KUALA LUMPUR: A total of 13,764 employers have failed to pay Employees Provident Fund (EPF) contributions for the last three months, affecting thousands of workers. This is despite being obliged to do so as specified in the EPF Act 1991 and EPF Rules and Regulations 1991.
An EPF spokesperson said employers that do not make contributions on or before the 15th of every month face imprisonment of up to six years or a fine of up to RM20,000 or both under section 48(3) of the Act.
However, the spokesperson declined to say if any employer has been prosecuted under the Act to date.
“We are not able to disclose any more data as well as details on our enforcement actions against errant employers other than the data and information we provided in our previous email to you on the same subject, as we are governed by our Data Governance Policy,” the spokesperson said.
Lawyer Kokila Vaani Vadiveloo said in Malaysia, the main piece of legislation governing data protection is the Personal Data Protection Act 2010 (PDPA).
The PDPA applies to any person who processes matters relating to data.
“‘Processing’ in relation to personal data is defined under clause 4 to mean collecting, recording, holding, or storing the personal data or carrying out any operation or set of operations on the personal data, including the organisation, adaptation or alteration.”
Kokila Vaani said she believed EPF’s Data Governance Policy was implemented to ensure data quality and protect the privacy of certain information. However, whether it falls within the domain of privacy and confidentiality or otherwise must also be considered.
“For such data where EPF has prosecuted any employer, there is an aspect of confidentiality that it must comply with. EPF’s compliance with its Data Governance Policy serves to protect its quality of confidentiality as a host to the public’s data when implemented accordingly.
“However, EPF as an agent that helps to ensure the well-being of its members should be transparent in regard to its enforcement towards irresponsible employers. If the individual employer or employee had been charged in court, the information will be public (and can be shared).”
Kokila Vaani also said that previously, the Social Security Organisation launched Ops Kesan to track down employers who failed to pay workers’ contribution, resulting in thousands of errant employers charged in court.
“I strongly suggest that EPF conduct similar initiatives to track down irresponsible employers for their non-contribution as this will ensure trust by its members towards EPF as an agency that is entrusted to protect the well-being of employees and retirees,” she stressed.
EPF contributions are compulsory for the private sector and non-pensionable public sector employees. It also covers the self-employed, informal sector and foreign workers, but voluntarily.
Out of its 15.72 million members, a total of 8.39 million were active and represent 50% of Malaysia’s 16.7 million labour force as of December last year.
The remaining 7.33 million members are inactive and refer to those who have not contributed to their EPF for the last 12 months.
The spokesperson said there are various reasons for inactive contributions.
“Job loss is among the main reasons; others include defaulting employers, the transition from the formal sector to an informal one or to a pension scheme, death, incapacitation, leaving the country and even the economic effects of the Covid-19 pandemic.
“There is also a sizeable number of workers who are not mandated to pay EPF contributions, such as informal sector employees, contract for service workers and business owners.
“The EPF constantly carries out routine checks on employers to ensure all employers remain committed to contributing on behalf of their employees as stipulated in the EPF Act 1991,” the spokesperson said.
As per the Act, employers are obliged to pay contributions in respect of any person engaged to work under a contract of service or apprenticeship.
Accurate monthly contributions are supposed to be deducted from employees’ salaries and remitted to the EPF.
Commenting on the matter, Malaysian Employers Federation (MEF) president Datuk Dr Syed Hussain Syed Husman expressed shock at the number of employers that have not paid EPF contributions of their employees.
“First, we have to establish if these employers are MEF members. If they are, we may expel those that failed to make EPF contributions for their employees without good reasons.
“However, thus far the MEF has not received any complaints that its members failed to fulfil their EPF obligations.”
The MEF has about 6,700 companies as ordinary members and 28 industry associations as affiliated members. In total, MEF members employ about three million workers.
“If there are MEF members that failed to make EPF contributions, then they may not be aware of their legal obligations in this respect. In some cases, such employers may also be facing cash flow problems and take the risk of not making contributions.
“Also, bad business, the economic slowdown, and the continuing after-effects of the Covid-19 pandemic can also be reasons why employers did not make the monthly contributions. These cases should be given due consideration.”
Syed Hussain advised MEF members that are in a bind to come forward and discuss their issues openly with the authorities rather than be hauled up for failing to fulfil their EPF obligations.
