This document provides an outline and overview of employee benefits and services. It begins with an early history of benefits in the United States dating back to 1794. It then defines what employee benefits and services are, including both mandated and non-mandated benefits. Mandated benefits discussed include unemployment insurance, social security, and workers' compensation. Non-mandated benefits include retirement plans, health care, paid time off, and other employee services. The purpose of offering benefits from both the employee and employer perspective is also summarized.

1. Benefits and Services
Administration
Prepared for: Assoc. Prof. Dr Roshidi
Hassan
Prepared by: Nur Aqilah Radzman
(2012238784)

2. OUTLINE
 Early History
 What is employee benefits & services?
 What is Cafeteria Plan
 Purpose of employee benefits & services
 Categories
 Mandated vs Non Mandated
 Reason offering benefits
 Act related to employee benefits & services
 Effect on employees & organization
 Managing an effective benefits programs

5. Early History
• Employee benefits have had a long history in the
United States.
• On 1794, the first recorded profit-sharing plan was
set up by Albert Gallatin in his glassworks in
Pennsylvania.
• The first private pension plan was started in the
United States by the American Express Company in
1875, and the first group annuity contract was issued
in 1921 by the Metropolitan Life Insurance Company.
Source: Hallman, Rosenbloom. et al., (1986)

6. Early History
• In 1910, the Montgomery Ward Company conceived
of group life and accident insurance for its
employees and the Company adopted the first group
accident & sickness policy underwritten by the
London Guarantee and Accident Company.
• The first group life insurance policy is said to have
been issued to the Pantasote Leather Company by
the Equitable Life Assurance Society of the United
States in 1911.
Source: Hallman, Rosenbloom. et al., (1986)

7. Early History
Early History
• Social Security Act of 1935 provided the
framework for much of the American social
insurance system which now provides an
underlying layer of protection associated with
many forms of employee benefits.
Source: Hallman, Rosenbloom. et al., (1986)

8. What is employee benefits
and services?
• Define as all employer provided
rewards and services, other
than wages or salaries arising
from:
Legally required
social insurance
payments
Private
insurance
Cost of services like
subsidized
cafeterias, clothing
allowances and etc.
Source: Dorinda, D. & Terence, M. (2007)

9. What is employee benefits
and services?
• Employee benefits are all forms of consideration
given by an enterprise in exchange for service
rendered by employees.
• Post employment benefits include:
– Retirement benefits e.g gratuity and pension
– Other benefits e.g post employment life insurance
and medical care
Source: Accounting Standard, 15 (2010)

10. What is employee benefits
and services?
• Refer to forms of non-monetary compensation
offered to select employees.
• Perk is not strictly necessary for the
accomplishment of the employee’s duties
Source: Raghuram G. R. et. al. (2011)

11. What is employee benefits
and services?
• Employee benefits represent virtually any
form of compensation provided:
 in a form other than direct wages
 paid for in whole or in part by the
employer, even if provided by a third party
Source:Bob M. & Brian H. K. (2011))

12. What is employee benefits
and services?
• Employee benefits is defined as any form of
compensation provided by the organization
other than wages or salaries that are paid for
in whole or in part by the employer.
Source: SoonYew, J., Zaliha, H. et al. (2008)

13. What is employee benefits
and services?
• Benefits can be defined as indirect financial
and non-financial returns for continuous
employment with an organization (Dessler,
2008).
INDIRECT FINANCIAL
COMPENSATION is called
benefits and services.

14. What is Cafeteria Plan?
A cafeteria plan is a written benefit plan
maintained by an employer for the benefit of its
employees. The plan must allow employees to
choose between two or more benefits consisting
of cash (or a taxable benefit which is treated as
cash) and certain "qualified benefits.“ (Internal
Revenue Service Office)
Is an employees benefits plan which allows
employees to choose from a list of options, much like
they might choose from a cafeteria menu (Thierry
and Croonen, 2010)

16. Is benefits & service
administration COMPULSORY??
Source: Rodney, M., (2013)

17. Who entitle for benefits &
service administration??
 All employees except domestic servant. (Travis, W. 2012)
 Contract workers is entitle for maternity leave for 60 days.
 Part time workers are entitle for EPF & SOCSO.
 Benefits are not evenly spread among the workforce,
some workers are more likely than others to have access
to benefits.
 Full-time workers, for example, have greater access to
benefits than do part-time workers, and workers in large
establishments usually have greater access to benefits
than do those in small establishments.
Source: Elka, J. (2005)

18. Is benefits automatic given to
employees ?
• The Employment Act provides many forms of
protection. Among the most significant would be :
– Automatic entitlement to minimum benefits provided by the Act or
existing benefits, whichever is more favorable
– Minimum notice period for termination or wages in lieu of notice
– Minimum days of work for certain industry
– Maternity benefits
– Leave, holiday, rest day and payments
– Termination and lay-off benefits
– Right to seek intervention of the Labour Office for failure of employer
to uphold agreed terms of employment .
Source: Employment Act, 1955

