Well, that didn’t last long.
Barely five weeks after PERKESO switched on the mandatory opt-in LINDUNG 24 Jam scheme on 1 June, the Cabinet announced on 8 July that contributions are no longer mandatory for local employees. Effective immediately. U-turn just like that.
If you run an SME, you probably found out the same way I did — through a flood of WhatsApp forwards and a Threads timeline full of people celebrating. And now you’re wondering: so what do I actually do with my payroll this month?
I’ve spent the past two days reading the official statements and the PERKESO FAQ so you don’t have to. Here’s what changed, what hasn’t, and the five things you still need to handle as an employer.
First, a 30-second recap
LINDUNG 24 Jam — officially the Skim Kemalangan Bukan Bencana Kerja (SKBBK) — covers your employees for accidents that happen outside work. At home, on the highway during a balik kampung trip, playing futsal on Sunday. The existing PERKESO scheme only covers workplace and commuting accidents, and the gap was significant and real: the large majority of accident claims were being rejected by PERKESO precisely because the accident wasn’t work-related.
The catch that killed it politically: the contribution — 0.75% of salary, capped at a RM6,000 wage ceiling, so a maximum of about RM45 a month — came entirely out of the employee’s pocket. Employers paid nothing. To a worker earning RM1,700, that RM12.75 deduction showed up on the June payslip with barely any warning, and it looked like exactly what it felt like: a pay cut nobody asked for.
The backlash was immediate and loud. Memang kaw kaw kena hentam on social media. The feedback reached the Prime Minister, the Cabinet met on 8 July, and the mandatory requirement was dropped on the spot. The scheme survives, but as an opt-in as a face-saving measure for the Malaysian government.
Your 5 obligations as an SME employer
Here’s the part that matters for you. “Voluntary” does not mean “don’t have to do anything” okay?
1. Don’t touch your payroll settings yet. PERKESO has not released the official opt-in/opt-out mechanism for local employees. If you unilaterally stop deductions before the guidelines come out, you risk creating a mess — especially if some staff want to stay in. Wait for the official announcement, then act. There’s a 6-month grace period on SKBBK enforcement from 1 June, so you have breathing room.
2. Foreign workers: still mandatory, no exceptions. This is the trap that will catch SMEs. If you employ foreign workers, LINDUNG 24 Jam contributions remain compulsory under existing law. The deduction and monthly remittance to PERKESO continues as normal. And remember — the penalty for non-remittance lands on you, the employer, not the worker.
3. Prepare for the opt-in conversation with your staff. Once PERKESO publishes the mechanism, your employees will come to you — some wanting out, some wanting to stay in. Get ahead of it. Prepare a simple written consent form, keep records of each employee’s choice, and make one thing crystal clear: this deduction comes from their salary, not from the company. You’d be surprised how many workers assume the boss is paying.
4. Handle the multiple-employer rule. If any of your staff work more than one job, only one employer deducts for this scheme — the employee chooses which. Get it in writing so you’re not double-deducting or missing a deduction someone assumed you were making.
5. Watch the year-end review. KESUMA has said it will review the whole scheme — policy direction, effectiveness, fund sustainability — by end of 2026, possibly leading to amendments in Parliament. Translation: the rules may change again. Don’t hardcode anything into your HR handbook just yet.
The part nobody’s talking about: some bosses were absorbing this
Here’s something I noticed among fellow business owners during the mandatory month. A number of SMEs quietly absorbed the 0.75% on behalf of their local staff — topping up salaries or reimbursing the deduction — as a goodwill move. Legally the contribution is employee-borne, but plenty of bosses didn’t want their people’s take-home pay to drop on their watch.
Now, with the U-turn, I’m hearing the opposite conversation: “Since it’s voluntary now, can we just drop the whole thing?”
