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A Guide to the Employment Insurance System (EIS) in Malaysia (2025)

Losing a job is a challenging and often stressful experience. In today’s fast-changing economy, retrenchment and company downsizing are unfortunate realities. During this difficult transition, the most immediate concern is often financial stability: “How will I manage my expenses while I search for a new job?”

Fortunately, Malaysia has a crucial safety net in place for this very situation: the Employment Insurance System (EIS). Managed by PERKESO (SOCSO), EIS is a vital financial bridge designed to support Malaysians who have unexpectedly lost their jobs.

This guide will provide a clear, step-by-step explanation of what the EIS is, who qualifies for its benefits, and exactly how you can apply for assistance to help you get back on your feet.

What is the Employment Insurance System (EIS)?

The Employment Insurance System (EIS) is a social security scheme that provides financial and re-employment support to insured individuals who have lost their jobs. Every month, both you and your employer contribute a small percentage of your salary to this fund. As explained on the official PERKESO website, the system is built on two primary objectives:

1. To provide immediate financial assistance to workers who have been retrenched. This helps cover basic living expenses while you search for new employment.
2. To provide re-employment support through services like career counseling, job matching via the MyFutureJobs portal, and vocational training to help you re-enter the workforce.

Who is Eligible for EIS Benefits?

Eligibility for EIS is specific. It is not unemployment insurance for every situation; it is specifically for involuntary job loss.

Key Eligibility Criteria

To qualify for EIS benefits, you must:

• Be a Malaysian citizen or a permanent resident.
• Have made monthly contributions to the EIS fund for a minimum number of months, as set by the “Contributions Qualifying Conditions.”
• Have experienced a “Loss of Employment” (LOE) as defined by PERKESO.

What Qualifies as “Loss of Employment”?

PERKESO has a clear definition of what constitutes a valid Loss of Employment. This is tied to your termination notice period and the reason for it. Covered scenarios include:

• Normal retrenchment or redundancy.
• VSS/MSS (Voluntary/Mutual Separation Scheme).
• Closure of the company (bankruptcy or otherwise).
• Constructive dismissal, where you were forced to resign due to a breach of contract by your employer.
• Natural disasters that resulted in the business shutting down.

What Does NOT Qualify?

It is equally important to understand what is not covered. You are not eligible for EIS benefits if your unemployment is due to:

• Voluntary resignation.
• Dismissal due to misconduct, which is different from a case of unfair dismissal.
• Retirement (mandatory or optional).
• The expiry of a fixed-term contract.

The Financial Benefits Available Under EIS

EIS provides several forms of financial aid, with the Job Search Allowance being the most significant.

1. Job Search Allowance (JSA)

This is the main financial benefit paid to you while you are actively looking for a new job. The JSA is calculated based on a percentage of your previous assumed monthly salary and is paid for a period of three to six months.

The payment rates are structured to be higher at the beginning:
| Month | Payout Rate |
| :——– | :————————- |
| 1st | 80% of your assumed salary |
| 2nd | 50% of your assumed salary |
| 3rd | 40% of your assumed salary |
| 4th | 40% of your assumed salary |
| 5th | 30% of your assumed salary |
| 6th | 30% of your assumed salary |

2. Early Re-employment Allowance (ERA)

The ERA is an incentive for you to find a new job quickly. If you get re-employed while you are still receiving the JSA, you will receive a one-time payment equivalent to 25% of the remaining balance of your JSA entitlement.

3. Other Financial Assistance

EIS also offers a Training Allowance if you attend approved vocational training courses, and a Reduced Income Allowance (RIA) for those who have multiple jobs and lose at least one of them.

How to Apply for EIS: Your Step-by-Step Guide

Timing is critical when applying for EIS benefits. You must act quickly and follow the correct procedure.

Step 1: Gather Your Documents

Before you start your application, make sure you have the following documents ready:

• A copy of your NRIC (Kad Pengenalan).
• Your official termination letter or VSS/MSS acceptance letter.
• Your bank account information (for the benefit payment).
• Your last six months’ pay slips.

Step 2: Submit Your Application Online or in Person

You have two options for submission. You can apply online through the official PERKESO website or visit the nearest PERKESO office to submit a physical application.

Important: You must submit your application within 60 days from your official Loss of Employment date. If you miss this deadline, you may no longer be eligible to claim.

Step 3: Actively Participate in the Re-employment Program

Receiving EIS benefits is conditional. You are required to register on the national jobs portal, MyFutureJobs, and actively apply for jobs. You must also report your job search progress to PERKESO as required.

The Employer’s Role in the EIS Process

Employers have a legal and ethical responsibility in the EIS process. Their cooperation is essential for their former employees to receive their benefits smoothly.

Accurate and Timely Contributions

The primary duty of an employer is to ensure that monthly EIS contributions for all employees are calculated correctly and paid on time to PERKESO.

Providing the Termination Letter

When an employee is retrenched, the employer must provide a clear termination letter. This letter must state the reason for the job loss, as it is a critical piece of evidence for the employee’s EIS claim. This is a key part of an effective offboarding process.

How an HRMS Ensures Compliance

A modern payroll software like Worksy is essential for compliance. The system automatically calculates and processes statutory deductions like EIS, SOCSO, and EPF for every employee. This eliminates human error, ensures that contributions are always accurate and up-to-date, and guarantees that your employees are protected and eligible for their benefits when they need them most.

Conclusion: A Support System for Your Career Transition

The Employment Insurance System (EIS) is a critical safety net for the Malaysian workforce. It provides not only temporary financial relief but also practical support to help you navigate the challenging period between jobs.

If you have lost your job due to reasons beyond your control, remember that this system is here to help you. The most important step is to act fast and submit your application within 60 days.

For employers, fulfilling your EIS obligations is a fundamental part of a responsible and compliant offboarding process, ensuring your departing employees are cared for during their transition.