Bonus, Allowance and Overtime in Malaysia: How Each Affects EPF, SOCSO and PCB

Bonus, allowance and overtime are each treated differently on a Malaysian payslip. Bonus and most allowances count for EPF, but overtime doesn't. Overtime and allowances do count for PERKESO (SOCSO and EIS), and a bonus is taxed for PCB as "additional remuneration". That's why you should enter each item separately in a salary calculator instead of lumping them into one gross figure.

This guide shows how overtime pay is calculated under the Employment Act, how each payment affects EPF, PERKESO and PCB, and two worked examples in RM.

Quick reference: what each payment counts for

Sources: KWSP's employer FAQ lists bonus, allowance, commission and incentives as wages, and overtime, service charge, gratuity and travelling allowance as "non-wages". PERKESO's FAQ says contributions are based on wages, overtime, commissions, service charge and allowances (meal, cost of living, housing and so on). LHDN's 2026 PCB specification lists bonus/incentive, arrears, non-monthly commission and allowances as additional remuneration.

How overtime pay is calculated (Employment Act 1955)

For a monthly-paid employee, start with the ordinary rate of pay (ORP):

• ORP (daily rate) = monthly salary ÷ 26 (s.60I(1A))
• Hourly rate = ORP ÷ normal hours of work per day

Then apply the statutory minimum multipliers:

• Overtime on a normal working day: at least 1.5 × hourly rate for each hour beyond normal hours (s.60A(3)).
• Work on a rest day (monthly-paid): up to half your normal hours = half a day's ORP; more than half and up to full normal hours = one day's ORP (s.60(3)(b)).
• Overtime on a rest day: at least 2 × hourly rate for hours beyond normal hours (s.60(3)(c)).
• Work on a paid public holiday: two days' ORP on top of the holiday pay you already get, even if you work less than the full day (s.60D(3)(a)).
• Overtime on a public holiday: at least 3 × hourly rate (s.60D(3)(aa)).

Example rates: Monthly salary RM2,600 with 8 normal hours a day → ORP = RM100 a day, hourly = RM12.50.

• Normal-day overtime: RM18.75 an hour
• Rest day, up to 4 hours: RM50 · 4 to 8 hours: RM100 · beyond 8 hours: RM25 an hour
• Public holiday worked: RM200 extra · beyond 8 hours: RM37.50 an hour

Who gets these rates by law: under the Act's First Schedule, employees earning more than RM4,000 a month are excluded from these overtime, rest-day and holiday-pay provisions (ss.60(3), 60A(3), 60C(2A), 60D(3) and (4), 60J), unless they're in a listed category such as manual labour or drivers. For them, overtime follows the employment contract. The Act covers Peninsular Malaysia and Labuan.

Timing: under s.19(2), overtime and rest-day/holiday pay must be paid by the last day of the next wage period. That's why October overtime often shows up on the November payslip.

Worked example 1: salary + overtime

Hafiz earns RM2,600 basic and works 10 hours of overtime on normal working days this month.

• Overtime: 10 × RM18.75 = RM187.50
• Gross pay: RM2,600 + RM187.50 = RM2,787.50
• EPF on RM2,600 only, because overtime is excluded: RM286 employee / RM338 employer
• PERKESO on RM2,787.50, because overtime is included (RM2,700.01–RM2,800 band): employee SOCSO RM13.75 + LINDUNG 24 Jam RM20.65 + EIS RM5.50 = RM39.90; employer SOCSO RM48.15 + EIS RM5.50 = RM53.65
• Take-home before PCB: RM2,787.50 − RM286 − RM39.90 = RM2,461.60

Without the overtime, Hafiz's PERKESO deduction would be RM37.00 (RM2,600 band). The overtime adds RM2.90 to PERKESO and nothing to EPF. If you add overtime to the EPF base, the EPF figure will be too high.

Worked example 2: salary + allowance + bonus

Mei Ling earns RM3,000 basic plus a fixed RM300 monthly allowance (not a travelling allowance). In December she also gets a RM1,500 bonus.

Normal month (RM3,300):

• EPF: RM363 employee / RM429 employer
• PERKESO (RM3,200.01–RM3,300 band): employee RM16.25 + RM24.35 + RM6.50 = RM47.10; employer RM56.85 + RM6.50 = RM63.35

Bonus month, EPF wages = RM3,000 + RM300 + RM1,500 = RM4,800:

• EPF: RM528 employee / RM624 employer. The bonus adds RM165 to her EPF deduction and RM195 to her employer's.
• PCB: the bonus is additional remuneration. LHDN's method works out the year's tax with and without the bonus and deducts the difference in that month, so PCB jumps in the bonus month. See why bonus-month PCB feels higher.
• PERKESO: PERKESO's FAQ doesn't list bonus either way, so confirm with your payroll whether it's included.

Because the total stays under RM5,000, the employer's EPF rate is 13% in both months. Our EPF contribution guide explains the bands and the 12% rate above RM5,000.

Allowances: which ones count?

• Fixed allowances that form part of your pay, such as meal, housing or cost of living, count for both EPF and PERKESO.
• Travelling allowance is on KWSP's non-wage list, so no EPF is due on it.
• Reimbursements of actual expenses you paid for the company, backed by receipts, aren't salary at all. Keep them out of the gross pay figure.
• For tax, some allowances and perquisites are partly exempt. Check LHDN's rules or your EA form.

Common mistakes

• Adding overtime to the EPF base. KWSP lists overtime as a non-wage.
• Leaving overtime out of the PERKESO base. PERKESO includes it.
• Using ÷30 or ÷22 for overtime. The Act's minimum ORP for monthly-paid staff uses ÷26. An employer can use a more generous formula, but not a lower one (s.60I(2)).
• Judging your normal take-home from a bonus month. PCB on the bonus makes that month look worse than usual.
• Assuming everyone gets 1.5× overtime by law. Above RM4,000 a month (non-manual roles), it depends on your contract.

Try your own numbers

Enter basic salary, allowance, overtime and bonus as separate items in the KiraBoss salary calculator to see EPF, SOCSO, EIS and PCB for that month. For the full net-pay walkthrough, see how to calculate take-home salary.

This guide is general information, not payroll, tax or legal advice. Confirm the treatment of specific allowances with your employer, KWSP, PERKESO or LHDN.