Compliance Labyrinths
When it comes to payroll compliance, it is divided into two distinct categories – statutory and non-statutory.
Examples of statutory ones are Employees Provident Fund (EPF or KWSP (Kumpulan Wang Simpanan Pekerja), Inland Revenue Board (IRB or LHDN (Lembaga Hasil Dalam Negeri Malaysia), Social Security Organisation (SOCSO or PERKESO (Pertubuhan Keselamatan Sosial), Human Resources Development Corp (HRDC or Pembangunan Sumber Manusia Berhad) and the National Higher Education Fund Institution (or PTPTN (Perbadanan Tabung Pendidikan Tinggi Nasional) whereas non-statutory include, Angkasa (Angkatan Koperasi Kebangsaan Malaysia Berhad), Zakat and certain contributions unique to a company like the Sports or Recreation Funds.
For CXL, managing these compliant requirements is part and parcel of our service as a payroll outsourcing vendor. We do this on a full time basis, serving a diverse clientele ranging from SMEs to large-scale MNCs, expertly managing annual salaries totaling RM300 million annually.
We extend this service to our clients confidently because we are backed by a department of personnels like Mardiana and Azlina who are well-versed with the responsibility and also the statutory laws that stipulate the requirements and boundaries for payroll processing.
Troublesome Submissions
Generally, a company is required to comply with a bare minimum of submissions comprising EPF (KWSP), Employment Insurance Scheme (comes under SOCSO (PERKESO)), IRD (LHDN) and HRDC. These are to be carried out on a monthly basis. Annually, income tax returns are to be done complying to the IRD (LHDN).
What we found to be two sides of the same coin is that while the provisions of laws and policies are clearly documented including the penalties of fines and imprisonment, the flip side is that not every company is fully compliant. One could argue that the lack of compliance is due to the differentiating standards of self regulation by the companies and enforcements by the authorities.
Granted Malaysia may be a business-friendly country, this however has left a gaping hole in HR compliance. For instance, when employers flout the Overtime rule of capping to a maximum of 104 hours per month, they will be fined and jailed but yet, not 100% of the employers adhere to this for one reason or another.
While we appreciate every enterprise is a profit making entity, by engaging CXL means we, beginning with Mardiana and Azlina, will take the lead to highlight where the shortcomings are and search for a viable solution thereafter. Why are we able to do this? Because of the sort of clients we have on board, we have sufficient knowledge base to cross reference best practices formulas to get the job done.
We believe we also have the capacity to work out the best way to handle Minimum Wage, which is predicated by whether an employer’s professional activities fall under the Malaysia Standard Classification of Occupations (MASCO) definitions and if the company employs more or less than five personnels.
Validating Compliance
In one of our past postings, we highlighted a study that identified Malaysia as a country with the most complicated HR compliance requirements in Asia Pacific. To this, I, along with Mardiana and Azlina would like to raise your attention to some of these points:
- Is your HR department or personnel conversant with all the HR statutory requirements?
- Are they able to cope with all the permutations from the different statutory bodies?
- What about the future amendments to such laws and policies, will they be able to understand it fully and apply it to the company?
- Is your organisation confident about complying with all the HR statutory requirements month-in and month-out, including the annual submissions without breaking the law?
Based on our records, most of our Payroll Outsourcing clients have been with us for up to seven years after renewing their contracts at each expiry. Those that have ceased relationships with us were due to the compulsion to change a vendor as required by their internal policies, not a misstep in our delivery. I believe this says a lot about what we can do as a vendor.
Further to this, our rates for Payroll Outsourcing is as affordable as minimum wage and subscribing to us means your company will stand a chance to be fully compliant from the get go. This includes usage of our tech platform, our HR services, handling of your time attendance data, payroll processing, disbursement of salaries & contributions to statutory bodies, issuance of payslips and receipts from the disbursements made.
If you think what I’ve just described above makes sense for your company, please don’t hesitate to get in touch with us. Mardiana, Azlina and I will be more than happy to chat with you further.
