Gig Workers Act reshapes social security for gig workers

PETALING JAYA: The enactment of the Gig Workers Act 2025 marked a watershed moment for Malaysia’s gig economy, moving social security coverage for gig workers from a voluntary opt-in system to automatic protection.

In the formal employment sector, an employer’s obligations extend beyond coverage against injury. It also includes contributions towards invalidity protection and retirement savings.

With gig workers now formally recognised as employees, the extend to which their employer must provide coverage for them is shifting.

The self-enrolment programme under the Self-Employment Social Security Scheme has been rebranded as Lindung Kendiri.

Platform-facilitated registration and contribution deductions are now directly linked to the Social Security Organisation’s (Perkeso) system.

But while the Act, which came into force on March 31, addresses injury protection for gig workers, gaps remain.

Invalidity coverage for non-work-related conditions and retirement savings through EPF are not part of the new legislation, which means gig workers are not provided the same protection that salaried employees are entitled to.

With a contribution deduction mechanism already established under the Act, the same infrastructure could in principle be extended to cover EPF contributions, bringing gig workers closer to the protections available to those in formal employment.

Why it matters

The changes come as Malaysia’s gig industry enters a period of rapid growth.

About 1.2 million people are engaged in gig work in a market valued at RM1.61 billion, which is expanding at an annual rate of 23%, according to the Malaysia Digital Economy Corporation’s 2024 Budget Digital Economy Snapshot.

With more than 24,100 retrenchments recorded in the first quarter of 2026 and cost-of-living pressures persisting, more are turning to gig work as an alternative to traditional employment.

Public awareness remains a hurdle

Now that gig workers have a more formal legal standing, a Perkeso spokesman said, the next step is to change this group’s mindset in an environment where public awareness of social security remains relatively low.

“It is imperative for social security to be embedded in the working behaviour of a person.”

“Perkeso is actively collaborating with platform providers to streamline the implementation of registration and contribution deduction processes for gig workers’ commercial transactions,” the spokesman said.

He added that for workers the automatic deduction is a first tangible experience of formal worker status, but whether it becomes a foundation for fuller protection depends on how far platforms are prepared to go beyond the statutory minimum.

Farah Diba Almayanda Alauddin, a researcher at Universiti Kebangsaan Malaysia who studies the influence of digital platforms on gig workers, said the Act’s design accounts for this awareness gap.

“Since many gig workers view their roles as temporary, they often lack active legal awareness about their labour status,” she said, adding that the Act shifts the compliance responsibility from the individual worker to the platform.

Farah, however, said that for there to be lasting change, following the introduction of the law, the gig industry must also be reformed.

“Gig workers now receive social security benefits automatically, regardless of their personal awareness of legal frameworks,” she said.

On the other hand, Farah said, platforms traditionally operated as independent market actors with little public oversight, enabling them to dictate terms unilaterally.

“The Act now serves as direct state intervention to close the regulatory gap left by platform self-regulation.”

How it works

Under the Act, platform providers must register gig workers, deduct contributions from their earnings and remit them to Perkeso through an application programming interface.

Social security coverage begins once a worker registers with a platform provider and accepts a first job assignment.

Once these conditions are met, coverage remains active even if the worker receives no jobs for several days or has yet to meet the RM13.10 monthly minimum contribution threshold.

Perkeso confirmed that workers enrolled under Lindung Kendiri before March 31 will automatically come under the new framework, with future contributions flowing once their platform completes integration.

Workers can monitor their contribution and protection status through the Prihatin app.

Perkeso is targeting full compliance among substantial platform providers in Malaysia and remains committed to safeguarding gig workers’ rights to social security protection.