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The buzz surrounding Budget 2027’s announcement that the minimum wage will rise to RM2,000 from June 2027 has somewhat overshadowed significant changes to Malaysia's employment laws, most of which came into force on 1 October 2026, with the remainder taking effect on 2 January 2027. We are, of course, talking about the Employment Insurance System (Amendment) Act 2026 [Act A1796] and its accompanying subsidiary legislation, the Employment Insurance System (Benefit and Re-Employment Placement Programme) (Amendment) Regulations 2026 [P.U. (A) 346/2026]; both of which represent a structural shift in Malaysia's labour safety net.
For context, the Amendment Act and the Regulations came into force on 1 October 2026, except Section 11 of the former, which will come into force on 2 January 2027. Together, these instruments transition the Social Security Organisation (PERKESO) from a reactive job-loss compensation administrator to an active, nationwide labour market placement and brokerage provider.
Among others, the Amendment Act and Regulations expand PERKESO’s statutory mandate to provide employment services to any person, including informal sector workers, and, from 2 January 2027, require employers to notify PERKESO in writing of any job vacancy or new position before hiring, and to notify PERKESO within seven days after the vacancy or position is filled.
Here’s everything you need to know.
Renaming of the principal Act and scope extension
Act renaming: With the amendment, the principal statute, the Employment Insurance System Act 2017 [Act 800], is officially renamed the Employment Insurance System and Employment Services Act 2017.
Employment services open to any person (New Part VIa, Section 45A): From 2 January 2027, a new Section 45A provides that, notwithstanding Section 2(2) of the Act, the Employment Services Part applies to "any person". In practice, this opens PERKESO's job placement services to non-contributors such as informal sector, casual, platform, and gig workers, though it does not extend EIS insurance benefits to them, as benefits remain available only to insured persons.
Employment brokerage framework (New Section 45B): Formalises "employment brokerage" as services assisting jobseekers in securing suitable employment and employers in sourcing qualified candidates through job matching, career counselling, advisory services, and job listings.
Employment brokerage framework (New Sections 45B, 45C and 45E): Section 45B defines "employment brokerage" as a service to assist any person to find suitable employment and to assist employers to find suitable employees. Meanwhile, Section 45C empowers PERKESO to carry out employment brokerage, including advertisement, job matching, job counselling, and career advice. As for Section 45E, it allows PERKESO to register any person aged eighteen years and above, and any person may register themselves for employment services.
Appointment of licensed private employment agencies (New Section 45D): This allows PERKESO to appoint any person licensed under the Private Employment Agencies Act 1981 as its employment agent for the purposes of employment brokerage, on such terms and conditions as the agency determines, to expand job placement capabilities across the country.
Active labour market interventions and statutory protection
Expanded re-employment placement mandate (Section 44 Amendment): Section 44 of Act 800 is amended by inserting subsection (1A), explicitly granting PERKESO statutory authority to provide re-employment placement programmes to insured jobseekers who submit benefit claims.
Government-directed labour programmes (New Part VIb, Section 45H): From 2 January 2027, Section 45H allows PERKESO to implement any programme, scheme, measure, or financial assistance relating to the active labour market if instructed by the Government. Crucially, Section 45H(2) provides that the agency shall not incur any expenditure from the Employment Insurance System (EIS) Fund (the statutory pool of monthly contributions paid by workers and employers) for these initiatives.
Protection for PERKESO and its personnel: A new Section 81A provides that no action, suit, prosecution, or other proceedings shall be brought against PERKESO, the Chairman of the Board, the Director General, the Deputy Director General, Board and committee members, Employment Services Officers, or PERKESO's officers and servants for any act, neglect, or default in carrying out their duties under the Act, unless it is proven that it was done or omitted in bad faith and without reasonable cause. Meanwhile, a new Section 81B applies the Public Authorities Protection Act 1948 to any such proceedings in respect of acts or omissions done in good faith.
Employers must notify PERKESO of job vacancies
Section 11 of the Amendment Act, which comes into force on 2 January 2027, inserts new Section 45F into the principal Act, which introduces mandatory compliance requirements for every employer:
Pre-hiring vacancy notification (New Section 45F(1)): Employers must notify PERKESO in writing of any open job vacancy or newly created position prior to hiring an employee.
PERKESO may harvest and advertise vacancies (New Section 45F(2)): PERKESO may obtain, use, or advertise information on any job vacancy or new position published in newspapers, on radio or television, or on any other mass communication channel, including electronic and digital platforms.
Post-placement confirmation (New Section 45F(3)): Once a vacancy or new position is filled, the employer must notify PERKESO in writing within seven days after it is filled. Note that the tiered fines below apply only to failures to give the pre-hiring notification under Section 45F(1).
Tiered fines for default (New Section 45F(4)): Non-compliance with pre-hiring notifications attracts a progressive penalty structure:
- First Offence: Fine not exceeding RM1,000.
- Second Offence: Fine not exceeding RM3,000.
- Third or Subsequent Offence: Fine not exceeding RM5,000.
Employers should take note that PERKESO had earlier announced a transitional moratorium of up to two years, with phased implementation, before penalties are enforced under Section 45F.
This is an administrative assurance and not part of the Act, so employers should monitor PERKESO's guidelines closely ahead of 2 January 2027.
Enhanced benefits under the Amendment Act and new claim procedure under the Regulations
Since 1 October 2026, the Amendment Act amends the Third Schedule to the principal Act to enhance the following benefits, while the Regulations set out the claim and payment procedure for the new mobility assistance allowance:
Mobility Assistance Allowance (New Section 37A): A one-off payment of RM1,000 (Third Schedule, paragraph 5A) for insured persons whose claims for benefits have been approved, who accept a new offer of employment, and who report for work within 12 months after receiving their last job search allowance or their early re-employment allowance. The allowance is subject to terms and conditions set by PERKESO which, according to PERKESO, include a requirement that the new workplace be more than 100km from the claimant's residence.
New statutory claim form: Claims for the mobility assistance allowance must be made in the new Form SIPF 1A, submitted to PERKESO electronically or otherwise, together with such documents or information as PERKESO may determine. PERKESO will pay the allowance once it is satisfied that the insured person has reported for work (new regulation 8A). Claims for job search allowance and reduced income allowance remain under Form SIPF 1.
Early Re-Employment Allowance (ERA): Adjusts the financial incentive calculation formula, allowing insured jobseekers who secure new employment before their Job Search Allowance (JSA) period expires to receive a lump sum equal to 50% of their remaining unpaid JSA balance (doubled from the previous 25%).
Daily training allowance: Standardised to a flat RM30 per day for each day of attending approved vocational training.
Maximum training fee cap: Raised to a maximum claimable limit of RM7,000 payable directly to PERKESO-approved training providers.
Employer contributions (New Section 20(1A) and (1B)): Since 1 October 2026, employers may recover an employee's EIS contribution only by deducting it from the employee's wages, and are expressly prohibited from deducting or recovering the employer's own share of contributions from the employee in any manner.
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