruman The e-Caruman enables employers to make monthly online EPF contributions via internet banking. FPX, direct debit and mobile application (e-Caruman app).i-Akaun Employers are now able to remit monthly contributions together with your employee’s particulars online through e-Caruman.

4) Record Keeping

One of the key responsibilities as an employer is to routinely update your records to reflect the latest information to ensure that members’ contribution are in order.

Updated information	1. Changes In Employer’s Name/Status And AddressIt is your duty as an employer to update the EPF within 14 days of change of address.For name or status change, such as Sole Proprietorship to Partnership, employers must notify the EPF within 21 days of change using the Form KWSP 1 (MAJ).
	2. Retrenchment Of Workers
	– Stop employing workers temporarily. Employers who do not have employees for a given month need to inform the EPF by mail/email or other designated channels from time to time. The EPF may cancel your Employer Reference Number if the employer has no liability to contribute/has no employee for a period of 6 consecutive months.
	– Do not have and does not intend to employ any employees. Employers who currently do not have employees and does not intend to employ any employees in the future should notify the EPF using Form KWSP 6 (Form B)/mail/email or other designated channels within 30 days. – If employers have started hiring again, please notify the EPF.
	3. Termination Of OperationsAn employer who wishes to terminate their operations shall notify the EPF by completing Form KWSP 6 (Form B) /mail/email or other designated channels within 30 days.
Maintain Records	1. Wages/Salary Records
	“The employer shall maintain and keep the wages and EPF records, at least six (6) years from the date of the last information being recorded.”
	Section 42(2) EPF Act 1991
	2. Preparing Wages Statement/Salary Slip
	“Employers must prepare and provide wage statements showing EPF deductions to employees.”
	Section 42(1) EPF Act 1991
	3. Feedback on the Contribution Statement
	It is the employer’s responsibility to check the accuracy of the information in the Contribution Statement received from the EPF. If there are any mistakes found, you need to inform the EPF within a month from receiving said statement.Employers can now opt to receive your Contribution Statement via email.

5) Compliance & Enforcement

Employers are legally required to make EPF contributions as spelt out in the EPF Act 1991 as well as the KWSP 1991 Rules and Regulations. Failure to comply is subject to penalties as listed below.

Section	Offences	Penalties/Legal Action
41(1)	An employer who fails to register with EPF within 7 days from the date he employs an employee.	Imprisonment term not exceeding 3 years or to a fine not exceeding RM10,000 or both.
43(2)	Failure to make contribution on or before the 15th day of the month.
59(a)	Make false statement orally or in writing.
48(3)	Deducts the employee’s share of contributions from the wages and fails to pay to EPF.	Imprisonment term not exceeding 6 years or a fine not exceeding RM20,000 or both.
47(1) & 47(2)	Deducts from the wages of any employee as part of the employer’s share of contribution.
41(3)	Fails to notify the EPF within 30 days from the date he ceased to have any employee.	Imprisonment term not exceeding 6 months or a fine not exceeding RM2,000 or both.
42(1)	Fails to furnish the statement of wages to his employee.
46(1)	Failure of the Company’s Director, Partner of the Firm or an Association of Persons to pay the outstanding EPF contribution.	Claims may be filed in court and actions that can be taken against you:
		Bankruptcy action
		Seizure & sale of assets
		Retention of passport
		Section 39 – The EPF Board may apply to the Immigration Department to prevent any company directors/partnership of firms/business owners from leaving the country if the company/firm fails to pay the contribution asset.

Malaysia - Responsibility of Employer to Register for EPF with KWSP in Malaysia

Employee’s Provident Fund (EPF)

1) Obligation As an Employer

2) Registration

Registering Your Employees

What You Will Get

Registering Your Employees

3) Contribution

a) Responsibility

Contribution Rate

4) Record Keeping

5) Compliance & Enforcement

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