Here Are The Benefits & Financial Lifelines Thousands Of Malaysians Who Were Retrenched This Year Should Know

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Losing your job can feel like the ground has disappeared beneath your feet

But contrary to what many Malaysians assume, retrenchment does not necessarily mean you're completely on your own.

If you're among the thousands of Malaysians who recently lost their jobs due to retrenchment, company restructuring, business closure, redundancy, or a voluntary separation scheme (VSS), there are several financial support systems, legal protections, and relief mechanisms available.

However, many of these benefits come with strict deadlines. Missing them could mean losing access to thousands of ringgit in financial assistance or compensation.

Here's a comprehensive guide to what Malaysians should do immediately after losing their jobs.

First of all, don't miss these deadlines

If there's one thing retrenched workers should remember, it's this: time matters.

Some rights and benefits can be lost entirely if applications are submitted late.

As soon as your employment ends, make sure you:

1. Check whether you're entitled to severance pay from your employer

For employees earning RM4,000 or below per month and who have worked continuously for at least 12 months, the Employment (Termination and Lay-Off Benefits) Regulations 1980 provide minimum statutory termination benefits.

The minimum statutory entitlement is:

What if you earn more than RM4,000?

For higher-income employees, entitlement is often governed by the employment contract.

This is why workers should carefully review their termination clauses before signing any documents.

By law, termination benefits must generally be paid within seven days from the date employment ends.

2. Apply for PERKESO's Employment Insurance System (EIS) benefits

If you worked in the private sector and lost your job through no fault of your own, your first stop should be PERKESO's Employment Insurance System (EIS), also known as Sistem Insurans Pekerjaan (SIP).

The scheme was specifically created to help workers who unexpectedly lose their jobs.

If approved, eligible workers can receive monthly financial assistance while searching for a new job.

One of the most important things to know is that EIS claims must generally be submitted within 60 days from your last day of employment.

Missing this deadline could result in your application being rejected.

Claimants must also register with the official national job portal, MYFutureJobs, and actively search for work.

Who qualifies?

Generally, EIS covers workers who lose their jobs due to:

• Retrenchment
• Redundancy
• Company closure
• Bankruptcy
• Voluntary Separation Schemes (VSS) or Mutual Separation Schemes (MSS)
• Force majeure situations
• Certain constructive dismissal cases

Who doesn't qualify?

Generally, EIS does not cover:

• Voluntary resignations
• Retirement
• Dismissal due to proven misconduct

This is why workers should think carefully before signing any voluntary resignation letter presented by an employer.

How much can you receive?

Successful applicants may receive a Job Search Allowance (EMP) for up to six months on a declining scale:

However, payouts are subject to EIS' wage ceiling of RM6,000 per month.

This means even if you previously earned RM8,000 or RM10,000, benefits will be calculated using the RM6,000 cap.

For someone who earned RM6,000 or more, the first month's allowance could be as much as RM4,800.

There's also a reward if you find work early

Workers who secure a new job before their EIS benefits run out may qualify for the Early Re-employment Allowance (EBSA), which provides a cash incentive based on remaining unused benefits.

PERKESO also offers training programmes, training allowances, and skills development opportunities to help unemployed workers return to the workforce faster.

However, claimants are generally required to actively seek employment and maintain job search records through the MYFutureJobs portal.

3. Check if your compensation is tax-free

A surprising number of retrenched workers end up paying more income tax than necessary simply because they don't know the exemptions available.

Compensation for loss of employment is eligible for a tax exemption of RM10,000 for every completed year of service with the same employer.

For example:

• Eight years of service
• RM100,000 retrenchment package

In this scenario, RM80,000 would be exempt from tax. Only the remaining RM20,000 would be subject to taxation.

If the termination occurred due to ill health, the compensation may be fully tax-exempt.

4. Beware of the final salary and tax clearance delay

Some employees panic when they don't receive their final salary or severance package immediately after termination.

In some cases, this may be due to tax clearance procedures.

Employers are legally required to notify the Inland Revenue Board (LHDN) when an employee leaves.

This involves submitting Form CP22A and temporarily withholding final payments until tax clearance is completed.

