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EIS rate revised to 0.2% upon objections, needs more clarity

FMM in the News: The Malaysian Reserve - August 17, 2017

government has revised the contribution rate for the employees insurance plan to 0.2% from the earlier 0.5%.

The Employment Insurance Scheme (EIS), tabled for law-makers’ approval in Parliament recently, was withdrawn after employers associations objected to the proposed 0.5% rate. They claimed the rate was too high and would be an additional financial burden for companies.

Human Resources (HR) Minister Datuk Seri Richard Riot Jaem said all related parties had approved the lower contribution rate and the Cabinet had endorsed the rate on Aug 11.

The revised EIS bill will be tabled in the October Parliament session, he said in a statement.

Federation of Malaysian Manufacturers (FMM), which had objected to the earlier EIS proposal, welcomed the new rate.

However, its vice chairman of HR management committee Datuk Palaniappan Joseph said there were other parts of the bill which required greater scrutiny.

“The rate is just one component. Other areas such as the implementation and governance of the scheme must also be addressed.

“We have a list of 15 provisions which should be reviewed for greater transparency and consistency,” Palaniappan told The Malaysian Reserve.

The FMM will engage with the HR ministry to discuss the matter further, he said.

“The HR minister has agreed to engage with FMM on the EIS and other HR-related issues concerning the manufacturing sector.

“We look forward to have a more active engagement with the ministry before they present the bill in October,” Palaniappan said.

On Monday, FMM said it had submitted its concerns and recommendations over the EIS bill after a meeting with the Second Finance Minister Datuk Seri Johari Ghani, HR minister and Ministers in the Prime Minister’s Department Datuk Seri Dr Wee Ka Siong and Senator Datuk Paul Low Seng Kuan.

The government had temporarily shelved the EIS bill and sought to get feedback from related stakeholders like the National Chamber of Commerce and Industry of Malaysia, SME Association of Malaysia, FMM and the Malaysian Employers Federation (MEF).

The EIS Bill 2017 aims to provide financial benefits for retrenched workers. It was first tabled in Parliament on Aug 1 and was expected to be passed by Aug 10. However, employer groups have expressed concerns of possible abuses to the scheme.

The FMM claimed that the insurance plan provided a safety net for unproductive workers and offered double benefits to retrenched employees who were given payments under a separation scheme.

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