19. Employee benefits also known
as:
Fringe benefits
Cafeteria plan
Perks
Contribution plans

21. Purpose of employee benefits?
Employee’s perspectives
To provide an appropriate
standard of living for the
employee and his
or her family based on the
employee’s relative position
with and responsibilities
to the employer
To provide
protection against
medical expenses for
the employee and his
or her dependents.
To recognise the employee’s
performance, perhaps
through some kind of incentive
compensation
To provide protection
against loss of income in the
event of the employee’s
premature death, disability,
or unemployment
To provide retirement
income (and also to
continue certain other
benefits, such as medical
expense and perhaps
death
benefits, during
retirement)
Source: Hallman, Rosenbloom, 1986

22. Purpose of employee benefits?
Employer’s perspectives
Source: Hallman, Rosenbloom, 1986

24. Source:Bob M. & Brian H. K. (2004)

25. Mandated vs. Non Mandated
Benefits
Non- Mandated Benefits
 Annual Leave.
 Gazette Public
Holidays.
 Maternity Leave.
 Medical Leave.
 Termination & LayOff Benefits.
 Long Service
Payment.
 Housing
allowances.
 Car allowances.
 Medical insurances.
 Bonus.
 Commission.
 Retirement benefits.
Source: Malaysia payroll service report, (2009)

27. Mandatory Benefits
• Define as types of employee benefits that are
mandated by law.
• Mandated Benefits Programs:
– Unemployment Insurance
– Social Security
– Workers’ Compensation
Source: John M. Ivancevich, (2010)

28. • Unemployment Insurance
 Unemployment insurance is compensation
provided to workers who are unemployed
through no fault of their own. Unemployment
provides monetary payments for a specific period
of time or until the worker finds a new job.
 was set up in United States as part of the Social
Security Act of 1935.
Source: John M. Ivancevich, (2010)

29.  Unemployment Insurance was designed with
several objectives:
o to provide periodic cash income to workers
during short periods of involuntary
unemployment
o to help the unemployed find jobs
o to encourage employers to stabilize
employment
o to stabilize labor supply
Source: John M. Ivancevich, (2010)

30.  To be eligible for compensation, the employee
must have worked a minimum number of
weeks, be without a job, & be willing to accept
a suitable position offered through a state
Unemployment Compensation Commission.
 Before benefits are paid, the reason for being
unemployed must be assessed.
 If voluntary quitting a job can be disqualified

31.  was established under the Old-Age, Survivors
and Disability Insurance program
 the goal was to provide income to retired
people to supplement savings, private pensions
and part time work.
 the employee & employer were to pay taxes
that would cover the retirement payments
each employee would later receive in a selffunding insurance program.

32.  SOCSO is a social security scheme for
employees. Under the scheme, employees are
protected against industrial accident including
accident occurred while working, occupational
diseases, invalidity or death
due to any cause.
 paid by the employers & employees

33.  how much to be paid is calculated on the average
monthly wage.
 if employee dies, a family with children under 18
receives survivor benefits, regardless of the
employee’s age.
 The Social Security Organization provides social
security protection by social insurance including
medical and cash benefits, provision of artificial aids
and rehabilitation to employees to reduce the
sufferings and to provide financial guarantees and
protection to the family.

34. • The Employees Social Security Act 1969 covers
all workers who earn less than RM3000.00
• This means that all employees under a
contract of service or apprenticeship and
earning less than RM3,000 per month must
compulsorily register and contribute to SOCSO
regardless of the employment status whether
it is permanent, temporary or casual in nature

35. • Those who are not eligible for SOCSO
protections are stated below:
– Government servants WILLCOVERED BY PENSION
PLAN 1980
– Foreign employers
– Self-employed persons
– Sole proprietors & Partnership
– Domestic servants or spouse

36. • Employees are compulsorily register and contribute
to SOCSO regardless of the employment status
whether it is permanent, temporary or casual in
nature.
• The exception is foreign workers who are no longer
protected by SOCSO and are protected under WCA
1952.

37. How do we report an accident and what
are the documents needed to make a
claim?
• For accidents at the work place, the employer has to
notify SOCSO by filling in the Accident Report (Form
21) and submit a claim form (Form 10), punch cards
or attendance records, medical certificate and a copy
of the identity card to the SOCSO Office. If the
accident occurs while commuting to and from work,
these documents must be accompanied by a police
report and sketch map of the route taken at the time
of accident.

38. • It is compulsory for the employer and employees to
contribute toward EPF and that such contributions
are payable to the employees in full on reaching the
age of 55 years. Effective from 2008, the employer is
liable to contribute to EPF for employees who have
attained the age of 55 years and above at revised
rate.
• The employer & employee have to contribute at the
prevailing rates set out in the Third Schedule of the
EPF Act 1991.

39. • The current rates of contribution are as
follow:Share Division
Until 55 years
After 55 years until
75 years
Employer Share
12%
6%
Employee’s Share
11%
5.5%
Total
23%
11.5%
Source: Malaysia payroll service report, (2009)

40.  Employees who are injured or become ill on
the job are covered by state workers'
compensation laws.
 employers pay the entire cost of workers’
compensation insurance.
 the cost of premiums is tied directly to each
employer’s past experience with job-related
accidents & illnesses.
 Benefits range from 60% – 70% of the average
weekly wage.

