Wage Subsidy Programme (Program Subsidi Upah)
What is Wage Subsidy Programme?
Wage Subsidy Programme is financial assistance offered to employers of all industries with workers earning RM4,000 and below for a period of 3 months. The programme was announced by the government as part of its economic stimulus package meant. The wage subsidy programme is intended to both protect job security and assist employers who are undergoing cash flow difficulties due to headcount costs.
What are the benefits under the wage subsidy programme? What are the criteria to apply for the wage subsidy?
The criteria and amount of subsidy depends on the size of the workforce of the business:
Who doesn’t qualify for the wage subsidy programme?
The wage subsidy programme doesn’t cover:
- Employers who began operations after 1 January 2020;
- Employers and employees who have are not registered with or contributing to SOCSO;
- Employees who have received the financial aid under the Employment Retention Program for the same months;
- Employees who are earning more than RM 4,000 a month;
- Employees who have already been terminated;
- Civil servants or employees of statutory bodies and local authorities;
- Foreign employees and trade officers; and
- Those self-employed, including freelancers.
The wage subsidy programme only applies for employees earning RM 4,000.00 and below a month. How is this RM 4,000.00 calculated? Is it just basic salary?
The definition of “wages” under the Employment Insurance System Act 2017 will apply. This includes the following payments:
ii. Overtime payments
iii. Commission and service charge
iv. Payments for leave; such as annual, sick, maternity, rest day,
public holidays and etc
v. Allowances such as incentives, shift, food / meal, cost of living, housing and etc
All payments made to an employee paid at an hourly rate, daily rate, weekly rate, piece or task rate is considered as wages. However the following payments are not considered as wages:
i. Payments by an employer to any statutory fund for employees
ii. Mileage claims
iii. Gratuity payments or payments for dismissal or retrenchments
iv. Annual bonus
Can the employer apply for the wage subsidy programme for only some of its employees?
Yes. The employer is free to choose which employees to apply for the wage subsidy programme and is not required to apply for the wage subsidy for all employees who qualify. The conditions of the wage subsidy programme will only apply to employees over which an application was made and approved.
Can an employer who has began operations before 1 January 2020 but have not registered for the Employment Insurance Scheme (EIS) apply for the wage subsidy?
Yes. Employers who wish to apply for the wage subsidy but have not registered with PERKESO have to fulfil the following conditions:
- Registered with the Companies Commission of Malaysia or Local Authorities before 1 January 2020;
- Have at least 1 employee; and
- Register with PERKESO.
Are there any obligations on the employer after they receive the wage subsidy?
Yes. The employer is not allowed to retrench, force the employees to take annual leave, or decrease the employee’s salary during the wage subsidy period, and for a period of 3 months after.
Does this mean that if the employer does not apply for the wage subsidy, they can retrench their employees?
Yes, provided the employer complies with the required labour law principles for retrenchment.
Can an employer retrench its employees after the wage subsidy period?
Under the wage subsidy programme, an employer who receives the wage subsidy cannot retrench that employee throughout the period of the wage subsidy programme and for a period of 3 months after. For example, if the employer receives the wage subsidy for an employee in April, May and June 2020, he cannot retrench that employee in the period of April to September 2020.
When does the wage subsidy programme take effect?
Employers can start making applications through the new Prihatin PERKESO website (https://psu.perkeso.gov.my/) from 9 April 2020. The final application deadline is 15 September 2020 or subject to balance of allocated funds or decision of the Government.
Is this wage subsidy the same thing as the Employment Retention Programme (ERP)?
No. They are different incentives. The incentive under the ERP is paid to the employee, whereas the wage subsidy is paid to the employer.
However, an application for ERP and the wage subsidy cannot be made on the same month for the same employee.
How is the wage subsidy paid to employers?
The wage subsidy will be paid directly to the employer’s bank account within 7 to 14 days from date of approval.
What supporting documents are required to apply for the wage subsidy programme?
- List of employees
- Employer’s bank account statement (front page only)
- The Business Registration Number (BRN) details used when opening the bank account. It is basically Company’s ROC. Example: 1234560-X
- SSM Registration Cert such as Form 9 or Section 13 (CA 2016)
- Declaration Form PSU50
- Supporting documents such as Statement of Profit and Loss and Revenue Report. These documents need to be verified by management. (Applicable to the companies size more than 75 employees)
What is the BRN details?
The BRN Form can be downloaded from the Prihatin PERKESO website. It is to assist the employer in providing the relevant banking details to enable direct payment to the employer’s account through Electronic Fund Transfer (EFT).
What is the declaration form PSU50?
The PSU50 can be downloaded from the PERKESO website. It is a declaration by the employer that the employer:
- has suffered a loss of revenue of at least 50% since 1 January 2020;
- has and will pay the salaries of employees involved in the wage subsidy programme without any reduction
- will inform PERKESO within 14 days of any change in the status of the business and / or the number of employees earning RM 4,000 and below throughout the wage subsidy period;
- has or will register under EIS and PERKESO during the wage subsidy period;
- will produce any documents requested by PERKESO in connection with the above
The PSU50 requires the employer to confirm that the information provided to PERKESO is true and accurate.
Does an employer have to apply for the wage subsidy every month?
No. The employer only needs to submit the application for the first month. However, the employer has an obligation to notify PERKESO if there any change in their status that would disqualify them from the wage subsidy programme.
The wage subsidy programme announced on 27 March 2020 was enhanced pursuant to an announcement on 6 April 2020, which resulted in some changes to the criteria and conditions. Can employers who have already applied for the wage subsidy following the previous conditions reapply given that the conditions have changed?
Yes, employers who have already submitted an application based on the programme announced on 27 March 2020 and has more than 100 employees, can make a new application for the remainder of his employees up to a total maximum of 200 employees.
How does an employer prove or calculate the loss of revenue of at least 50%?
The loss of revenue is calculated by comparing the revenue or sales in January 2020 compared to the subsequent months.
The employer must produce the declaration form in PSU50 which declares that the employer has suffered that loss of revenue, together with supporting documents such as financial statements or sales reports that have been certified by management. Employers who make false declarations may be subject to legal action.
Does this wage subsidy apply for foreign employees?
How does the wage subsidy programme affect the salary that is paid to employees?
The employer must continue to pay the affected employee’s salary like normal without deduction, since the subsidy will be credited into the employer’s bank account for the employer’s use, and will not be paid directly to the employee.
How about statutory contributions? Are these payments affected?
The employer must continue to make the statutory contributions for the affected employee’s salary like normal without change, even though the employer is receiving the wage subsidy.
In other words, how does the wage subsidy programme affect the employees’ take-home pay?
Practically, the wage subsidy programme should have no bearing on the employee’s take home pay since the wage subsidy is paid directly to the employer (not the employee) and the employer is not allowed to make any changes or deductions to the employee’s salary or contributions as a result of the wage subsidy. Therefore, the employee’s take home pay should remain the same even though the employer has received a wage subsidy.