Workmen's Compensation Act 1952: What Malaysian Employers Need to Know

The short answer

The Workmen's Compensation Act 1952 is the long-standing Malaysian law that set out an employer's duty to compensate workers injured, or made ill, because of their work. Over the years, much of that protection has moved to the national social security system run by PERKESO (SOCSO), including for foreign workers. For employers today, the practical question is: what does SOCSO cover, what does it leave out, and how can insurance fill the gaps?

What is the Workmen's Compensation Act 1952?

It is legislation that made employers responsible for paying compensation to workers who suffer injury by accident arising out of and in the course of employment, or who contract an occupational disease. The idea was simple: a worker hurt on the job should not be left without support, and in the case of death, their dependants should be looked after.

How things have changed

For many years, employers insured their workers under workmen's compensation policies, while local employees earning below certain levels were covered by SOCSO. The government has since moved towards a single national scheme. Foreign workers, who used to be covered by a separate compensation arrangement, were brought under the SOCSO employment injury scheme from 2019.

Because the legal framework has evolved, it is wise to confirm the current requirements for your business with PERKESO or your legal adviser. Your broker can also explain how the rules affect the insurance you hold.

What does this mean for employers?

• Register and contribute: eligible employees, including covered foreign workers, need to be registered with SOCSO, with contributions paid on time.
• Report accidents promptly: work-related accidents and diseases are normally reported to PERKESO and other relevant authorities within set timeframes.
• Keep records: maintain accurate staff lists, job roles and incident records.
• Look at the gaps: SOCSO benefits have their own limits and eligibility rules. Some workers may fall outside the scheme, and some claims may go beyond what it provides.

Where does insurance fit in?

Insurance can sit alongside SOCSO to cover risks the scheme does not fully address. Depending on your business, this may include:

• Workmen's compensation or employer's liability cover for claims outside the scheme or above its benefits
• Personal accident cover for staff, with benefits for injury, disability or death
• Group medical cover for treatment and hospitalisation
• Public liability for third parties who are injured by your business activities

Learn more on our workmen's compensation insurance page.

Common mistakes employers make

• Not declaring all workers, including contract, temporary and foreign workers
• Assuming SOCSO covers every type of claim and every worker
• Reporting accidents late
• Letting policies or contributions lapse
• Forgetting to update cover when the workforce changes

Common questions

Do I still need workmen's compensation insurance if I pay SOCSO?
It depends on your workforce, your contracts and how much risk you want to carry yourself. Many employers keep additional cover to deal with gaps. A broker can compare what you have with what you might need.

What about foreign workers?
Foreign workers are generally covered under the SOCSO employment injury scheme, with employers responsible for registration and contributions. Check the latest PERKESO guidance for details.

Does it cover occupational illness?
SOCSO and insurance can respond to recognised occupational diseases, subject to the rules of the scheme and the policy.

What if a worker is injured at a customer's site?
If the injury arises from their work, it is generally treated as a work injury. Make sure your policies and your contracts with clients reflect who is responsible for what.

Related reading

For the benefits side of workmen's compensation insurance, see The Value Of Workmen Compensation Insurance.

Hear it from David Teh

For a quick overview of the main types of business insurance, founder David Teh walks through the coverage types found on SME packages in under 20 minutes on the Cover Buddies Podcast. Read the episode page, listen on Apple Podcasts or Spotify, or watch on YouTube.

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Not sure what your business needs on top of SOCSO? Cover Buddies can review your workforce and your cover with you. Explore Workmen's Compensation Insurance, get a quote or WhatsApp us.