41. An employee shall be entitled to paid annual leave as follows:
1. 8 days for every 12 months of continuous service if he has been employed
by the same employer for a period of less than 2 years.
2. 12 days for every 12 months of continuous service if he has been employed
by the same employer for a period of 2 years or more but less than 5 years.
3. 16 days for every 12 months of continuous service if he has been employed
by the same employer for a period of 5 years or more.
4. where an employee has not completed 12 months of continuous service
with the same employer, his entitlement to paid annual leave shall be
proportioned to the number of completed months of service.
Source: Employment Act 1955 (Act 265)

42. Annual Leave
Less than two years of service
8 days
Two or more but less than five years of
service
12 days
Over five years of service
16 days
Source: Employment Act 1955 (Act 265)

43.  Every employee is entitled to 11 out of any of the following gazetted
public holidays and any day declared as a public holiday by the Federal
or State Government under section 8 of the Holidays Act 1951 in any
one calendar year: Federal Public Holiday
•
•
•
•
•
•
•
•
•
•
•
Hari Raya Puasa
Chinese New Year
Workers’ Day
Wesak Day
Birthday of YDPA
Hari Raya Haji
Awal Muharram
National Day
Birthday of Prophet Muhammad
Deepavali
Source: section 8 of the Holiday Act 1951
Christmas Day

44.  State Public Holidays
•
•
•
•
•
•
•
•
•
New Year’s Day
Federal Territory Day
Thaipusam
Israk & Mikraj
Nuzul Quran
Good Friday
Pesta Keamatan
Hari Dayak
Birthday of State’s Sultans / Rulers
 Compulsory gazetted Public Holiday
•
•
•
•
•
•
National Day
Birthday of YDP Agong
Birthday of Sultans/ Head of State or Federal Territory Day
Workers’ Day
Labor Day
Malaysian Day
Source: section 8 of the Holiday Act 1951

45.  If any of the chosen gazetted public holidays falls
within the period during which the employee is
absent due to sick leave, annual leave, temporary
disablement under the Workmen’s Compensation
Act 1952 or under the Employees’ Social Securities
Act 1969 or maternity leave, the employee is
entitled to another day as a paid holiday in
substitution for such public holiday.

46. Maternity Leave.
 Every female employee shall be entitled to
maternity leave for a period of not less than
60 consecutive days in respect of each
confinement.
Source: Employment Act 1955

48. Medical Leave
 An employee is entitled to paid sick leave
only under the following circumstances:
– he has obtained a certificate from a registered medical
practitioner duly appointed by his employer; or
– he has obtained a certificate from a dental surgeon; or
– if no such medical practitioner is appointed, or the services of
such a practitioner are not obtainable within a reasonable
time or distance, then other registered medical practitioners
or government medical officers will be accepted; and
– he has informed or has attempted to inform the employer of
his sick leave within 48 hours of the commencement of the
sickness.

49. Medical Leave
The number of days of paid sick leave which an
employee is entitled to in each calendar year is as
follows:
 Less than 2 years – 14 days
2 years but less than 5 years – 18 days
5 years or more – 22 days
 If hospitalization is necessary, the amount of paid
sick leave can be extended by up to 60 days per
calendar year.

52. Non Mandated Benefits
• Also called as voluntary benefits/optional
benefits
• Consists:
Employees Services &
others
Health Care
Retirement Plans
Paid Leave & On Job
Paid Time Off
Income Protection
Source: Milkovich & Newman, 2008

53. Retirement Plans
• a plan for setting aside money to be spent
after retirement.
• Retirement plans covered by Employee
Retirement Income Security Act (ERISA)
• Pension Benefits consists:
– Benefits pension plan
– Contribution pension plan
Source: Milkovich & Newman, 2008

54. Defined Benefits Plans
• Employer provides a specific pension level
defined in term of :
– Fixed dollar amount
– Percentage of earnings amount that may vary with
years of seniority
• Employer finance this obligation by:
o Following an actuarially determined benefits
formula and
o Making current payments that will yield the future
pension benefit for a retiring employee
Source: Milkovich, Newman, & Gerhart, (2011)

55. Defined Benefits Plans
Defined Benefits Plans
• Determination of benefits level:
– Average earnings at end of tenure (last 3 – 5
years) or
– Average career earnings or
– Fixed dollar amount not dependent on earning
Source: Milkovich, Newman, & Gerhart, (2011)

56. Defined Contribution Plans
• Require specific contributions by employer
• Final benefit received by employees is
unknown
• Dependent on investment success of plan manager
• Include savings, profit sharing, and stock
ownership plans
Source: Milkovich, Newman, & Gerhart, (2011)

57. Advantages of Pension Alternatives
BENEFIT PENSION PLAN
CONTRIBUTION PENSION PLAN
Provides explicit benefit which
is easily communicated
Unknown benefit level is difficult to
communicate
Company absorbs risk associated
with changes in inflation and
interest rates which affect cost
Employees assume these risks
More favorable to long service
employees
More favorable to short-term
employees
Employer costs unknown
Employer costs known up front
Source: Milkovich, Newman, & Gerhart, (2011)

59. Health Care
• Traditionally, defined benefit healthcare plans were
a very simple concept. Employers agreed to offer
their employees a set dollar amount each year
toward health insurance premiums.

