The Employment Insurance System (EIS) Bill was passed yesterday by the Parliament, to provide workers who lose their jobs with temporary financial assistance.
Under the new law, employers and employees will contribute 0.2% each of an employee's salary, which will go towards a fund from which retrenched workers can claim financial assistance. The scheme will involve 430,000 employers and 6.6 million employees.
The EIS will cover employees who lose their job from voluntary or mandatory retrenchment, or those whose jobs become redundant due to business restructuring, downsizing or closure.
The maximum amount of the EIS monthly contribution is capped at MYR59.30 (US$14.08) for those earning MYR4,000 and above. Monthly contributions start from 10 sen for workers earning MYR30 a month.
The insurance scheme, which will be administered by the Social Security Organisation (SOCSO), seeks to provide temporary financial assistance for up to six months to workers who are retrenched. All organisations and companies with one or more employees must comply to this new rule.
Contributions will start on 1 January 2018 and the payouts for retrenched workers will begin in 2019.
The Malaysian Trades Union Congress, which represents 500,000 private-sector employees, hails the EIS as a new protection for workers.