sarminah samad

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SOCIAL SECURITY SYSTEM ASSOC. PROF. DR. HJH SARMINAH SAMAD [email protected]

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SOCIAL SECURITY SYSTEMASSOC. PROF. DR. HJH SARMINAH SAMAD [email protected] SECURITY SYSTEMSy y y y y yArrangement for any social problems Sufficient funds to cope Contingencies may not happen to everybody Everybody has high probability to face problems Individual not reliable to safe for future Gov established system for financial protection- for individual whose income are reduced due to:Unemployment Post retirement Accident or serious illness Child birth & upbringing childr

TRANSCRIPT

Page 1: sarminah samad

SOCIAL SECURITY SYSTEM

ASSOC. PROF. DR. HJH SARMINAH [email protected]

Page 2: sarminah samad

SOCIAL SECURITY SYSTEMS

Arrangement for any social problemsSufficient funds to copeContingencies may not happen to everybodyEverybody has high probability to face problems Individual not reliable to safe for futureGov established system for financial protection-

for individual whose income are reduced due to:◦ Unemployment◦ Post retirement◦ Accident or serious illness◦ Child birth & upbringing children◦ Death of income earner

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SOCIAL SECURITY SYSTEMS

Differs across countries◦ Eg between Northern and Western Europe:

Old age pensions Unemployment benefits Children’s benefits Accident compensation Free medical services Most benefits secure tax exemptions

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SOCIAL SECURITY SYSTEMS Social security systems◦ Welfare states most expected◦ Provide a wide range of generous benefits◦ US no old age pensions – but has unemployment benefits◦ Eg of welfare states; NZ, AUS & Western Europe◦ Contributed major problems◦ The system may collapse◦ NZ unskilled school leavers – do not try to look for job◦ Age 16 registered for unemployment benefit◦ The system – no incentive to work

Issue of welfare benefits◦ Old age pension funded from taxation◦ Assumption:

Old age number increase Less younger & working adults Pension from taxation The smaller & reducing workforce has to support growing

population of elders

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SOCIAL SECURITY SYSTEMS

Social security system (Malaysian Context)

Can’t afford to be welfare stateHowever provide some social security

system:◦Employee’s Social Security Act 1952◦Workmen Compensation Act 1952◦EPF Act 1951

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EMPLOYMENT SECURITY ACT 1969 Introduced in 1969Coverage : All industries, sectors in MalaysiaEligibility of SOCSO:

◦ Malaysian employees◦ Earn less than 3000◦ Except foreign workers – workmen’s compensation Act

(est. 1993)◦ Required to buy insurance to cover liabilities

Public employees◦ Exempted since 1967-pension Act◦ Entitled to medical benefits

Purpose of SOCSO◦ Establish an insurance system so if they involve in

accident or develop a work related diseases – will be protected.

Page 7: sarminah samad

EMPLOYMENT SECURITY ACT 1969Responsibility of SOCSO implementation:

◦ Employer should register if employee doesn’t◦ Ensure monthly mandatory contributions◦ Failure – can be prosecuted eg. Cases of page 71

Nature of contributions:◦ Employer & employee have to pay◦ 2.5% rate of employee’s wage◦ Employer pays higher rate than employee

Page 8: sarminah samad

EMPLOYMENT SECURITY ACT 1969 SOCSO schemes:

◦ Employment injury insurance scheme◦ Invalidity pension scheme

Effectiveness of Social Security Organization◦ Criticisms◦ Reluctant to pay or ignorance of employers◦ Regular checks

Registrations Payments Enforcing law

Less enforcement SOCSO collects more money Suggestion to increase quantum of benefits Since 1998 – provided educational assistance for school going

children – to compensate the employees disablement Proposal loan for educational purposes – rejected by MHR Instead suggesting “no claim bonus” on retirement if not involved

with accidents

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EMPLOYMENT SECURITY ACT 1969Complaints:

