Section 8: Compensation for Industrial Accidents

Setting Up @ PKFZ > Rules & Regulations

Section 8: Compensation for Industrial Accidents

PKFZ Rules & Regulation
Section 8: 
Compensation for Industrial Accidents

Compensation for Industrial Accidents

Two compensation schemes provided for local and foreign workers are as follows:

 1. Social Security Organisation (SOCSO):

  • Administers the Employment Injury Insurance Scheme and the Invalidity Pension Scheme provided under the Employees’ Social Security Act 1969. Socso only covers Malaysian workers and permanent residents.
  • All establishments, including factories, employing workers earning wages not exceeding RM2,000 a month are required to insure their workers under the two social security schemes.
  • The Employment Injury Insurance Scheme provides employees with coverage by way of cash benefits and medical care in the event of any disablement or death due to employment injury. Only the employer pays the contribution of about 1.25% of the employees’ monthly wages.
  • The Invalidity Pension Scheme provides 24-hour coverage to employees against invalidity and death due to any cause before attaining the age of 55 years. The 1% monthly contribution is shared equally between the employer and employee.

2. Foreign Workers’ Compensation Plan (FWCP) – Malaysia

  • The Workmen’s Compensation Act 1952 administered by the Department of Labour provides for the payment of compensation to workmen in the event of injuries arising from their employment. Where fatalities occur, the Act provides for the payment of compensation to the workers’ dependants.
  • The Act covers private sector workers who earn less than RM500 a month and all manual workers irrespective of their wages.
  • Malaysian and permanent residents who are covered by SOCSO are NOT covered by this Act.
  • All foreign workers come under the purview of the Act in respect of compensation for employment injury as well as non-employment injury via the Workmen’s Compensation (Foreign Workers’ Compensation Scheme) (Insurance) Order 1998.
  • Under Section 26(2) of the Amended Act 1996 of Workmen’s Compensation Act 1952, it is mandatory for every employer to insure all the foreign workers employed by him under an approved insurance scheme in respect of any liability he may incur.
  • MAA Assurance has been appointed by the Ministry of Human Resource to exclusively administer the Insurance Scheme to provide coverage for employment accidents to foreign workers, known as ‘Foreign Workers’ Compensation Scheme”.
An employee who is the victim of an accident at work [an “Industrial” accident] which results in total or partial permanent disability will be eligible for SOCSO/Foreign Workers’ Compensation Scheme in accordance with these rules.
An accident, which occurs while travelling in the course of an employee’s duties, or going to or coming from work, shall be treated as an industrial accident and these rules will apply.

The employer will be responsible for payment for all medical treatment, including hospitalisation costs needed by an employee involved in an industrial accident.

The SOCSO/Foreign Workers’ Compensation Scheme will pay an employee who cannot work due to an industrial accident, the basic rate of salary as defined in the Employment Contract.

An employee shall not be entitled to compensation in accordance with these rules if enquiries by the competent authority (Labour Department Of Malaysia) establishes that the employee caused the accident through:

a) Wilful neglect

b) Intentional violation of safety regulations

c) Being under the influence of drugs or alcohol

d) Deliberate misconduct

Under these circumstances, the employee will not be entitled to payment of medical treatment or payment of basic salary by the employer.


In the case of death resulting from an industrial accident, compensation under the Workmen’s Compensation Act 1952, benefits will be increased to RM25,000 maximum under FWCS, with Workmen’s Compensation of up to RM18,000 and Personal Accident for Death & Permanent Disablement of up to RM7,000.

Repatriation Expenses to send back the foreign workers to their country of origin up to an amount of RM4,800 in the event of Death or Permanent Total Disablement.

If an employee is wholly, or partially disabled, compensation will be payable by the employer in accordance with the following schedule; Classification of the degree of disability shall be made by a competent Medical Authority appointed or the Clinic appointed by SOSCO or Fomema Sdn Bhd to the Labour Office who would then process the claims and decide on the insurance amount to pay.