THE RIGHTS OF EMPLOYEES: WAGES

LABOUR LAW

LEARNING OUTCOME

THE DEFINITION OF WAGES

Section 2 of the Employment Act 1955

wages" means basic wages and all other payments in cash payable to an employee for work done in respect of his contract of service but does not include --

(a) the value of any house accommodation or the supply of any food, fuel, light or water or medical attendance,

(b) any contribution paid by the employer on his own account to any pension fund, provident fund, retrenchment, termination, lay-off or retirement scheme,

(c) any travelling allowance, (d) any sum payable to the employee to defray special expenses

entailed on him by the nature of his employment; (e) any gratuity payable on discharge or retirement; or (f) any annual bonus or any part of any annual bonus;

The Employment Act does not establish minimum wages, but it does lay down certain procedures relating to the payment of wages to ensure workers are not exploited.

The Act allows the employee whose income between RM1500 and RM5000 per month to make a claim at the Labour department if he is not paid wages.

The Act deals with; - wage periods - Advances on wages - Deduction from wages - Priority of wages - the truck system

WAGE PERIODS

Wages must be paid at least once every month. Employers may pay more frequently but not less.

The wage period does not have to be a calendar month. The employer can decide on the date.

The employer must make payment not later than seven days after the end of that wage period.

ADVANCES OF WAGES

The Employment Act allows employers to give employees an advance on wages but it is not encouraged.

However, the Act strictly regulates the giving of advances;

The maximum advance that can be given is the equivalent of one month’s wages. The exception is when the purpose of the advance is to help the employee buy a house, land, a car, a motorcycle or bicycle, or to assist employee buy shares in the employer’s business. If the employer want to give advance for other reasons, he must request the permission from the Director- General of Labour.

DEDUCTIONS FROM WAGES

Deduction from employees’ wages are only allowed in restricted circumstances.

The deduction only for the purposes of; - Recovery of wages overpaid - Payment to the Employees Provident Fund,

Employees Social Security Organisation and Inland Revenue Board

- recovery of advances where no interest is charged.

The maximum monthly deduction must not exceed 50 per cent of the wages unless the amount to be deducted includes repayment of a housing loan. In this case, with the permission of the Director-General of Labour, the deductions may be increased to 75% of the monthly wages.

If the employees wishes for deductions to be made and paid on his behalf to a trade union and co-operatives, the employee must put his request in writing. If other than this reason, the written permission must be given by the Director General of labour.

WHEN NO WAGES NEED BE PAID

Employers are not required to pay wages in the following situations;

a) The employee is being held in custody by the authorities

b) The employee is in prisonc) The employee is required to attend a court

hearing or trial (except he is a witness for the employer).

TRUCK SYSTEM

- The wages must be paid in legal tender – must be in cash or deposit into bank account. The employee can insist on being paid in cash if they had a strong reason.

The wages must be in Malaysian Ringgit.

The workers must be paid in money rather than being forced to take unwanted goods as payment.

PRIORITY OF WAGES

If an employer is forced by a court to sell off property and assets to pay debts, employees who have not been paid their wages receive priority over all debtors, but they can claim a maximum of four months'