Have you heard of the EIS or Employment Insurance System? Most salaried employees have this and is actually an insurance scheme in the event that you lose your jobs or retrenched. Like your EPF (Employee Provident Fund) and SOCSO (Social Security Organization), it is an amount that you contribute through your monthly salary.
What is EIS actually?
EIS was launched in 2018 as a safety net for anyone who lost their jobs or is in between jobs due to retrenchment or any such situations. If you have been retrenched and are currently looking for a new job, EIS will give you some form of financial assistance so that you can continue your livelihood. It is under the SOCSO where the contributions are managed as a fund for investment.
Why EIS works and how does it help?
What makes EIS so effective is that it covers many areas which are not only in retrenchment. You could have lost your job because of VSS (voluntary separation scheme) or MSS (mutual separation scheme), closure of the company, constructive dismissal, redundancy or you could have resigned because of sexual harassment or breach of contract by your employer. All these will come under the EIS umbrella which gives you some form of financial help because you might not be drawing any salary currently.
What is your role in EIS?
Each month, you will contribute 0.2% of your salary (and 0.2% from the employer) to EIS. This is on top of your SOCSO, EPF and Income Tax contributions. This is a simple concept and is practiced by employers in the private sector. Self-employed workers, civil servants and those in local or statutory bodies are not eligible for this scheme. When the need arises, you can claim from the EIS in terms of allowance which is based on your last drawn salary. This could come in the form of job search allowance, reduced income allowance, training allowance and others.
Take note that there is a cap when it comes to such allowances. RM4,000 is the maximum salary for contributions which means that if your salary is more than RM4,000 you can only claim up to 80% of RM4,000 instead of your salary. The idea behind this is to avoid abuse of the system and because the EIS is meant to help you get back on your feet after losing your job and not as a means to sustain your lifestyle or financial commitment. Furthermore, the allowance reduces in the proceeding months.
The EIS is a good platform that can help Malaysian salaried workers especially in light of the economic crisis since the COVID-19 pandemic. The problem is that while many are contributing monthly, many are still unaware that there are such provisions and assistance provided through these agencies which can surely come in handy when the need arises.