KUALA LUMPUR: A new law to implement an Employment Insurance System (EIS) which could benefit thousands of retrenched employees a year, was tabled in the Dewan Rakyat today.
The proposed EIS is a job-loss coverage scheme for retrenched staff, that also includes employees made redundant due to business restructuring or closure, and those whose employers abscond or become bankrupt.
Under the bill, employers are to contribute to the EIS, a minimum rate based on the employee’s monthly wages.
The system, to be managed by the national social security organisation (Socso), is expected to come into force on Jan 1, 2018, with payouts starting in 2019.
Under the bill, the EIS is also applicable to those who are not already Socso members.
The scheme covers monthly wages of up to RM4,000, with both the employers’ and employees’ contributions ranging from 10 sen to RM29.65 a month.
According to the bill, loss of employment occurs if the contract of service of an insured person is terminated or becomes invalid.
It does not cover voluntary resignation of the insured person, the expiry of a contract, termination of a contract of service due to mutual consent, completion of contract in accordance with the terms of conditions of service, retirement and termination of a contract of service due to the insured employee’s misconduct.
Any employee meeting the conditions of termination which allows for the insurance to be activated, must submit an application within 60 days from the day the employee loses his/her job.
A job search allowance could be paid to the insured person but on condition that the person shall not be under any employment during the job search period.
Another provision of the bill is the incentive of an early re-employment allowance. Under this provision, the insured person shall be paid early re-employment allowance on the month that follows the month he or she has reported for work with a new employer.
The insurance payout to an employee made jobless will follow the monthly contribution scale but the insurable benefit will be capped at RM4,000 even if the staff member earns more than RM4,000.
A maximum of 12 claims can be made depending on the number of months of contribution within an employment period.
Employers found to dock pay or benefits from employees to cover the additional expense of contributions can be punishable by a fine of up to RM10,000, up to two years’ imprisonment, or both.
Under the bill, a worker must have contributed to the fund for at least 12 months to be entitled to three months’ of unemployment benefits.
For a retrenched staff member to be entitled to six months’ of benefits, at least 24 months of contributions must have been made.
According to statistics revealed during the tabling of the bill today, there has been an average retrenchment rate of 30,000 to 40,000 workers a year in the past 10 years.