Which payments are subject to EPF contribution and which are exempted?

Payments Subject to EPF Contribution

In general, all monetary payments that are meant to be wages are subject to EPF contribution.

These include:

    • Salaries

    • Payments for unutilised annual or medical leave

    • Bonuses

    • Allowances (except a few, see below)

    • Commissions

    • Incentives

    • Arrears of wages

    • Wages for maternity leave

    • Wages for study leave

    • Wages for half day leave

    • Other contractual payments or otherwise



Payments Exempted From EPF Contribution

The payments below are not considered “wages” by the EPF and are not subject to EPF deduction.

  • Service charges (tips, etc)

  • Overtime payments

  • Gratuity (payment to employee payable at the end of a service period or upon voluntary resignation)

  • Retirement benefits

  • Termination benefits

  • Travel allowances

  • Payment in lieu of notice of termination of service (payment given when employee’s service is terminated)

  • Director's fee

  • Gifts (includes Cash Payments for holidays like Hari Raya, Christmas etc.)



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