The purpose is to ensure there are no outstanding tax liabilities before funds are released.

Workers should check with their HR department that the process is initiated promptly to avoid unnecessary delays.

5. Never sign a resignation letter just because HR tells you to

Employment lawyers have long warned workers about this mistake.

In some situations, employers may encourage workers to resign voluntarily instead of being formally retrenched.

This can have major consequences.

Once an employee resigns voluntarily, they may lose access to:

• EIS unemployment benefits
• Statutory termination benefits
• Certain unfair dismissal claims

Workers who are uncertain should seek advice before signing resignation documents. A resignation can be difficult to challenge later.

6. Think you were unfairly targeted? You may be able to challenge it

Not every retrenchment is automatically legitimate.

Under Malaysian industrial relations principles, retrenchment should generally be based on genuine business needs such as restructuring, financial difficulties, redundancy, automation, or operational changes.

Where possible, employers are expected to follow established retrenchment principles, including the widely recognised Last In, First Out (LIFO) approach.

However, employees who believe they were unfairly dismissed may file a representation under Section 20 of the Industrial Relations Act 1967.

The deadline is strict: 60 days from the date of dismissal.

If successful, remedies can include:

• Reinstatement
• Backwages
• Compensation in lieu of reinstatement

7. Use EPF Account 3 carefully if you need emergency cash

For workers facing an immediate cash crunch, EPF may provide temporary relief.

Under the current EPF structure, members can make withdrawals from Account 3 (Flexible Account), subject to available balances.

For some families, this can help cover essentials such as rent, groceries, utilities, and transportation, etc.

Still, financial planners generally advise treating EPF as a short-term bridge rather than a long-term solution.

8. Contact your bank before you miss payments

One of the biggest mistakes retrenched workers make is waiting until they default on loans before seeking help.

If you've lost your income, contact your bank immediately and explain the situation. Banks are generally more willing to discuss restructuring options before an account falls into arrears.

Depending on the institution and circumstances, available options may include:

• Temporary payment relief
• Loan restructuring
• Reduced monthly instalments
• Extended repayment periods

9. AKPK may help if debts become overwhelming

For those struggling with credit card debt, personal loans, or multiple financial commitments, help is available through the Credit Counselling and Debt Management Agency (AKPK).

AKPK offers free financial counselling and debt management services.

Its Debt Management Programme can help eligible borrowers restructure repayments and avoid spiralling debt problems.

Importantly, AKPK is a legitimate government-linked agency and does not charge fees for counselling services.

The agency can help borrowers:

• Avoid escalating debt problems
• Assess their financial situation
• Develop repayment plans
• Negotiate with participating financial institutions

Seeking help early is often easier than trying to resolve debt after falling seriously behind.

10. Don't overlook the loss of company medical coverage

Many employees rely entirely on company-provided medical benefits. What some workers don't realise is that this coverage often ends once employment ends.

If you're covered under a corporate plan, check with your insurer or agent to see whether the policy offers portability or conversion options. In some cases, workers may be able to convert group coverage into individual coverage without undergoing fresh medical underwriting.

11. If you're moving into freelance or gig work, there are still safety nets available

Many retrenched workers eventually turn to freelancing, e-hailing, food delivery, consulting, or small businesses to generate income.

While this can provide short-term income, it also means losing traditional employer-backed protections.

Two schemes worth considering are:

EPF i-Saraan

Allows self-employed individuals to continue building retirement savings through voluntary contributions while receiving government incentives.

SOCSO SKSPS

The Self-Employment Social Security Scheme provides protection for self-employed workers in the event of work-related accidents, disability, or injury.

12. The deadlines you absolutely shouldn't miss

If there's one thing to remember after losing a job, it's this:

Missing these timelines could mean losing access to benefits, compensation, or legal remedies.

The Bottom Line

Losing a job can be overwhelming, but it doesn't mean you've run out of options.

From PERKESO unemployment benefits and severance pay to tax exemptions, EPF withdrawals, debt restructuring, and legal remedies, Malaysia's safety net is broader than many people realise.

The most important thing is to act quickly.

Because after a retrenchment, the difference between getting help and missing out often comes down to a few critical deadlines.