I’d think twice before you do, because the LINDUNG 24 PERKESO scheme represents a good value insurance coverage for staffs. For a maximum of RM45 a month per person (due to the RM 6000 wage gap contribution calculation) — often much less (because the group of employees that benefit from this are generally B40s and M40s)— your staff get free treatment at government hospitals until they make a full recovery, implants and rehabilitation are also covered, wage replacement of roughly 80% while on medical leave, a lifetime disability pension if the worst happens, and dependants’ benefits if they don’t make it home. In its very first month, PERKESO paid out over RM1.2 million across 592 claims — the biggest single payout was RM1.16 million for a medical implant. Show me a private personal accident policy that does that at this price. There isn’t one.
If you were absorbing the cost before, consider keeping it as a formal staff benefit. It’s one of the cheapest staff retention perks you will ever buy.
My honest take on the U-turn
Let me be a bit candid here, because I think the public conversation got this one wrong.
The loudest opposition came from lower-income workers — the very group this scheme protects the most. And I get it. When you’re earning RM1,700, every RM12.75 is real money, and the government did a poor job explaining what it bought. From that seat, it looked like another hand in your pocket.
But here’s the uncomfortable irony. That same worker is the one with no personal accident policy, no medical card, no savings buffer. If he crashes his motorbike on a Sunday jalan-jalan and can’t work for six months, there is nothing at his disposal to absorb the financial impact. No income, no safety net — and then the anger turns to SOCSO for “not paying out,” when the accident was never covered in the first place. We saw the same pattern with the EPF special withdrawals: short-term relief celebrated loudly, long-term consequences felt quietly, years later.
For the record, I’m not arguing it should have stayed mandatory. Forcing a deduction onto nine million payslips overnight, fully employee-funded, with minimal communication — that was always going to blow up, and it deserved to. But the smarter fix was staring everyone in the face: keep everyone auto-enrolled with the freedom to opt out, instead of making people actively opt in. Behavioral economics has proven this a hundred times over — defaults do the heavy lifting. Auto-enrolment with an easy exit would have preserved coverage for the millions who’d never get around to signing up, while still respecting choice. Instead, mounting political pressure pushed the government to the bluntest possible reversal, and participation will now collapse to the small minority who actively register.
One more myth worth killing while I’m here. A popular argument online goes: “Nobody needs this — most people already have their own insurance, and employers provide medical coverage anyway.” The data says otherwise. Only around 42% of Malaysian workers have any personal accident insurance. The majority of the workforce — very much including the typical SME payroll — is walking around with zero protection for anything that happens outside working hours. The scheme could have been executed better, but the gap the government tried to target is very real indeed.
Which brings me to your actual responsibility as an employer
Here’s the thing LINDUNG 24 Jam was never going to solve, voluntary or not: it only covers accidents. Dengue, cancer, heart disease, kidney failure — the illnesses that actually bankrupt Malaysian families — are completely outside its scope. And even for accidents, treatment is limited to second-class wards in government hospitals.
This is where group medical insurance earns its place in your benefits package. A proper group medical plan covers your employees for hospitalisation from illness and injury, gives them access to private hospitals without the months-long government queue, and — because it’s underwritten at the group level — costs far less per head than any individual policy your staff could buy themselves, often with no medical checkup required. For an SME competing for talent against bigger companies, it’s one of the few benefits that genuinely moves the needle: staff feel the difference the first time they, or their kid, need a hospital bed. If you’re weighing up options, start with our breakdown of AIA group medical insurance for Malaysian businesses — it walks through plan tiers, typical pricing per employee, and what to watch for in the fine print.
The bottom line
- Local staff: voluntary now. Wait for PERKESO’s mechanism before changing payroll.
- Foreign workers: still mandatory. Keep deducting, keep remitting.
- Document every employee’s choice once the opt-in opens.
- If you can afford RM45 a month per person, consider sponsoring it — cheapest safety net you’ll ever provide.
- And whatever happens to this scheme, the real coverage gap for your team is illness, not accidents. That one is on you to close.