◦ Delay in payment◦ Fraud cases: need investigation◦ Need report for medical cases eg. Practitioners◦ Hospital lack of staff◦ Invalidity pension scheme◦ Problem status of employees in question

Suggestion◦ MTUC – retrenchment benefits fund by SOCSO

Role of SOCSO◦ Prevent industrial accidents◦ Encourage safety and healthy working environment

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PROTECTION SCHEMES BY SOCSO

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COVERAGEProvides protection to eligible employees

through 2 schemes:A: Employment injury insurance schemeB: Invalidity Pension Scheme

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BENEFITS UNDER EMPLOYMENT INJURY INSURANCE SCHEME

1. Medical benefit

2. Temporary disablement benefit

3. Permanent disablement benefit

4. Constant attendance allowance

5. Dependents benefit

6. Funeral benefit

7. Rehabilitation benefit

8. Education benefit

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EMPLOYMENT INJURY INSURANCE SCHEMEThe scheme provides an employee with

protection for accidents which cause physical injuries in 3 situations:◦ Arising out of and in the course of employment◦ Occupational diseases◦ Commuting accidents

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EMPLOYMENT INJURY INSURANCE SCHEMEArising out of and in the course of employment

◦ Accidents occurring while working at the workplace which arise out of and in the course of employment.

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EMPLOYMENT INJURY INSURANCE SCHEMEOccupational diseases

◦ Diseases that result due to exposure at work to various hazards, example of which are: Loss of hearing due to exposure to excessive noise at

the workplace Respiratory diseases or industrial asthma as a result of

exposure to dust for employees in sawmills, powder factories, flour plants etc.

The listed scheduled occupational diseases are found in the Fifth schedule of the Employee’s social Security Act 1969

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EMPLOYMENT INJURY INSURANCE SCHEMECommuting accidents

◦ Occurs during travel: On a journey directly connected to work En route between his place of residence/stay and his

workplace Between workplace and the place where he takes his meals

during any authorized recess

◦ All commuting accidents are considered as employment related as long as the accident does not occur during stoppage or deviation done for personal reasons.

◦ All reports of commuting accidents must be accompanied by: Police reports Sketch map – indicating the route taken, place of accident,

place of work and place of stay/residence or place where he/she takes his meals.

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BENEFIT UNDER EMPLOYMENT INJURY INSURANCE SCHEMEMedical benefit

◦ When an employee meets with an accident or suffers from any occupational disease, he/she is entitled for free treatment at a SOCSO clinic panel or at any gov hospital/clinic.

◦ The employee or his representative is required to bring along: Accident report form/identification letter from his employer

or report of Occupational Disease Form SOCSO settles their medical bills by directly paying the

medical treatment provider The employee must continue the treatment at the same

SOCSO Panel clinic until he recovers unless he is referred to a gov hospital

In case of any serious injury, the treatment should be at the nearest gov hospital. The employee is eligible for 2nd class ward treatment at the hospital if he requires inpatient treatment.

Specialist treatment if required will also be provided at gov hospital

An employer may submit for reimbursement for medical expenditure incurred at a non SOCSO Panel clinic for consideration.

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BENEFIT UNDER EMPLOYMENT INJURY INSURANCE SCHEME

Temporary Disablement Benefit◦ Is payable to an employee who has been certified by a

doctor to be unfit for work not less than 4 days including the day of the accident

◦ Is paid for the period the employee in on medical leave. However, no benefit will be paid for the days or which the employee works and earns wages during this period.

◦ The daily rate of temporary disablement benefit is equivalent to 80% of the average assumed daily wage. However, if the daily rate is below RM 10.00 the employee will be paid a minimum rate of RM 10.00

◦ The maximum rate payable for an employee whose wage exceeds RM 1900 a month is RM 52.00 a day.

◦ Cash benefit = 80% of the assumed daily wage◦ Min. rate RM 10 per day◦ Max rate RM 52 per day

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BENEFIT UNDER EMPLOYMENT INJURY INSURANCE SCHEME

Temporary Disablement Benefit◦ Is payable to an employee who has been certified by a

doctor to be unfit for work not less than 4 days including the day of the accident

◦ Is paid for the period the employee in on medical leave. However, no benefit will be paid for the days or which the employee works and earns wages during this period.

