Daniel Heng highlights the salient features of a new social security legislation.
As a general rule, a person who is employed in Malaysia, as well as his employer, are required to contribute to a social security fund established under the Employees’ Social Security Act 1969 (“SOCSO Act”) in order to safeguard the employee and his dependants against certain contingencies, such as partial or permanent disability or injury sustained by the employee in the course of his employment.
No corresponding social security system had existed in Malaysia for self-employed persons until the Self-Employment Social Security Act 2017 (“Act”) came into operation on 13 June 2017.
The objective of the Act is to provide social security for citizens or permanent residents of Malaysia who carry out a self-employment activity. A “self-employment activity” refers to any activity in relation to an industry specified in the First Schedule of the Act (“self-employment activity”).
The Act establishes a scheme called the “Self-Employment Social Security Scheme” (“Scheme”) and a fund known as the “Self-Employment Security Fund (“Fund”). The Scheme and Fund are to be administered by the Social Security Organisation (“Organisation”) established under the SOCSO Act.
Presently, the only self-employment activity specified in the First Schedule of the Act is the service of carriage of passengers by means of a public service vehicle or motor vehicle owned by a person, or managed, maintained or operated by a person under any arrangement with the owner or lessor of the vehicle. The vehicles that may be used to provide this service include taxis, airport taxis, limousine taxis, school buses, employees’ buses and in due course, e-hailing vehicles.
The Act requires every self-employed person who is engaged in a self-employment activity (“self-employed person”) to register under the Scheme and make contributions on a monthly basis to the Organisation. The rates of contribution are set out in the Second Schedule and are based on the insured monthly earnings in the Second Schedule selected by the self-employed person (“selected insured monthly earnings”). The monthly contribution is about 1.25% of the selected insured monthly earnings and range from RM13.10 to RM49.40 for income coverage from RM1,050 to RM3,950 per month.
Failure by a self-employed person to register under the Scheme or contribute to the Fund is an offence which is punishable with a fine not exceeding RM10,000 or imprisonment for a term not exceeding two years or both.
Notwithstanding the First Schedule, section 10 of the Act provides that the Scheme is to be implemented by the Organisation to self-employed persons carrying out a self-employment activity by regulations made under the Act. In furtherance of the foregoing, the Act was applied to taxi drivers when the Self-Employment Social Security (Rates of Contribution for Taxi Drivers) Regulations 2017 (“Regulations”) were gazetted and came into force on 13 June 2017.
Unlike the Second Schedule of the Act which provides 30 tiers of monthly earnings within the range of RM1,050 to RM3,950, the Regulations only provide four such tiers within the same range of monthly earnings. The Regulations also provide that contributions are to be made in a lump sum payment for coverage of 12 months.
BENEFITS UNDER THE ACT
A self-employed person who has registered with the Organisation and has paid the contributions under the Act (“insured”) is entitled to claim benefits arising from a self-employment injury, that is, a personal injury to the insured caused by an accident or an occupational disease arising out of and in the course of his self-employment activity, including while travelling for the purpose of such activity.
An occupational disease refers to a disease specified in the Fifth Schedule of the SOCSO Act which is contracted by an insured who is directly involved in any occupation or industry specified in that schedule (e.g. lung fibrosis due to exposure to arsenic during the production of arsenic-based pesticides) while being self-employed or within 72 months (or such extended period as the Organisation may accept upon production of relevant supporting evidence) after ceasing to be self-employed.
The benefits provided to an insured under the Act are as follows:
Temporary disablement benefit
An insured who suffers temporary disablement will be entitled to a periodical payment of an amount equal to 80% of his selected insured daily earning for the duration of his disablement. The temporary disablement benefit will only be payable if the temporary disablement lasts for at least four days, including the day of the accident.
The expression “temporary disablement” refers to a condition resulting from a self-employment injury which requires medical treatment and renders the insured, as a result of such injury, temporarily incapable of carrying out any self-employment activity which he was capable of performing before or at the time of the self-employment injury.
Permanent disablement benefit
An insured who suffers permanent partial disablement will be entitled to a periodical payment of an amount equal to 90% of his selected insured daily earning multiplied by the percentage of his loss of earning capacity.
An insured who suffers permanent total disablement will be entitled to a periodical payment of an amount equal to 90% of his selected insured daily earning.
The expression “permanent partial disablement” refers to any disablement of a permanent nature, which reduces the earning capacity of an insured to carry out any self-employment activity which he was capable of performing before or at the time of the self-employment injury; whereas the expression “permanent total disablement” refers to any disablement of a permanent nature, which disables an insured from carrying out any self-employment activity which he was capable of performing before or at the time of the self-employment injury.
