Malaysian Statutory Contribution

1. Overview
   • Every employer and employee are responsible to pay respective statutory contributions using a portion of their wages. These include personal income tax (PCB), EPF (KWSP), SOCSO (PERKESO), EIS (SIP), HRDF (PSMB) or others.
   • As a hassle-free solution, HR.my provides automated calculation of all employer and employee portions of the respective statutory contributions, according to the rates specified in Employee ❯ Management » Edit » Salary » Statutory.
   • Since it is very common that an employee's salary may comprise several components (e.g. overtime claims, leave encashment), therefore it is sometimes not necessary for some salary components to be included in the Statutory Contribution calculation. As such, HR.my also offers extra flexibility so that employers may decide which statutory contributions are required in their salary components. This could be easily customized via the options provided in Earning, Deduction and Bonus. With the options provided, an employer could choose not to contribute to certain statutory contribution (e.g. EPF) for a particular salary component.
   • In the event that an employer may have their own preferred way of statutory contribution calculation, HR.my also allows employers to input their own calculated results for various statutory contributions.
2. Statutory Contribution Calculation
   • Go to Payroll ❯ Statutory Contribution, click at the button to create a new item.
   • There are both Employer Portion and Employee Portion in each Statutory Contribution. You may decide how each portion's amount is calculated with the options below:
     • Not Applicable. This means that this portion is irrelevant, and it will be shown as empty field on employee payslip.
       This option is not the same as having an amount of zero printed on the employee payslip.
     • Amount. This allows you to enter your own calculated value directly.
     • % Gross Income. Gross Income is the summation of Basic Salary + Earning + Bonus - Deduction. This means that HR.my will calculate the portion based on the percentage decided by you during payroll run. As explained earlier, not all salary components are necessarily involved in all statutory contribution calculation. You may exclude certain salary component by changing the options provided in Earning, Deduction and Bonus. Nonetheless, Basic Salary will always be included for the statutory contribution calculation.
3. How to Override System Generated Values?
   • By default, HR.my automatically calculates Malaysian Statutory Contributions according to the rates specified in Employee ❯ Management » Edit » Salary » Statutory.
   • If you ever need to OVERRIDE the system's generated value for certain statutory contributions, e.g. you have your own calculation for EPF, you may follow the steps below:
     • Go to Payroll ❯ Statutory Contribution, click at the button to create an "EPF" item.
     • Leave the Employer Portion and Employee Portion as zero, set Amount Type to "Amount".
     • Update the specified employee's salary profile via Payroll ❯ Salary Adjustment. Add the created EPF item in the Statutory Contribution section.
     • In the next payroll run, go to Payroll ❯ Process. You will be able to update EPF contribution in Edit Salary Items step. Edit the EPF component and enter your calculated amounts for both Employer Portion and Employee Portion.
   • Repeat the same steps for other statutory contributions like Tax (i.e. monthly PCB, make sure to enter "Tax" in the Code field), SOCSO, EIS, HRDF if necessary.
     Statutory Contribution Code entered must match exactly the name of the statutory contributions listed here (i.e Tax, EPF, SOCSO, EIS, HRDF). Otherwise they will appear as new Statutory Contribution items instead of overriding system calculated values (e.g. "KWSP" will appear as a new Statutory Contribution item, but "EPF" will override the system generated value.).
4. How do I set up HRDF (PSMB)?
   • If you contribute to HRDF, you will need to set up your employee's salary profile to include HRDF item in the Statutory Contribution tab. You may do so via Payroll ❯ Salary Adjustment.
   • When you add the HRDF component, remember to set the Employer's rate.