Directors are jointly and severally liable for any outstanding EPF contributions by their company. Is it necessary for the Company to be sued together with its directors, or can EPF pursue legal action against the directors without including the Company in the suit?
The Federal Court addressed these questions in Mohd Abdul Karim Abdullah & Ors v Lembaga Kumpulan Wang Simpanan Pekerja [2025] 4 ILR 1.
Factual Background
- In December 2022, EPF filed a civil action against the registered directors (“Directors”) of a company (“Company”) for the failure to pay outstanding EPF contributions for the period September 2021 until July 2022, together with dividend and late payment charges.
- The Company was not named or made a party in this suit. The Company was also wound up through a court order.
- At the High Court, a summary judgment was granted against the Directors. The Court of Appeal upheld this decision.
- Dissatisfied with the High Court and the Court of Appeal’s decision, the Directors sought leave to appeal to the Federal Court.
Court’s Findings
The Federal Court identified the main issue as the interpretation of section 46 of the Employees Provident Fund Act 1991 (“EPF Act 1991”), which provides in part:-
“(1) Where any contributions remaining unpaid by a company, a firm or an association of persons, then, notwithstanding anything to the contrary in this Act or any other written law, the directors of such company including any persons who were directors of such company during such period in which contributions were liable to be paid, or the partners of such firm, including any persons who were partners of such firm during such period in which contributions were liable to be paid, or the office-bearers of such association of persons, including any persons who were office-bearers of such association during such period in which contributions were liable to be paid, as the case may be, shall together with the company, firm or association of persons liable to pay the said contributions, be jointly and severally liable for the contributions due and payable to the Fund.”
The Directors argued that the phrase “shall together with the company” implied a requirement to sue the company together with the directors. They contended that suing them alone, without the company, constituted selective prosecution, exposing them to full liability while the company escaped responsibility.
The Federal Court reviewed prior authorities and clarified that there was no ambiguity in section 46. The Court confirmed that even if only one director is sued, the action remains valid and proper, as the section establishes joint and several liability.
Hence, the Federal Court dismissed the Directors’ application for leave to appeal.
Key Takeaways
Directors, partners, and office bearers can be sued independently of their business entity for unpaid EPF contributions. Even if the company has been wound up or is not part of the lawsuit, individual directors remain jointly and severally liable, meaning EPF can pursue them personally for the full amount due.
Section 46 of the EPF Act 1991 also does not distinguish between active, “sleeping”, or non-executive directors. Registered directors during the period in which contributions are liable can be held accountable.
Directors should therefore be proactive in overseeing EPF contributions and other statutory obligations. Regular monitoring of the company’s records, ensuring timely remittances, and documenting compliance can help reduce personal exposure.
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This article was written by Leow Ho Eng (Senior Associate) from Donovan & Ho’s employment law practice.
Donovan & Ho is a law firm in Malaysia, and our employment practice group has built a reputation for providing strategic employment advice to local and global organisations. Our team of employment lawyers provide advice on employment law and industrial relations including review of employment contracts, policies and handbooks, advising on workforce reductions, and managing dismissals of employees for poor performance or misconduct. We also represent clients in unfair dismissal claims and employment-related litigation.
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