The Story

Amalina had worked as an accounts assistant for nearly seven years. One morning, her manager called her into the office with devastating news: the company was downsizing, and her position had been made redundant. Shocked and heartbroken, Amalina packed her belongings and left with a termination letter in hand.

For days, she worried about how to pay rent, buy groceries, and support her parents. She thought losing her job meant losing her stability entirely. But when she went to the Social Security Organisation (SOCSO/Perkeso) office, an officer explained: “Don’t worry. You are covered under the Employment Insurance System (EIS). This scheme is designed for people exactly in your situation.”

Amalina had never really paid attention to the small monthly EIS deduction in her payslip. Now, it became her lifeline. With EIS, she could receive financial support while searching for a new job, and even join training programmes to upgrade her skills. For the first time since losing her job, she felt a glimmer of hope.

The Law

The Employment Insurance System Act 2017 (Act 800) established the EIS (Sistem Insurans Pekerjaan), managed by SOCSO. Its aim is to help workers who lose jobs not due to misconduct but for reasons such as retrenchment, redundancy, or business closure.

1. Who Is Covered?

• All private-sector employees aged 18–60 who contribute to SOCSO are covered.
• Excluded: civil servants, domestic servants, and self-employed persons (though reforms may expand coverage in the future).

2. Contributions

• Employers and employees each contribute 0.2% of monthly wages to the EIS fund.
• This small amount is automatically deducted and pooled to support insured workers.

3. When Can You Claim?
You can apply for EIS if you lose your job due to:

• Retrenchment,
• Redundancy,
• Voluntary or mutual separation schemes,
• Business closure, bankruptcy, or downsizing,
• Constructive dismissal (if recognised by the Industrial Court).

You cannot claim if you resign voluntarily, retire, or are dismissed for misconduct.

4. Benefits Under EIS
EIS provides more than just money:

• Job Search Allowance (JSA): Monthly cash allowance for up to 6 months. The amount decreases gradually (80%, 50%, then 30% of your last salary, subject to a cap).
• Reduced Income Allowance: For workers forced to accept lower-paying jobs while searching for new employment.
• Training Fee Coverage: EIS pays for vocational or skills training courses to help you re-skill.
• Early Re-Employment Allowance: If you secure a new job quickly, you may receive additional incentives.
• Job Placement Services: SOCSO provides counselling, career guidance, and job-matching support through MYFutureJobs.

5. Application Procedure

• Applications must be made within 60 days of losing employment.
• Documents required include: termination letter, IC, bank account details, and payslips.
• Claims can be made online (via SOCSO’s website) or at the nearest SOCSO office.

6. Legal Enforcement

• Employers are legally obliged to register employees and make EIS contributions.
• Failure to do so is an offence punishable by fines or imprisonment under the EIS Act.

Why EIS Matters

Before 2018, workers who lost jobs in Malaysia had no safety net unless they were covered by contractual retrenchment benefits. Many were left with nothing but savings.

EIS changed that by:

• Providing immediate financial relief while job hunting,
• Encouraging active re-employment through job-matching services,
• Supporting reskilling and upskilling to meet changing job market demands,
• Reducing dependence on family or informal loans during unemployment.

It reflects the idea that employment is not just about wages but about security and dignity.

Lessons

For Employees:

1. Do not ignore payslip deductions. That small EIS contribution may one day save you.
2. Know your rights. If you lose your job, check eligibility and apply within 60 days.
3. Use all services. EIS is not just cash—it includes training, job counselling, and placement. Take advantage of them.
4. Keep documents. Termination letters, payslips, and contribution records are crucial for smooth claims.

For Employers:

1. Register and contribute. It is illegal to omit employees from EIS contributions.
2. Support retrenched staff. Provide proper documentation to help them claim. This shows goodwill and compliance.
3. Avoid stigma. Retrenchment is hard, but assisting workers in accessing EIS softens the impact and preserves company reputation.

For HR Practitioners:

1. Educate staff. Many employees do not know they are covered. HR should explain EIS benefits during orientation or exit processes.
2. Ensure compliance. Monitor payroll systems to ensure contributions are made every month.
3. Offer counselling. When retrenchment happens, guide affected employees to EIS resources.

For Policymakers:

1. Expand coverage. Consider including gig workers and the self-employed, who face even greater instability.
2. Enhance awareness. Many Malaysians still do not fully understand EIS. Public campaigns are needed.
3. Improve job matching. Strengthen collaboration between SOCSO, employers, and training providers to help workers return to the workforce faster.

Conclusion

Amalina’s story shows that losing a job does not have to mean losing hope. The Employment Insurance System (EIS) exists precisely to protect workers in times of sudden unemployment. By providing financial assistance, training opportunities, and job search support, it gives retrenched employees a safety net as they rebuild their careers.

For employees, the lesson is to understand your EIS rights and use them fully if needed. For employers, the lesson is to comply with contribution obligations and support affected staff. For HR practitioners, the lesson is to ensure awareness and guidance in times of retrenchment.

At its core, EIS reflects a social contract: workers contribute during good times so that they are protected during hard times. It is a recognition that every worker deserves dignity, even when jobs are lost.

So, can losing a job ever bring hope? With EIS, the answer is yes. It is not the end of the road—it is a bridge to the next opportunity.

In short: I lost my job, but EIS gave me hope—because the law now ensures that no worker should be left behind.