Is Pay Cut Legal in Malaysia

In Viking Askim Sdn Bhd v. National Union of Employees in Companies Manufacturing Rubber Products & Anor [1991] 2 MLJ 115, the High Court considered whether there was a legal basis for the Labour Court, during a period of closure caused by a drop in orders resulting from the loss of a contract for one million euros by the applicant company, received full pay for Sundays and statutory holidays. In her application for annulment of the Labour Court`s award, the applicant argued that there was no legal basis. In dismissing Certiorari`s application, the High Court held that there was no provision in the Employment Act which allowed an employer to make a deduction from wages for periods of closure. Such a deduction is therefore unlawful. The High Court also held that under labour law, workers have the right to retain their wages in full during periods of reduced production if no work is done, where the collective agreement does not provide for partial payment of wages or deduction of wages during temporary layoffs. There is no difference between deduction of wages and non-payment of wages. It is important to always take into account the legal rights and obligations of the employer with regard to the adaptation of the essential conditions provided for in the employment contract. This is particularly true in cases where such an adjustment would place workers in a less advantageous position. As noted above, while employers may explore and consider the possibility of requiring payroll deductions or unpaid leave, employers are required to provide workers with full and open disclosure and adequate justification. Of course, if you were doing the same amount of work each month, you`d expect the same pay everywhere. Unless you received a promotion.

Before you started working for your company, you would have signed an employment contract with them. One of the things you would have agreed on is your salary. Under this contract, your boss is then legally required to pay you this amount every month. The thought of having your salary reduced by an employer is often a tough pill to swallow. In the corporate landscape, salary cuts are often attributed to a downgrade or decline in the company`s financial performance. But are employer pay cuts even legal? Please contact us if you need our help and further advice on your legal rights and obligations in relation to the business downturn and the employer`s financial situation, in particular with regard to employee salaries. Q5. Can the employee take legal action against the employer because of the wage reduction? The following situations may constitute an illegal wage reduction: – Employers should be aware of their legal obligations before making wage cuts.

Although wage reductions are permitted in some cases, they should only be imposed when necessary and duly justified. If the Employment Act 1950 does not provide for the purpose and manner of deductions from wages, they automatically become illegal. You know you didn`t take any unpaid days off this month, so maybe it could be a mistake by the finance department, right? You call them, but they tell you that no mistake was made. This is your salary for this month. It should also be noted that Malaysian labour law actually gives employers the right to demote workers. Under section 14 of the Employment Act 1955, employers have the right to “demote” an employee if there is “misconduct incompatible with the performance of the express or implied terms of his service after due investigation”. The first thing managers and employers need to consider is whether a demotion is the right decision. When making this decision, it is good to think about the following questions: In general, the employer is not allowed to deduct the employee`s salary or make a salary reduction without obtaining the employee`s consent. This is based on section 24(1) of the Employment Act 1955 which states: “There are no obstacles (in this case), employers may ask them (employees) to come to the office. (After all) No party may work from home without the consent of the employer. Check out AJobThing`s hiring tools and services here! Section 43 of the National Wage Advisory Council Act 2011 also provides that an employer who fails to pay its employees without just cause is effectively committing a crime. A pay cut is essentially a change in an employee`s contract.

Therefore, the law generally requires that a salary reduction be made with the employee`s consent. Failure to obtain consent prior to a reduction may constitute a breach of contract by the employer, allowing an employee to seek de facto termination.