the power of being understood...erp vs wsp : employer’s point of view rsmo payroll team’s...

THE POWER

OF BEING

UNDERSTOOD

AUDIT | TAX | CONSULTING

EMPLOYMENT RETENTION

PROGRAM “ERP”

WAGES SUBSIDY PROGRAM

“WSP”

Presentation by RSM Outsourcing (Malaysia) Sdn Bhd Outsourced Payroll Services

RSMO payroll team’s presentation on ERP and WSP

The Malaysian government’s Economic Stimulus Package includes 2

assistance program designed to sustain employment :

Employment Retention Program “ERP” and

Wages Subsidy Program “WSP”

announced on 27th March and 6th April respectively.

ERP and WSP are administered by the Social Security Organisation (Perkeso)


.

Prime Minister Tan Sri Muhyiddin Yassin had said on Monday (April 6) that the wage subsidy programme announced on March

27 would be expanded from RM5.9bil to RM13.8bil, an increase of RM7.9bil.

The programme was part of an additional package, valued at RM10bil, intended to ease the financial burden of SMEs and

subsequently assure that two-thirds of the workforce will remain employed.

https://www.thestar.com.my/news/nation/2020/04/08/employers-can-apply-for-wage-subsidy-programme-online-starting-april-9


Employee threshold include Malaysian and non-Malaysian employees

Only Malaysian employees get the subsidies, foreign workers/expatriates are not entitled to the subsidies

Unpaid leave to commence on or after 1 March; employee’s consent must be documented

Definition of Wages – according to Employee’s Social Security Act, 1969


APPLICATION – DOCUMENTS REQUIRED ERP

1. List of employees (Borang Senarai Pekerja)

2. Notice of Unpaid Leave (CTG) to the employees

3. Employer’s registration ID for panel bank / MyCOID

4. Bank account details of employer (front page only)

WSP


RSMO can

assist with

your

application

APPLICATION

Employers shall get a reference number upon submission of application and able to

check the status of application online


RSMO can

assist with

your

application

FOLLOW UP ACTIONS IN SUBSEQUENT MONTHS -

WSP

Employers are required to update any changes to the business status or

number of eligible employees for the second and third claims via

PERKESO’s system.

e.g. number of employees increased from 75 to 76.

Failure of the employer to report such changes may result in legal action.

Perkeso will cross check information with their employer’s portal (Assist)

and make inquiries if they discover inconsistencies between application

and existing SOCSO returns


RSMO can

assist with your

subsequent

reporting tasks

Perkeso make available an avenue for employees to

lodge complaints


EVALUATION OF ERP AND WSP • Employer’s point of view

• Employee’s point of view


Employer’s point of view


% COVERAGE OF WSP OF COST TO EMPLOYERS


RM RM RM

Wages 2,000.00 3,000.00 4,000.00

Employer's portion:

EPF 13% 260.00 390.00 520.00

SOCSO 34.15 51.65 69.05

EIS 3.90 5.90 7.90

Full blown hiring cost 2,298.05 3,447.55 4,596.95

WSP amount

1,200.00 52.2% 34.8% 26.1%

800.00 34.8% 23.2% 17.4%

600.00 26.1% 17.4% 13.1%

Coverage

ERP VS WSP : employer’s point of view


Salary 4,000.00

Full blown hiring cost 4,596.95

No of staff 10.00

If received ERP for all 10 staff Recepient

Cost of business -

Subsidy received 6,000.00 Employee RM600 per employee

If received WSP for all 10 staff Recepient

Full blown hiring cost 45,969.50

Less:

Subsidy received 12,000.00 Employer RM1,200 per employee

Cost of business 33,969.50

ERP VS WSP : employer’s point of view


Numbers are

not the only

factor to be

considered

If you have more than 200 employees; but WSP only allowed up to 200 employees

You may think of applying for both ERP and WSP

Is there a scope for planning? Perhaps employer may want to put some on ERP and some on WSP

Option 1 - put Mr. A on ERP, Miss B on WSP Option 2 - put Mr. A on WSP, Miss B on ERP

Mr A Miss B Mr A Miss B

RM RM RM RM

Basic salary 2,000.00 4,000.00 Basic salary 2,000.00 4,000.00

Full blow hiring cost 2,298.05 4,596.95 Full blow hiring cost 2,298.05 4,596.95

ERP WSP WSP ERP

Cost to employers - 4,596.95 Cost to employers 2,298.05 -

Subsidy 600.00 600.00- Subsidy 600.00- 600.00

Net cost 3,996.95 Net cost 1,698.05

Impact on cash flow Impact on cash flow

Avoid paying 2,298.05 Avoid paying 4,596.95

Paying lower hiring cost 3,996.95 Paying lower hiring cost 1,698.05

RM RM

Total original cashflow 6,895.00 Total original cashflow 6,895.00

Revised cashflow 3,996.95 Revised cashflow 1,698.05

Difference 2,898.05 Difference 5,196.95

Income to employee 600.00 Income to employee 600.00

ERP VS WSP : employee’s point of view


ERP VS WSP : employee’s point of view


RM

Wages a 4,000.00 Under ERP RM

Income to employee 600.00

Employer's portion:

EPF (13%) b # 520.00 Under WSP RM

SOCSO c 69.05 Take home pay i=a-f-g-h 3,532.35

EIS d 7.90 Employers cost of business j=e-RM1,200 3,396.95

e = a+b+c+d 4,596.95 (assuming subsidy is RM1,200)

Employee's portion:

EPF (11%) f # 440.00

SOCSO g 19.75

EIS h 7.90

Take home pay i=a-f-g-h 3,532.35

Bantuan Prihatin Nasional to B40 & M40 ( announced on 27 March)

Direct cash to individuals, not via employers

Apr May Total

Household income up to RM4,000 1,000.00 600.00 1,600.00

Household income >RM4K to 8K 500.00 500.00 1,000.00

Singles with salary up to RM2,000 500.00 300.00 800.00

Singles with salary >RM2,000 - RM4000 250.00 250.00 500.00

Some of the questions we received while we were

assisting clients to apply for ERP and WSP


1. We have some employees with performance issues and we are wondering if we

should apply WSP as employers are not allowed to terminate employees for 6

months?

2. How can I support the 50% downturn in my business when my financial

statements for February and March are not available?

3. Can I apply for some of the qualifying staff only?

4. My staff cannot sign unpaid leave letter as they are trapped in their houses during

Movement Control Order. What can I do?


How does Malaysia’s wage subsidy schemes compared

with some of the other countries?


Other countries by comparison


HKD9,000 is roughly RM5,040

Individual tax rate 2020: 2% to 17%



Individual tax rate

2020:

14% to 45%



Individual tax rate 2020: 0% to 22%

QUESTIONS

AND ANSWERS?

. [email protected]

[email protected]

mailto:[email protected]

mailto:[email protected]

THANK YOU FOR

YOUR TIME AND

ATTENTION

the power of being understood...erp vs wsp : employer’s point of view rsmo payroll team’s...

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