◦ The daily rate of temporary disablement benefit is equivalent to 80% of the average assumed daily wage. However, if the daily rate is below RM 10.00 the employee will be paid a minimum rate of RM 10.00

◦ The maximum rate payable for an employee whose wage exceeds RM 1900 a month is RM 52.00 a day.

◦ Cash benefit = 80% of the assumed daily wage◦ Min. rate RM 10 per day◦ Max rate RM 52 per day

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BENEFIT UNDER EMPLOYMENT INJURY INSURANCE SCHEME

Permanent Disablement Benefit◦ Payable to an employment who has been certified by

medical board or an Appellate/Medical Board◦ The daily rate is = 90% of the average assumed daily

wage with min. rate of RM 10.00 per day◦ If the permanent disablement is assessed to be 20% or

less, the employee can claim the benefit as paid lump sum.

◦ How to claim: The employee has to submit:

2 written application to the SOCSO Local Office for reference to the Medical Board

Medical Report (the employee is required to get a medical report from the hospital or clinic which treated him)

Certain form (claim form)

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BENEFIT UNDER EMPLOYMENT INJURY INSURANCE SCHEME

Constant Attendance Allowance◦ paid to an employee who is suffering from permanent

total disablement (100% loss of earnings capacity) and is so severely incapacitated that he constantly requires the personal attendance of another person

◦ The allowance is equal to 40% of the rate of permanent total disablement benefit subject to a max of RM 500

◦ Eligibility is determined by the Medical Board or the Appelate medical board and the payment is made directly to the recipient of the benefit

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BENEFIT UNDER EMPLOYMENT INJURY INSURANCE SCHEME

Dependent’s Benefit◦ If an employee dies as a result of an employment injury,

his dependents are entitled to this benefit. The full daily rate of dependent’s benefit is 90% of the average assumed daily wage subject to a min. rate of RM 10 per day.

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BENEFIT UNDER EMPLOYMENT INJURY INSURANCE SCHEME

Funeral Benefits◦ An amount of RM 1500 will be paid if an employee dies

as a result of an employment injury while receiving disablement benefit.

◦ Payments will be made to the eligible next of kin. If there are no next of kin, the benefit will be paid to the person who incurred the funeral expenditure

◦ The max. amount for the benefit is the actual amount incurred or RM 1500 whichever is lower.

◦ How to claim: Claim form A certified copy of the death certificate

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BENEFIT UNDER EMPLOYMENT INJURY INSURANCE SCHEMERehabilitation Benefits

◦ Facilities for vocational and physical rehabilitation are provided free by SOCSO to an employee who suffers from permanent disablement.

◦ Physical rehabilitation includes physiotherapy, occupational therapy, reconstructive surgery as well as the supply of artificial limbs such as artificial leg, hand, eye and dentures and other prosthetic appliances such as wheelchairs, crutches, hearing aids, spectacles, calipers and orthopedics shoes including their repair and replacement.

◦ Who can apply? Individual suffering from permanent disablement who

is unable to find job, can apply to undergo vocational training in courses such as radio/TV repairs, electrical wiring, metal trade, plumbing etc.

All expenses incurred for the purpose of vocational and physical rehabilitation will be borne by SOCSO based on rates and conditions determined by SOCSO

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INVALIDITY PENSION SCHEME

Provides 24 hours coverage to an employee against invalidity or death due to any cause not connection with his employment.

Invalidity is defined as a serious disablement or morbid condition of a permanent nature that is either incurable or not likely to be cured, as a result of which an employee is unable to earn at least 1/3 of what a normal person earns.