60. Income Protection
• Pays a monthly benefit for the client if they are
unable to work due to incapacity caused by illness or
injury.
• This benefit can be used in any way the client wishes,
for example towards mortgage payments, medical
payments, household payments, school fees and
much more.
• Disability Protection
– Non occupational related
– Short term
– Long term

61. Income Protection: Life
Income Protection: Life Insurance
Insurance
• One of the most common employee benefits
• 87% of medium and large companies offer life
insurance
• Most companies offer term policies
– Value of one to two times an employee’s salary
– Most plan premiums paid completely by employer
– Varying amount of additional coverage often an
option
Source: Milkovich, Newman, & Gerhart, (2011)

62. Paid Time off during working
hours
• Rest periods
(thirty minutes in the five consecutive hours shall not break
the continuity of that five consecutive hours;
•
•
•
•
•
Lunch periods
Wash-up time
Travel
Clothes-change time
Get-ready time

63. Paid for Time Not Worked
Paid for time Not Work
• Paid vacations
• Paid sick leave
Paid sick leave per calendar year:
Less than two years of service
: 14 days
Two or more but less than five years
of service
: 18 days
Over five years of service
: 22 days
Where hospitalisation is necessary
up to 60 days (inclusive of the
: paid sick leave entitlement
stated above)

65. Employee Services
• Is something of a catchall category of
voluntary benefits, including all other benefits
or services provided by employers.
• Varied programs as cafeterias, sauna, gyms,
free parking lots, commuter vans, ability to
purchase company products at a discount,
death, personal & financial counseling.
Source: John M. Ivancevich, (2010)

66. Stock Ownership Plans
• Companies encourage employees to purchase
company stock to increase their incentives to
work, their satisfaction, the quality of their
work, reduce absenteeism and turnover.
• Allow for payroll deductions
• Sometimes the company will agree to buy the
stock back if the employee have a significant
loss.
• When employees become partners in their
business, they work harder
Source: John M. Ivancevich, (2010)

67. Education Programs
• Many organization support off the job general
education for their employees.
• PETRONAS offer Maryland International
Programs in U.S.
Source: John M. Ivancevich, (2010)

68. Child Care
• Each day, at least 5,000 parents fail to come
to work or to find employment because they
cannot find adequate & affordable child care.
• Alternatives include flexible work hours,
establishing workstations at home, offering
list of available childcare facilities, & provide
on site programs.
• This will lead to absenteeism & turnover fall
while job satisfaction increase.
Source: John M. Ivancevich, (2010)

69. Average Monthly Turnover Rate
(June 2009- June 2010)
NON EXECUTIVE
EXECUTIVE
Oil & Gas Industry
1.56%
0.87%
Overall
1.97%
1.35%
Source : Malaysian Employers Federation (MEF)

70. Year
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013​
Average
Monthly
Recruitm
ent Rate
(%)
​
Annual A
verage
2.4
2.3
2.8
2.7
2.8
2.9
2.8
2.2
2.8
2.7
2.8
n.a.​
1st Qtr
2.1
2.3
2.7
2.5
2.7
2.6
2.8
1.9
2.6
2.6
2.7
2.7​
2nd Qtr
2.5
2.2
3.0
2.8
2.9
3.3
3.2
2.1
2.9
2.8
2.9
3.0​
3rd Qtr
2.7
2.5
3.0
2.9
3.1
3.2
3.1
2.5
3.0
3.0
2.8
n.a.​
4th Qtr
2.2
2.4
2.5
2.6
2.6
2.7
2.2
2.4
2.6
2.6
2.6
n.a.​
Average
Monthly
Resignati
on Rate
(%)
​
Annual
Average
2.1
2.0
2.2
2.1
2.0
2.0
2.0
1.8
2.0
2.0
2.1
n.a.​
1st Qtr
2.0
2.2
2.3
2.1
2.0
2.0
2.0
1.8
2.0
2.0
2.1
2.1​
2nd Qtr
2.2
2.1
2.3
2.2
2.1
2.2
2.3
1.8
2.2
2.1
2.2
2.2​
3rd Qtr
2.2
2.0
2.2
2.1
2.0
2.1
2.0
1.8
2.1
2.1
2.1
n.a.​
4th Qtr
1.9
1.8
1.9
1.8
1.7
1.7
1.6
1.7
1.8
1.7
1.8
n.a.​

71. • The turnover rate for non-executives is much
higher than executives & this is linked to low
employee commitment.
• The employers desire to hop from one job to
another seem to be the trend today.
• 3 recent surveys conducted in U.S, Canada &
Malaysia, it was reported that more than half
would abondon their employers if offered
comparable jobs elsewhere.
Source : McShane,(2009)

72. BENEFITS
 Health insurance for you & family
Vacation policy
Death benefit
Quality single or family housing in
company community.
 Personal effects shipment and
excess baggage allowances.
 Access to some of the finest social
and recreational facilities in United
Kingdom.
 Free medical care in United
Kingdom for you and your family for
contract duration.
 Excellent educational
assistance benefits with family
status contracts.
 Life insurance Policy.
 Maximum and efficient security
both in work place and housing
Community.
 Phones: the employer will
provide each employee with one
(1) Landline and one (1) Mobile
Telephone. This shall have a
reasonable credit limit application
per month.

