Can Employer Reduce Salary During MCO Period?
For the employees earning RM2,000 and below, employed as manual labour or domestic servant, the only provision authorizing an employer to make salary deduction is provided under Section 24 of the Employment Act 1955:-
deductions to the extent of any overpayment of wages made during the immediately preceding three months from the month in which deductions are to be made, by the employer to the employee by the employer’s mistake;
deductions for the indemnity due to the employer by the employee for termination of contract without notice;
deductions for the recovery of advances of wages provided no interest is charged on the advances; and
deductions authorized by any other written law.
It must be noted that the above situations caused by MCO not fall under any categories under Section 24 of the Employment Act 1955 that allows an employer to deduct the salary. An employer who contravenes this section may be liable to an offense in the Employment Act 1955 punishable with a fine not exceeding RM10,000.
While for the employees earning RM2,000 or more, there is no statutory provision to regulate deduction of salary. However, a salary reduction is essentially a variation of an employee’s contract which requires a salary reduction to be with the employee’s consent. An employers is entitled to reduce the employees’ salaries if able to justify that the business is at extreme difficulty and after exhausting all reasonable steps provided the employees consent to it. Failure to obtain consent before a reduction may amount to a breach of contract by the employer.
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