Disclaimer: The content of this article pertains to the altHR payroll module (not PayrollPanda). As of this date, the altHR payroll module has been discontinued as we form a new partnership with PayrollPanda to bring forth enhanced payroll solutions for our users.

*Disclaimer: This article serves as a reference of knowledge for the company or HR admin to understand more about Internship Allowance, however, the context of this article may differ with each company's practices - Please take the information in the article carefully, and based on your own judgment.

An internship often refers to an individual(mostly students) undergoing short-term training with a company to allow them to experience real working life aside from their studies.

In Malaysia, the university student is usually required to undergo 2-6 months of internship in order to complete their tertiary course. Companies are also aggressively taking in interns to help with projects or eventually to convert them to full-time employees.

Interns in Malaysia are often paid an internship allowance ranging from RM300-RM1500 during the internship period with the company. But, is the Internship allowance subjected to EPF & SOCSO?

First, is an Intern an employee?

Based on Employment Act 1955, an employee is defined as "any person who has entered into a contract of service" and who is under the scope of the First Schedule.  

Unlike a full-time or part-time or contract employee, an internship is a training program for real working life in order for students to learn and complete their studies and does not bound by company KPIs and so, in most cases, internship student is not categorized as an employee, and they are more like a "Trainee" who joined on a training program by the company. 

However, do note here that internship and apprenticeship are different in nature and their length of attachment to the company, if the "Trainee" that the company hired fulfills the criteria of apprenticeship, the apprentice that the company hired is an employee. For Protege program - please check with the Protege department.

Therefore, since the internship's nature is training, not work or providing services to the company, an intern is NOT an employee and naturally, the internship does not cover under Employment Act 1955.

So, is the Internship allowance subject to EPF & SOCSO?

Since interns are not covered under Employment Act 1955, there is no any law-governed that an internship has to be "paid", so the amount provided by the company to the interns is mostly out of the goodwill from the company to the interns to cover their expenses such as transport, meal or living expenses.

In this kind of nature, the internship allowance shall not be treated as "Wages" as well so it is not subjected to any statutory deduction such as EPF and SOCSO.

Note: An company still can opt to contribute to EPF & SOCSO/EIS based on the company's discretion, however, then the internship shall be treated as a part-time or contract employee which is covered under Employment Act 1955

How do I pay the Internship allowance?

We also received some questions about whether should include internship allowance (without EPF & SOCSO) in the payroll or not; the companies may do it according to their way whether it is through payment voucher/ invoice or process via payroll. As some companies may run it under payroll to treat this as manpower cost, but some companies pay through invoice or payment voucher so it is parked under the OPEX cost.

If you are paying through payroll, you can process the internship allowance with altHR's payroll module by following a few steps below:


  1. Go to Payroll > Settings > Set Pay Items
  2. Under Normal > Click Add New Pay Item 
  3. Type in the pay item name; Internship Allowance (or any preferred name) > Select Wage Type accordingly > Click Confirm 

  4. Then you will see the Internship Allowance is created, you do not need to tick the PCB / EPF / SOCSO / EIS / HRDF


** Please create a new employee profile in the People module first, with complete personal details and bank details

  1. Go to People > Employees > Search for the intern's name > Click View Profile
  2. Go to Compensation > Compensation Details > Click Add 
  3. Select MYR as Currency > Insert Salary Rate as 0 > Choose Pay Type as Monthly > Input the First day of internship at the Effective Date > Click Confirm 
  4. Next, on the left panel, click Statutory Details  > Check the box for "Hey, I'm a Fresh graduate" > scroll to the bottom and click Confirm  
  5. Lastly, also on the left panel, click Previous Employment Income.
    At 1. Totals (Current Year-to-date),  fill in "0" in all the fields.
    At 2. 
    Period of Payments, select any period of start date or end date > Click Confirm 


  1. Go to Payroll > Run Payroll > Select the desired intern > Click Manage.
  2. Under Normal Remuneration, click Add Item 

  3. Search for the pay item; Internship Allowance under Select Type > Enter amount accordingly > Click Send 
  4. The amount that you input will show under the Normal Remuneration with no statutory contributions.