73. SHELL
BENEFITS
• Health Care Coverage
• Nationwide coverage
• Personal health coach
• Dental
• Free to choose any dental provider
• Participants pay a percentage of the treatment cost (limited)
• Dependent Care Account
• Disability Account
• Shell Sharesave Scheme
• Car Parking
• Recreation Facilities
• Vision
• annual comprehensive eye exam, and either lenses/frames or contact
lens allowance. Reduced rates for additional contact lenses, glasses,
Lasik surgery, and other vision services.

74. SHELL
BENEFITS
•
•
•
Flexi time
Flexible spending account
Market aligned levels of annual leave and maternity/paternity leave
allowances.
• Sports activities: Shell Sports Club, Shell Women’s Network, Shell African
Network, Shell Disability Network & etc.
• gym facilities, swimming pools, tennis courts, sailing and scuba
diving.
• Listening to our employees
• online surveys, discussion forums or interactive webcasts. For
example, we regularly conduct the online ‘Shell People Survey’ on
a global basis. This gives everyone a chance to make suggestions
on improving the work environment, developing policies or
addressing areas of concern.
Source: http://www.shell.com.my/

75. DHL
•
•
•
•
•
BENEFITS
Pensions
Healthcare
– Private medical insurance (PMI) offered to about 8,000 employees,
with family cover added for certain job grades.
– Cash plan available as voluntary benefit.
Family-friendly benefits
– Childcare vouchers available as voluntary benefit.
– Ad-hoc flexible working.
Cars
– Company cars for business-need drivers.
– Choice of cash allowance or car offered to status-perk drivers.
Annual leave
– 25 days for all employees (excluding public holidays).

76. DHL
•
•
•
BENEFITS
Group risk
– Life assurance (four-times salary) offered to all employees.
– Income protection for executives.
– Life cover (for staff not in the pension scheme).
– Sick pay, which increases with length of service. Staff with more than
five years’ service entitled to 26 weeks on full pay, followed by 26
weeks on half pay.
– Personal accident cover for all employees.
Variable pay and bonuses
– Bonuses available to about 8,000 employees, based on job grade.
– Incentive stock options for senior executives (by invitation only).
Other benefits
– Retail discounts.

77. Hewlett Packard
BENEFITS
• Medical Benefits
• HP takes a regional approach to health care
• Dental
• HP flexible benefits include a choice of dental options that cover
preventive and diagnostic, basic, and major services, as well as
orthodontia
• Most of the premiums are covered by HP
• Vision
• cover eye exams and eyeglasses or contact lenses
• Life & Accident insurance
• HP provides employee life and accident insurance coverage of one
times your annual pay.
• You can choose to purchase additional coverage for yourself, as well
as your spouse and eligible children, at group rates.

78. Hewlett Packard
BENEFITS
•
•
•
•
•
•
•
•
Short term & Long term disability
Flexible spending account
HP 401 (K) Benefits
• a great foundation for building future financial security
• reducing your current income tax bill.
Retirement Medical Saving Account
Annual Vacation up to 25 days (20 years of service)
Vacation But Program
Leave of Absence
• Family and Medical (FMLA) Leave, Military Leave, parental leave,
personal leave, bereavement leave, and jury duty leave
Employee Stock Purchase Plan
• contribute up to 10% of your eligible pay.
• end of each six-month period, entitle to purchase HP shares at a 5%
discount

79. Hewlett Packard
BENEFITS
•
•
•
•
•
•
•
Adoption Assistance Program
• The Adoption Assistance Program offers financial support for
eligible expenses if you’re adopting a child
Volunteer opportunities
Work/Life employee resource and referral services
• How manage stress and work life changing
Employee Programs
• Credit Union
• Employee Discount (from theme park tickets to hotels)
• Employee purchase program
Insurance Discounts
Travel Assistance Program & Employee Assistance Program
Equal Opportunities/Non-Discrimination

80. Reason for offering benefits
Source: Terry, P. (2009)

81. Interest in & usage of VEBs

83. WORKMEN’S COMPENSATION ACT 1952
• This Act provides for the compensation payment to an injured
employee or worker arising out of and in the course of
employment or contracting occupational disease.
• This Act is administered by the Department of Labour and
applies throughout Malaysia.

84. The Compensation
 Workmen's compensation is a compensation for
injury to an employee or worker arising out of and in
the course of employment that is paid to the worker
or dependants.
 The employer will have to purchase a workmen's
compensation insurance for workmen's
compensation claims by injured employees or
workers.

85. The Compensation
• Malaysian workers are no longer covered under the
Workmen's Compensation Act 1952 with effective from 1st
July 1992. Local workers will be covered under the Employees
Social Security Act 1969.
• Only foreign workers are covered under this Act in respect of
compensation for employment injury as well as nonemployment injury vide Workmen's Compensation (Foreign
Worker's Scheme) (Insurance) Order 1993.
• This Act applies to foreign workers
– whose earnings are not more than RM500 per month and
– all manual workers irrespective of the wage

86. Foreign Worker Insured by Employer
• Under the Foreign Worker's Scheme, an
employer of foreign workers is responsible to
pay an insurance premium of RM86 per year
per worker.
• An employer is not allowed to deduct the
earnings of a worker for the payment of
insurance premium. An employer found guilty
of such action, shall be liable, on conviction to
a fine of RM5,000 or to imprisonment for a 1
year term or to both.