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INVALIDITY PENSION SCHEME

Benefits:◦ Invalidity pension◦ Invalidity grant◦ Constant attendance allowance◦ Survivors pension◦ Funeral benefit◦ Rehabilitation◦ Educational plan

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INVALIDITY PENSION SCHEME

Invalidity pension◦ Chronic aliments or diseases that could be considered

for invalidity such as: Heart attack Renal or kidney failure Cancer Mental illness Chronic asthma Permanent disablement caused by injury not

connected to employment

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INVALIDITY PENSION SCHEME

Survivors Pension◦ Paid to dependents of an employee who dies irrespective

of the cause of death, in any of the following situations: Before 55 yrs old and has contributed at least 24

months of contribution (i.e.. Full or reduced qualifying condition)

If recipient of the invalidity pension died irrespective of his age.

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INVALIDITY PENSION SCHEME

Funeral Benefit◦ Paid to an employee who dies:

While receiving invalidity pension or Before reaching 55 yrs old but meets the full reduced

qualifying contribution conditions

◦ The amount and the persons qualified to receive this benefit are the same as those under Employment Injury Scheme.

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INVALIDITY PENSION SCHEME

Rehabilitation Benefit◦ An employee who suffers invalidity is also entitled to

receive rehabilitation benefit such as physical and vocational rehabilitation as provided under the Employment Insurance Injury Scheme.

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INVALIDITY PENSION SCHEME

Education Benefit◦ In the form of an education loan given to dependent

children who are in receipt of a monthly benefit for: Dependent’s benefit Survivor’s pension

◦ Children of employee who are in receipt of a monthly benefit for: Permanent disablement invalidity

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WORKMEN COMPENSATION ACT 1952 Coverage paid up to RM 500 per month Manual workers, foreigner and not domestic servants Irrespective of their wages The Act is enforced by Labour Department Compensation:

◦ Injured due to work related accident◦ Diseases◦ Disabled for 4 days or more

Worker die – dependents Claims made via Labour Department If disagreed with the claim, Labour Department has the

authority to hear and make decision Employer required to but insurance policy from a panel to

cover liabilities of the worker.

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WORKMEN COMPENSATION ACT 1952Accidents case quantum is fixed by the ActDeath – lump sum RM 25, 000 to dependentsDepending whether the accident is work-related

or not If accident – total or temporary disablement

amount as in the Act – variesBenefits lesser than in Employment Social

Security Act

Page 34: sarminah samad

EMPLOYMENT PROVIDENT FUND 1961 Established in 1961 Social security systems

◦ Arrangements for any social problems◦ Sufficient funds to cope◦ Contingencies may not happen to everybody◦ Everybody has high probability to face◦ Individual not reliable to safe for future◦ Gov established system for financial protection – for

individual whose income are reduced due to: Unemployment Post retirement Accident or serious illness Childbirth and upbringing Death of income earner

Page 35: sarminah samad

EMPLOYMENT PROVIDENT FUND 1961 Post Retirement Security:

◦ Voluntary savings and investment◦ State pensions◦ EPF◦ Saving scheme by both employer/employee legally

EPF:◦ Source of income after retiring◦ Introduced in 1961◦ Financial assistance to workers◦ Unable to work (temporary or permanent) – illness or

accident◦ Membership◦ Responsibility of contributions◦ withdrawals

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EMPLOYMENT PROVIDENT FUND 1961 Act establishes a Statutory Body under the control of a

Board that makes a policy decision. The Board:

◦ Chairman◦ Deputy chairman◦ 18 members (reps. From gov, employees and employers)

Investment Panel = formulate investment policies Categories of employees have option whether to join or

not to join as members of the Fund:◦ Including retirees◦ Have withdrawn savings – employed – domestic servant

or foreign workers

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EPF MEMBERSHIP

As long as under contract of service – required – part time, temporary

Domestic servant – exempted Over 55 yrs old – has not withdrawn – remains as member

– continues to contribute if still employed Already withdrawn still can contribute if they wish

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EPF MEMBERSHIP

Compulsory In the private sector

◦ Full time◦ Part time◦ Permanent◦ Temporary / contract◦ Probations

Those above 55 who has not withdrawn all their savings.