The “selected insured daily earning” of an insured is an amount equal to one-thirtieth of his selected insured monthly earnings. For example, if the selected insured monthly earnings is RM2,050, the selected insured daily earning will be RM68.33.
If an insured dies as a result of a self-employment injury, his dependants shall be entitled to the following benefit:
(a) for a widow or widower, an amount equal to three-fifths of the daily rate of permanent total disablement benefit of the deceased insured, or if there is more than one widow, such amount shall be divided equally between the widows; and
(b) for each child, two-fifths of the daily rate of permanent total disablement benefit of the deceased insured.
However, if the total of the dependants’ benefit to be distributed among the widow or widower and child or children exceeds at any time the daily rate of permanent total disablement benefit, the share of each dependant will be proportionately reduced so that the total amount payable to the dependants will not exceed the daily rate of permanent total disablement benefit.
A “child” refers to a child of the deceased insured who is (a) under 21 years of age (including a posthumous child, a dependent stepchild, an illegitimate child and an adopted child); and (b) of any age who is mentally retarded or physically incapacitated and is incapable of supporting himself.
The benefit is payable to a child:
(a) until the child is married, legally adopted or dies (whichever occurs first);
(b) in the case of a child who is mentally retarded or physically incapacitated and is incapable of supporting himself, for so long as the child is incapable of self-support; or
(c) in the case of a child who is receiving education in any institution of higher education, until he completes his first degree or ceases to receive such education or marries, whichever occurs first.
If a deceased insured does not leave a widow or widower, or if the widow or widower dies, the daily rate of benefit for each child shall be three-fifths of the daily rate of permanent total disablement benefit, and if there is more than one child, the amount payable shall be equally divided between them.
Where a deceased insured does not leave a widow or widower or child, or if the widow or widower or child dies, the parents or siblings (excluding a sibling who is 21 years of age or older, or is married or adopted, or has died) or grandparents shall be paid a dependants’ benefit of an amount equal to four-tenths of the daily rate of permanent total disablement benefit, and if there are two or more parents or grandparents, the amount payable shall be equally divided between them.
If the insured dies as a result of a self-employment injury or while receiving a disablement benefit, a funeral benefit will be paid to his dependants, or if there is none, to any person who incurs the funeral expenses.
Constant attendance allowance
An insured who is entitled to a permanent total disablement benefit will also be entitled to a daily constant attendance allowance, if and so long as he is so severely incapacitated as to constantly require the personal attendance of another person.
An insured whose condition requires medical treatment and attendance as a result of a self-employment injury shall be entitled to receive a medical benefit.
Rehabilitation or dialysis
An insured who has been certified to suffer from a self-employment injury may be provided with facilities for physical or vocational rehabilitation or dialysis, and where his condition requires, be fitted, at no cost, with prosthetic, orthotic or other appropriate appliances.
The Organisation may provide education benefit in the form of an educational loan or scholarship on terms to be determined by the Organisation, to a child of an insured who has died as a result of a self-employment injury or is in receipt of permanent disablement benefits.
Travelling and other allowances
A claimant for benefit may be paid travelling and other allowances if he is required to appear before a medical assessor or the Appellate Medical Board, or is required by the Organisation, a medical assessor or the Appellate Medical Board to attend physical or vocational rehabilitation, or dialysis.
Where loss of earning capacity has been assessed by a medical assessor or the Appellate Medical Board at not more than 20%, the insured may opt to commute the daily benefit to a lump sum payment. Where the loss of earning capacity has been assessed as aforesaid at more than 20%, the insured may opt to commute one-fifth of the daily benefit payable for a lump sum payment and to receive the balance as periodical payments.
Further subsidiary legislation
The Act stipulates that regulations will be made to provide for the various matters, including: (a) the amount of the funeral benefit; (b) the existence of the degree of incapacity that qualifies an insured for a constant attendance allowance; (c) the nature and scale of the medical benefits and places where treatment is to be provided; (d) the nature, scale and terms of the facilities for physical or vocational rehabilitation or dialysis; (e) the terms and conditions for payment of travelling and other allowances; and (f) the terms on which daily payments may be commuted to lump sum payments.
Benefits not assignable or attachable
The benefits under the Act are not transferable, assignable nor liable to attachment.
Notwithstanding the Regulations, it would appear that the Act has yet to be implemented as regulations have yet to be made to provide for matters that require prescription, such as the existence of the degree of incapacity that qualifies an insured for a constant attendance allowance and the nature and scale of the medical benefits.
It is not inconceivable that the Malaysian Government will in due course extend the application of the Act to provide social security for self-employed persons in other businesses, trades or industries.