87. • There are 11 insurance companies being
selected as insurer to issue insurance policy
under the Foreign Worker's Scheme.
•
•
•
•
•
•
•
•
•
•
Amanah General Insurance Berhad
Arab Malaysian Assurance Berhad
London & Pacific Insurance Company Berhad
Mayban Assurance Berhad
MNI Takaful Sdn. Bhd.
Malaysia British Assurance Berhad
Malaysian Assurance Alliance Berhad
Malaysia National Insurance Berhad
The Pacific Insurance Berhad
Syarikat Takaful

88. • An employer found guilty of not buying an insurance
for workmen's compensation, shall be liable, on
conviction to fine of RM20,000 or imprisonment for
a term of 2 years or to both.
• Each worker involved in an accident must inform the
employer within 7 days from the date of such
accident except in the even of fatal accident.

89. • An employer must notify the nearest Department of
Labour from the place of accident in writing. Such
notice must be submitted within 10 days from the
date of accident.
• An employer shall ensure that all information is with
full details and supporting documents are enclosed
such as medical certificate or death certificate.

90. Pension
• What is pension?
o Pension means money paid under given conditions to a
person following retirement or to surviving dependants.
• The Pensions Act 1980 which came into force on the
1st January 1976 is the governing act for pensions
benefits in Malaysia. This Act provide for the
administration of pensions, gratuities and other
benefits for officers in the public service and their
dependants.
• Under the Pensions Act 1980, pension, gratuity or
other benefit granted shall be charged on the
Federal Consolidated Fund.

91. • Pension does not include any cash award
granted in lieu of accumulated vacation leave
to an officer whose salary is not paid out of
the Federal Consolidated Fund.
• An officer refers to an officer of the public
service or an employee of any statutory or
local authority who prior to retirement or
death, was service in Malaysia or in any of the
territories which presently constitute
Malaysia.

92. • In Malaysia, officers on full-time employment in the public
service under given condition are entitled to pension benefits.
• Public service refers to :
• the Judicial and Legal Service
• the General Public Service of the Federal Government
• the Police Force
• the Railway Service
• the Education Service the Joint Public Services common
to the Federal Government and of one or more of the
states
• the Public service of each state
• the Parliamentary service
• such other service as the Yang di- Pertuan Agong may
determine to be public service for the purposes of the
Pensions Act 1980

93. • Officers in the public service
– who have opted or who are deemed to have opted for any
New Scheme
– who are or were appointed under any New Scheme
– who by virtue of their option are bound by any New
Scheme
• temporary officers in the public service who were appointed
prior to the 1st January 1976 and who were not given the
option to opt for the New Scheme which came into force
from that date are entitled for pension benefits.

94. Who Is Deemed to Be A Pensionable
Officer?
• A permanent officer may be conferred the status of a
pensionable officer if he has been confirmed in his
present appointment and completed not less than 10
years reckonable service.
• An officer who has already been emplaced or
qualified to be emplaced on the pensionable
establishment under the Pensions Ordinance 1951
prior to the 1st July 1977, the Pensions Ordinance
1963 of Sabah or the Pensions Ordinance of Sarawak
prior to the 1st July 1978, as the case may be, shall
be deemed to be pensionable officers.

95. • A permanent and confirmed officer who dies in service, retires
on medical ground or attains the age of 45 years for :
– a woman officer
– an officer of the fire service holding the rank of sub-officer
and below
– a police officer below the rank of Assistant Superintendent
of Police
– a prison officer below the rank of Superintendent
– a male nurse of a mental hospital
• before completing 10 years service shall also be deemed to be
pensionable officer.

96. EMPLOYEES PROVIDENT FUND (EPF)
• Employees Provident Fund is a compulsory savings scheme in
Malaysia. Its primary aim is to provide a measure of security
for old age retirement to its members. It also provides
supplementary benefits to members to utilize part of their
savings for house ownership and other withdrawal schemes.
• EPF is the abbreviation for Employees Provident Fund.
Employees Provident Fund is commonly known in the Malay
term as KWSP or Kumpulan Wang Simpanan Pekerja.
• Employees Provident Fund Act 1991 is the act governing the
Employees Provident Fund in Malaysia. This Act is
administered by the Employees Provident Fund, Malaysia.

97. • All employees in Malaysia who have reached
the age of 16 and employed under a contract
of service whether express or implied, and
whether oral or in writing must be registered
as a member of the Employees Provident
Fund.
• An employer will contribute 12% of the
employee's wages and the employee
contributes 11% of the monthly wages
towards the employee's account.

98. • Employers must register their employees with the EPF within
7 days of employment under law.
• Under section 41(2) of the EPF Act 1991, an employer who
contravenes the above shall be found guilty of an offence and
shall be liable, on conviction to imprisonment for a term not
exceeding 3 years or fine not exceeding RM10,000 or to both.
• An employer shall register the company or firm with the EPF
by submitting the KWSP 1 Form. This can be obtained from
the nearest EPF branch office.
• Thereafter, for each employee, the employee and the
employer is required to complete the KWSP 3 (AHL) Form.
Generally, an employee will also be required to submit the
Nomination Form KWSP 4 (AHL) which is attached together
with the KWSP 3 (AHL) Form.

99. • Once the application is approved, the
employee will be sent a Membership Card.
• The EPF contribution by employer and
employee shall commence on the first month
of salary payment pursuant to section 45(2) of
the EPF Act 1991.