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EPF MEMBERSHIP

Optional Domestic servant (foreign and Malaysian) Self employed – sole proprietors and partner in a

partnership Pensionable employees in the public sector Employees who have withdrawn their savings at the age of

55 and who are subsequently reemployed. Employees who have withdrawn their savings under the

Leaving the Country Withdrawal Scheme and have returned.

Page 40: sarminah samad

EPF CONTRIBUTION

Rates – vary Gov economic policy Refer table 3.1 page 65 Level of contribution by law – low requirement Reduce contribution – increase consumer spending Higher level – attract and retain employee

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EPF CONTRIBUTION

Contributor for above 55 – 75 yrs old after 11 February:

DISTRIBUTION

55 YRS 75 YRS

EMPLOYER 12% 6%

EMPLOYEE 11% 5.5%

TOTAL 23% 11.5%

Page 42: sarminah samad

EPF

Wages based on EPF definition “ All remuneration of money, due to an employee under

his contract of service or apprenticeship and includes any bonus or allowance payable by the employer to the employee but does not include:◦ Service charge◦ Overtime◦ Gratuity◦ Retirement benefit◦ Retrenchment/termination benefit◦ Travelling allowance

Page 43: sarminah samad

EPF

RESPONSIBILITY OF CONTRIBUTORS: ◦ Employer◦ Employee◦ Employer failure – an offence. Prosecuted. Fined◦ Prevented from leaving the country◦ Provides pay slips – showing his wages, deduction

including EPF◦ Annual statement◦ Employee – request report from EPF

Page 44: sarminah samad

EPF

Withdrawals◦ 2 accounts◦ 1st acc: 55 yrs – all money in the account◦ 2nd acc: 50 yrs – 30% for housing, education and medical

treatment◦ In recent years:

Build houses, housing loans from bank or other resources

Medical expenses – incapacitated – accident or illness Fees for tertiary education for members or children Invest in approved unit trusts

Criticisms – misused, abused Defeat the purpose for old age savings EPF dividend – refer table 3.3 page 69

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PUBLIC SERVICE TRIBUNAL Public sector:

◦ No union for collective bargaining

◦ Decided by unilateral action by PSD

◦ Largest employer

◦ Immediate financial implication

◦ Influence public sector to increase pay

◦ Increase public expenditure

◦ Before 1973 Whitley Councils

◦ 1973 – 3 National Joint Councils then increased (right to negotiate on wages and benefits withdrawn in 1979)

◦ Decision making – commissions and committees

◦ Salaries commissions as in page 177

Public Service Terminal◦ Determine any dispute

◦ Cabinet committee report

◦ PSD role

◦ Gov and employer unilaterally decide

Page 46: sarminah samad

CODE OF PREVENTION OF SEXUAL HARRASSMENT AT WORKPLACE Empower to prepare procedure of complaints Make employees aware of the procedure Special committee of investigators Consists of male and female Confidentially Proof and evidence Training of the procedures Proper records

Page 47: sarminah samad

CODE OF PREVENTION OF SEXUAL HARASSMENT AT WORKPLACEExample of procedure of complaints – pg 260Challenges:

◦ Definition of harassment◦ Affect productivity◦ Harmony in organization

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CONSTRUCTION INDUSTRY DEVELOPMENT BOARD ACT 1004Rules and regulations that govern the Malaysian

Construction IndustryKnown as ACT 520 in short, the ACT came into

force on the 24th July 1994 to established CIDB (Lembaga Pembangunan Industri Pembinaan Malaysia) as the governing body entrusted with the responsibility to provide effective leadership and coordination among Construction Industry players in Malaysia.

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CONSTRUCTION INDUSTRY DEVELOPMENT BOARD ACT 1004ACT 520 is enacted by the Seri Paduka Baginda

Yang di-Pertuan Agong with the advice and consent of the Dewan Negara and Dewan Rakyat.

Refer the act