Employees' Provident Fund (EPF; Malay: Kumpulan Wang Simpanan Pekerja, KWSP) is a federal statutory body under the purview of the Ministry of Finance. It manages the compulsory savings plan and retirement planning for private sector workers in Malaysia. Membership of the EPF is mandatory for Malaysian citizens employed in the private sector and voluntary for non-Malaysian citizens.
Employers are legally required to make EPF contributions as spelt out in the EPF Act 1991 and the KWSP 1991 Rules and Regulations. Failure to comply is subject to penalties.
A Company must register the Employees Provident Fund (EPF) profile within 7 days of the first employee being hired by the Company under section 41(1) of the Employees Provident Fund Act 1991.
This can be done in person at any available counter or online via the official website.
Failure to do so could result in a prison sentence of up to three years or a fine of up to ten thousand Malaysian ringgit (RM10,000) or both.
To apply for registration, the Company will need to put together the following documents:
Form KWSP 1 (available on EPF website)
Copy of the sole proprietor/partner/director's identification (MyKad/Passport)
Copy of Certification of Company/Business Registration from SSM; or
Section 14 – Superform
Section 15 – Notice of registration
Section 17 – Certificate of Incorporation
What You Will Get Upon Registration
Employer’s reference number
Notice of employer registration
Employer’s registration certificate (to be displayed at employer’s premises)
*Companies registered with SSM and have registered as EPF Employers online can view the employer registration information here.
Compliance and Enforcement
Some of the offences and penalties:-
Failure to make contributions on or before the 15th day of the month:
A jail term not exceeding 3 years; or
A fine not exceeding RM10,000; or
Both.
Make false statement orally or in writing:
A jail term not exceeding 3 years; or
A fine not exceeding RM10,000; or
Both.
Deducts the employee's share of contributions from the wages and fails to pay to EPF:
A jail term not exceeding 6 years; or
A fine not exceeding RM20,000; or
Both.
Payments Subject to EPF Contribution
“Wages” is defined under the EPF Act as all remuneration in money due to an employee under his contract of service or apprenticeship and includes any bonus, commission or allowance. The following are expressly excluded from the definition:
service charge;
overtime payment;
gratuity;
retirement benefit;
retrenchment, lay-off or termination benefits;
any travelling allowance or the value of any travelling concession; or
any other remuneration or payment as may be exempted by the Minister.
In general, all monetary payments meant to be wages are subject to EPF contribution. On the other hand, when people talk about director fees, they typically mean the fees that shareholders solely decide upon during the company's annual general meeting, which takes place after the end of the fiscal year. Director fees are not liable to EPF.
When And What To Contribute
The employer must make monthly payments on or before the 15th of the month.
Example: Salary for October 2022
Therefore, the Contribution Month is November 2022, and it has to be paid either before or on 15th November 2022.
The employer must pay the employees and the employer’s share to the EPF. Employers may deduct the employee’s share from their salary.
Persons Liable To Contribute Any person, not being a person of the descriptions specified in the First Schedule, Second Section of the EPF Act 1991, who is employed under a contract of service or apprenticeship, whether written or oral and whether expressed or implied, to work for an employer.
Persons Not Liable To Contribute
Nomadic aborigines unless recommended in certain cases by the Director-General of the Department of Aborigines.
Domestic servants as defined under Section 3 of the Workmen's Compensation Act 1952 [Act 273], for example, maids, cooks, house guards, gardeners and personal drivers EXCEPT when hired:
by any employer as stated in the Second Schedule of the Act
by an association already registered or required to register under any written law currently in force concerning the registration of associations - or cooperative bodies
in any business registered or licensed or required to be registered or licensed under the Registration of Businesses Act 1956 [Act 197], Trades Licensing Ordinance for the State of Sabah [Sabah Chapter 144], Business, Profession and Trade Licensing Ordinance for the State of Sarawak [Sarawak Chapter 33], or Business Names Ordinance for the State of Sarawak [Sarawak Chapter 64], as the case may be
by corporations incorporated under any written laws
Out-workers (as defined under Section 3 of the Workmen's Compensation Act 1952 [Act 273]).
Persons detained in any prison, Henry Gurney School, detention centre, mental hospital or rehabilitation centre defined under the Drug Dependants (Treatment and Rehabilitation) Act 1983 or leprosariums.
Administration members (refer to Article 160 of the Federal Constitution).
Expatriates whose country of domicile is outside Malaysia (foreign citizens) and who elect not to contribute.
Employees who have reached age 75.
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