100. When Should Employer Pay
Contribution to EPF
• An employer shall before the end of the first week in
the first month in which he is paying required paying
contribution to the Employees Provident Fund.
• An employer shall prepare and furnish a statement
of wages to each employee.
• An employer who fails to make contributions to EPF
shall be guilty of an offense and shall be liable on
conviction to imprisonment for a term not exceeding
3 years or to a fine not exceeding RM10,000 or to
both.

101. SOCSO
• The Social Security Organization is an organization set up to
administer, enforce and implement the Employees' Social
Security Act, 1969 and the Employees' Social Security
(General) Regulations 1971.
• The Social Security Organization provides social security
protection by social insurance including medical and cash
benefits, provision of artificial aids and rehabilitation to
employees to reduce the sufferings and to provide financial
guarantees and protection to the family.
• SOCSO is the abbreviation for Social Security Organization. It
is commonly known in the Malay term as PERKESO or
Pertubuhan Keselamatan Sosial.

102. • An employee employed under a contract of
service or apprenticeship and earning a
monthly wages of RM2,000 and below must
compulsorily register and contribute to SOCSO
regardless of the employment status whether
it is permanent, temporary or casual in
nature.
• An employee must be registered with the
SOCSO irrespective of the age.

103. • SOCSO only covers Malaysian workers and permanent
residents. As a result, foreign workers are protected under
the Workmen's Compensation Act 1952.
• Nevertheless, SOCSO does not cover the following categories
of persons :
• A person whose wages exceed RM2,000 a month and has never
been covered before.
• Government employees.
• Domestic servants employed to work in a private dwelling house
which includes a cook, gardeners, house servants, watchman,
washer woman and driver.
• Employees who have attained the age of 55 only for purposes of
invalidity but if they continue to work they should be covered
under the Employment Injuries Scheme.
• Self-employed persons.
• Foreign workers.

104. The Coverage Provided To an Insured
Person by SOCSO Under ESSA
1969
• An insured person or dependants will be entitled to the
following benefits :
• Periodical payments in the case of invalidity
• Periodical payments in the case of disablement suffered as a result
of an employment injury
• Periodical payments to the dependants of an insured person who
dies as a result of an employment injury
• Payments for funeral benefit or expense on the death of an
insured person as a result of an employment injury
• Periodical payments to an insured person who is in receipt of
invalidity pension or disablement benefit and is so severely
incapacitated or disabled as to require the personal attendance of
another person

105. The Coverage Provided To an Insured
Person by SOCSO Under ESSA
1969
• Medical treatments for the attendance on insured persons
suffering from disablement
• Periodical payments to dependants of an insured person who dies
while in receipt of invalidity pension

106. • SOCSO provides coverage to eligible
employees through 2 schemes namely
– Employment Injury Insurance Scheme
– Invalidity Pension Scheme

107. • These schemes are classified into 2 categories:
1)
First Category - Employment Injury Insurance Scheme
and Invalidity Pension Scheme. The contribution
payment is made by both the employer and employee
2) Second Category - Employment Injury Insurance Scheme
Only. The contribution is paid by the employer only. An
employee who is not eligible for coverage under the
Invalidity Pension Scheme is protected under this
category.
Source: Perkeso Website retrieved at
http://www.perkeso.gov.my/en/contribution.html

108. Example of SOCSO
•
Example:
Salary
= RM1000.00
Overtime Payments = RM 250.00
COLA
= RM 100.00
Total Salary
= RM1350.00
Contribution to be paid to SOCSO is RM30.40 (Refer the Contribution
Table) However, the following payments are not considered as wages:
• Payments by employer to any pension or provident fund for employees
• Mileage claims
• Gratuity payment(s) for dismissal or retrenchments
• Annual bonus

109. “Because of the current economic situation
and other changes, my employer may not
be able to offer me all the benefits.”

110. Source: MetLife, Inc. (2009)

111. Industrial Relation Act 1967
 An employee is entitled to annual leave only after 12
months of continuous service as follows:
 1] Less than 2 years of service – 8 days for each year
•
•
•
2] 2 years or more but less than 5 years – 12 days for each year
3] More than 5 years – 16 days for each year
The paid annual leave does not include public holidays.
An employee must take his annual leave not later 12 months after
the end of every 12 months of continuous service. If he fails to do
so, his annual leave will be forfeited.
The whole or part of the untaken annual leave may be substituted
for payment at the request of the employer and with the written
consent of the employee.

112. Industrial Relation Act 1967
• An employee’s annual leave can be forfeited if he absents
himself from work without permission, or without any
reasonable excuse for more than 10% of the total number of
working days during the twelve months of continuous service
for which his entitlement is accrued.
• If an employee’s service is terminated (for reasons other than
misconduct) or if he resigns by giving due notice, he is
entitled to the ordinary rate of pay in lieu for the completed
months of service.
• If an employee who is on annual leave falls sick, or is on
maternity leave, the employee is entitled to sick leave or
maternity leave as the case may be and the annual leave
already taken by him/her becomes cancelled.

