Everything HR needs to know about Malaysia’s enhanced wage subsidy programme

As part of the Malaysia government’s Prihatin package to tackle the impact of COVID-19, the Wage Subsidy Programme (WSP) was announced on 27 March to help employers retain workers. About a week later, Malaysia’s Prime Minister Tan Sri Muhyiddin Yassin unveiled the Prihatin Plus package which included an enhanced WSP, increasing the amount allocated to it from RM5.9bn to RM13.8bn, an increase of RM7.9bn.

With the confusion over the two variations of the WSP, as well as other programmes such as the Employment Insurance System (SIP), Malaysia’s Ministry of Human Resources recently answered some frequently asked questions (FAQs) in a Facebook post.

Here are the key points HR needs to know about Malaysia’s enhanced WSP.

The WSP is a financial assistance programme to help employers continue their company operations during COVID-19 and prevent workers from losing their jobs and sources of income.

Through the programme, wage subsidies are paid to employers for each local employee earning RM4,000* and below for a period of 3 months only.

* Note: The interpretation of wages or income is in accordance with the interpretation of wages under the Employee Social Security Act 1969 [Act 4]. All monetary payments to employees are treated as salaries such as basic pay/overtime/commissions/payments on annual leave, sickness, maternity leave, vacation, general leave and so on/incentive allowance, good behaviour, living expenses and so on/service charges (service charge).

The WSP took effect on 1 April 2020 and is valid for a period of three months beginning 1 April or from the time an employer submits an application. The deadline for applying for the WSP is 15 September 2020.

Wage subsidies will be paid from the month the application is submitted with no backdated monthly payment.

All employers are eligible to apply for the WSP, except:

• Employers or companies registering and operating on or after January 1, 2020;
• Employers and employees who have not registered or contributed to SOCSO before April 1, 2020;
• Employees who have received the Employment Retention Programme (ERP) financial aid during the same month;
• If they are applying for an employee who is paid more than RM4,000 per month;
• If they are applying for retired employees;
• Public sector employees, federal and state statutory bodies, all statutory remuneration bodies, Local Authorities (Local Authorities) and self-employed (non-employers) including freelancers; as well as
• If they are applying for foreign workers and expatriates.

The documents required for the WSP application are:

• List of employee names * (according to enterprise size eligibility limits);
• Employer’s bank account information (copy of bank statement cover only);
• The Business Registration Number (BRN) information registered by the employer at the time of opening the bank account is as in 5 (ii) above. Please consult the bank;
• Copy of SSM / ROS / ROB / professional, scientific or technical services/business license registration;
• PSU50 Declaration Declaration; and
• Supporting documents** such as financial statements or sales reports that have been verified by management or other related documents.

* Note: Employers can choose any local employee who earns RM4,000 and below to receive the wage subsidy.
** Note: Supporting documents apply for companies of 76 employees and above

The WSP announced on April 6, 2020 replaces the WSP announced on March 27, 2020. The improvements to the WSP are as shown in the following table:

Table 1: Improvement of Wage Subsidy Programme (April 6, 2020)

Note: When calculating the size of the enterprise for the application of the WSP, the employer or company owner is not included in the count.

FAQs

Q Why are workers paid RM4,000 and above not covered under the WSP despite making monthly SOCSO contributions?

The programme is aimed at helping workers in the B40 group who earn RM4,000 and below.

Q For the application for the WSP next month, does the employer have to submit a new application for the next claim?

Employers do not need to submit a new WSP application for the second and third claims. However, employers are required to update the information in the event of any change to the business activity status or number of eligible employees through the system. Failure of the employer to not report such change may result in legal action.

In the event of a change in the list of workers’ names, the wage subsidy payable to the employer will be based on the list of names and numbers of workers submitted during the month.

An application containing incorrect information or an application containing a list of foreign workers, will be questioned for further action. Employers should fill in the employee information accurately to avoid delay in processing the application.

Q Can an employer who has been operating before 1 January, 2020 but has not registered with SOCSO apply for the WSP?

No. Any employer who wishes to apply for the WSP must register with SOCSO, before 1 April 2020, be registered with the SSM, local authority or professional, scientific or technical services authority before 1 January 2020 and have at least one employee.

Q If the employer is registered with SOCSO before 1 April 2020 and has an employee who started work on 1 February 2020 but is not registered with SOCSO, is the employer eligible to apply for the WSP?

Yes, employers are eligible to apply for the WSP. The employee must be a person who began working under the employer before 1 April 2020 and the employer must first register the employee with SOCSO (ASSIST Portal) before applying for the month.

Q Can an employer who has received an ERP apply for the WSP?

Yes. Employers who meet the prescribed application requirements as shown in Table 1 can submit an application despite having previously received an ERP.

However, the company cannot claim a WSP for employees who have received ERP assistance during the same month.

Q Can an employer re-apply for the latest WSP (6 April 2020) if the employer has applied for the previously announced WSP (27 March 2020)?

Yes. Employers who have applied for the WSP after the announcement on 27 March 2020, and have more than 100 employees, will only need to submit a new list with the remaining employees up to a limit of no more than 200 employees. The relevant employer will be contacted by the WSP Secretariat.

The terms of application can be seen in Table 1.

Q If I do not apply for the WSP, can I terminate my employees at any time?

Yes. However, any employer who wishes to terminate employees is subject to all the Labor and Employment Laws in Malaysia such as the Employment Act 1955 and the Companies Relations Act 1967.

Employers involved in the WSP cannot layoff any employees, deduct salaries, put employees on unpaid leave. This applies to employees earning RM4,000 and below, especially those employees who have been enrolled in the WSP.

Q One of the eligibility requirements for the WSP is that employers have to retain employees for 6 months. If an employee voluntarily quits and has received a previous wage subsidy, does the employer have to submit a new application?

No. If the voluntary termination of an employee occurs within the first 3 months of the WSP, the employer will only need to update the employee’s eligibility information by submitting a new list through the system next month. Failure of the employer to not report such change may result in legal action.

Q How will an employer determine whether a wage subsidy application has been accepted, approved or rejected?

Employer will receive a reference number once the application has been completed. The employer can then check the status of the application on the WSP Portal using the reference number provided.

The employer will also be notified of the status of the application (whether approved or rejected) by email.

A list of employers who have been approved for the WSP application can also be found on the SOCSO website (eiscentre.perkeso.gov.my/) including the number of approved employees per employer.

Q How do I pay my employees wages if they join the WSP?

Employers must pay their salaries as usual and at the same rate, then submit their WSP application to SOCSO. The subsidy assistance received from SOCSO is financial assistance to the employer. SOCSO and SIP contribution payments are mandatory based on the employee’s actual salary.

Q If an employee works with Company A and Company B and contributes to SOCSO, are both companies eligible to apply for the WSP?

Yes. Both companies are eligible to apply for the WSP for the same employee as long as they meet the eligibility requirements as shown in Table 1.

Q My company has both Malaysian and non-citizen employees but has not registered with SOCSO. Can I register with SOCSO and apply for the WSP on behalf of Malaysian citizens only?

Yes. Employers must first register or contribute with SOCSO before applying for the WSP. This application is only available to Malaysian citizens only. Employers must also declare the total number of Malaysian and non-citizen employees *.

* Note: The definition of Enterprise Size is based on the total number of Malaysian and non-citizen employees

Q What is the difference between Employment Insurance System, Employment Retention Programme and Wage Subsidy Programme?

Table 2: Difference between Employment Insurance System, Employment Retention Programme and Wage Subsidy Programme

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