Workmen's Compensation Insurance in Malaysia

What workmen's compensation insurance covers

Workmen's compensation insurance helps an employer pay compensation when an employee is injured, or falls ill, because of their work. It is also sometimes called employer's liability cover. Typical benefits include:

• Medical expenses for treating a work-related injury or illness
• Lost wages while the employee cannot work
• Disability benefits for permanent or partial disability
• Death benefits for the family of an employee who loses their life in a work-related incident, including funeral expenses

The exact benefits and limits depend on your policy, so the schedule and exclusions on your own policy decide what is covered.

Workmen's compensation and SOCSO

The Workmen's Compensation Act 1952 is the long-standing Malaysian law that made employers responsible for compensating workers hurt by their work. Over the years, much of that protection has moved to the national social security scheme run by PERKESO (SOCSO) under the Employees' Social Security Act 1969. Foreign workers, who were previously covered by a separate arrangement, were brought under the SOCSO employment injury scheme from 2019.

The practical question for an employer is what SOCSO covers, what it leaves out, and how insurance can fill 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. The rules have changed over time, so confirm current requirements with PERKESO or your legal adviser. Our guide to the Workmen's Compensation Act 1952 explains this in more detail.

Examples of claims it is designed for

These are illustrations, not real client cases:

• A factory worker injures a hand on machinery and cannot work for several weeks.
• A delivery driver is hurt in an accident while on a work trip.
• A site worker falls from a ladder and suffers a permanent disability.
• An employee develops a recognised occupational illness from their work environment.

Who typically needs it

Any business with employees, including local, foreign, contract and temporary staff. Risk is higher where staff work with machinery, at heights, on site or on the road. Many employers choose this cover for protection beyond what SOCSO provides.

Workmen's compensation compared with other cover

• Public liability and CGL: these cover injury to third parties such as customers and visitors, not to your own employees. See public liability insurance and CGL insurance.
• Personal accident and group medical: these add benefits for staff injury, disability, death, treatment and hospitalisation. They work alongside, not instead of, work-injury cover.
• Professional indemnity: covers claims about your professional services, not workplace injuries. See professional indemnity insurance.

Not sure which of these your business needs? Our business insurance in Malaysia overview explains each one.

What insurers look at

Insurers generally consider the number of employees, their job roles and duties, your payroll, your industry and your claims history. Declare all your workers, including contract, temporary and foreign staff. Leaving workers out is one of the most common mistakes and can cause problems at claim time.

Common employer mistakes

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

Read what can happen if you have no workmen's compensation when an employee is injured.

How Cover Buddies helps

We are an insurance broker. We review your workforce and your existing cover with you, then compare options and set up the right policy, so you deal with one team instead of several insurers. To get a quote, it helps to have:

• The number of employees, split by local and foreign, and by job role
• Your approximate annual payroll
• What your business does, and whether staff work on site or at heights
• Your current SOCSO and insurance arrangements
• Any past work-injury claims

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. We can compare what you have with what you might need.

Does it cover foreign workers?

Foreign workers are generally covered under the SOCSO employment injury scheme, with the employer responsible for registration and contributions. Check the latest PERKESO guidance, and tell us about your foreign workers so we can advise on any gaps.

Is this the same as SOCSO?

No. SOCSO is the national social security scheme. Workmen's compensation insurance is a private policy that can sit alongside it.

What happens if an employee dies because of work?

Compensation may be payable to the employee's dependants, and funeral expenses may be covered, under the scheme and under your policy where it applies.

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.

Does it cover occupational illness?

SOCSO and insurance can respond to recognised occupational diseases, subject to the rules of the scheme and the policy.

Read our full guide: The Value of Workmen Compensation Insurance

Related reading: What Happens If I Don't Have Workmen's Compensation and an Employee Is Injured? | Workmen's Compensation Act 1952: What Malaysian Employers Need to Know

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