113. Effect on organization
performance
Do Employee Benefits Really Offer No
Advantage On Firm Productivity? An
Examination Of Taiwan's Shipping Industry
 Usually, employee benefits viewed as a hygiene factor and
provided to employees because of membership in the
organization do not motivate employees (Rosenbloom and
Hallman, 1981; Hills, 1987; Milkovich and Newman, 1990)
 Benefits may be valuable in recruiting and retaining
employees, but are typically unrelated to productivity (Adigun
and Stephenson, 1992; Mondy et al., 2002)
Source: Kuen-Hung Tsai., et.al.,(2009)

114. • Hennessey (1989) argued that benefits cannot help firms
achieve competitive advantages.
• Huseman et al. (1978), Sutton (1986), and McCaffrey (1987)
argued that benefits can be seen a means to meet
organizational objectives, such as increasing morale and
retaining and attracting good employees; however, they
claimed that benefits can affect employee attitudes and
performance through operation of benefit programs.
• Hennessey et al. (1992) contended that mixed views result
from benefit awareness. He argued that if employees are
completely unaware of benefits, they bring no motivation to
organizational productivity. His investigation
further
demonstrated that benefit-awareness intervention has a
significant impact on perceived organizational productivity
Source: Kuen-Hung Tsai., et.al.,(2009)

115. • Result:
•
•
•
•
employee benefits contribute to firm productivity
through enhancement of labor efficiency.
labor-output elasticity represents efficiency of labor use and
has been widely used in empirical research related to firm
productivity (e.g. Griliches, 1986; Wakelin, 2001).
Efficient companies have higher productivity than rivals and,
therefore, lower costs.
Thus, this study implies the link between employee benefits
and competitive advantage, and confirms claims of previous
research (e.g. Hennessey et al., 1992; Lado and Wilson, 1994;
Fernandez et al.,
1999; Nerdrum and Erikson, 2001).
Source: Kuen-Hung Tsai., et.al.,(2009)

116. • A lot of studies suggest that employee benefits are a
useful tool in attracting and retaining employees
with critical skills (e.g. Beam and McFadden, 1988;
Evers, 1998; Federico and Goldsmith, 1998; Steere,
2000; Laabs, 2000; Kurlander and Barton, 2003).
• Firms can use employee benefits to increase
employee productivity, and, in turn, achieve
competitive advantage. Second, using employee
benefits to achieve competitive advantage for SMEs
seems to be more important than large companies.

117. • In summary, despite the growing cost of employee
benefits, little is really known about effects
• of benefit level on firm performance. Obviously, this
study demonstrates that employee
• benefits offer advantage in terms of firm
productivity through improvement of labor
• efficiency. Although external validity of findings is
worthy of further examination in other
• contexts, this study has contributed to the
understanding of the relationship between
employee benefits and firm productivity.

118. The Influence of Employee Benefits
Towards Organizational Commitment
 Purpose of the study: The purpose of this study was to
reveal whether employee benefits offered by the
organization are important as antecedents to
organizational commitment for employees in foodmanufacturing industry in the state of Kedah, Malaysia.
 Result of the study: The results of the study suggested
that mandatory benefits and fringe benefits were
positively influenced organizational commitment. The
results further denoted that fringe benefits fully mediated
mandatory benefits when predicting organizational
commitment.

119. The Influence of Employee Benefits
Towards Organizational Commitment
wards Organizational Commitment
 Findings :
 Both mandatory and fringe benefits were having significant and
positive relationship with organizational commitment and fringe
benefits having higher relationship as compare to mandatory
benefits.
 When employees received more fringe benefits, their
organization commitment tend to be higher.
 Therefore the employers should not only provide mandatory
benefits as required by the law, but also provide and/or improve
the fringe benefits in order to strengthen the employees’
organizational commitment, motivation, productivity and job
performance.

120. • Many internal and external issues have
affected organizations and their employee
benefits programs in recent years. Legislative
changes, escalating costs, slashed HR budgets
and an uneven economy are some of the
factors organizations are dealing with today.
Source: SHRM, 2013

121. Managing an Effective Benefits
Program
Step 1: Set Objectives & Strategy for Benefit
There are 3 strategies for benefits
 Pacesetter strategy: Be first with the newest
benefits employees desire.
 Comparable benefits strategy: Match the benefits
program similar organization offer.
 Minimum benefits strategy: Offer the mandatory
benefits & those that are most desired & least
costly.
Source: John M. Ivancevich, (2010)

122. Managing an Effective Benefits
Program
Step 2: Involve Participants & Unions
 Encourage employees’ participation in decision
making on benefits & services.
One way to let employees participate in the
decision is to poll them with attitude surveys & set
up employee benefits advisory committees.
 Involve union leadership so that all parties are
seeking benefits desired by the employees.
Source: John M. Ivancevich, (2010)

123. Managing an Effective Benefits
Program
Step 3: Communication Benefits
 Develop effective communication program.
 For pension, ERISA requires employers to
communicate with employees by sending them an
annual report on the pension plan & basic
information on their pension in language they can
understand.
Source: John M. Ivancevich, (2010)

124. Managing an Effective Benefits
Program
Step 4: Monitor Costs Closely
 It is vital for the managers to consider the cost of
benefits incur.
 Review the insurance claims is important.
More efficient administration procedures using
computerized methods also can lead to greater
savings & more satisfied employees.
Source: John M. Ivancevich, (2010)

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