EPF is governed by Employee Provident Fund (Amendment) Act 2007 referred as EPFA
An Employer must register an employee and contribute to EPF even if he has only one Employee. It is illegal for an employer and his employee to agree between them in the contract of employment not to contribute to EPF.
If employer fails to pay EPF contributions within the specified periods, the employer must pay in addition to the outstanding EPF contributions the dividend which would have been accrued on such outstanding base on EPF last declared date.
Rate of contribution (New 2016)
- Malaysian Citizen up to age 60 > RM 5000 Salary: Employee 11% Employer 12% Total 23%
- Malaysian Citizen Over age 60 < RM 5000 Salary: Employee 11% Employer 13% Total 24%
- Malaysian Citizen Over age 60: Employee 5.5% Employer 6% Total 11.5%
- Foreign Worker up to age 60: Employee 11% Employer RM 5 Total 11% + RM 5
- Foreign Workers Over age 60: Employee 5.5% Employer RM 5 Total 5.5% + RM 5
Employer are required to furnish each employee a statement of wages containing the following particulars.
- Full Name of the Employee
- EPF membership number
- Employee’s Sex
- Identify card number (Passport number and citizenship if foreigner)
- Duration of wage period (that is, monthly, daily, etc)
- Wages for the period
- Other remuneration for the period
- Amount deducted for EPF from employee’s wages
- Employer’s registration number
- Amount of employer’s share of EPF contribution
- Full name of the employee/employer representative, signature and date of issue of statement
EPF contributions need not be paid on directors’ fees because they are only passed or approved by the shareholders at the general meeting of the company. RPF contribution must be paid on a director’s salary if the director is a salaried director.
If a director is appointed for a fixed period of time and is paid a salary and also director’s fee then EPF contributions must be paid on the salary and the director’s fee.
The following are not considered as “employees” for the purpose of EPFA
- Normadic aborigines
- Domestic Servants (not liable to pay unless the servant has given one month’s notice to the EPF board and to his/her employer intention to contribute towards EPF.
- Out workers as defined in Section 3 of the Workmen’s Compensation Act 1952
- Person detained in any prison, place of detention, mental hospital, rehabilitation centre or leper settlement
- Any person who has attained the age of 75 years
Note: Monthly EPF contributions payments must reach the EPF office on or before the 15th if the following month
eg: Deductions made from the wages for December 2015, the deducted contribution plus the employer’s share must reach the EPF office on or before 15.01.2016
Note: If an employees dies, no contribution us due from the employee for the month during which such death occirs. But if contribution has been received, it must be paid over to the EPF.
Partners and firms and sole proprietors are not required to contribute to EPF but they can elect to contribute.
An employer and an employee or either of them may at any time elect to pay monthly contributions at a rate which exceeds the rate set out. However this is subject to any maximum limit of monthly contributions set out in the Third Schedule to the EPFA.