4 Situations Employers Can Deduct Salary

4 Situations Employers Can Deduct Salary in Malaysia

4 Situations Employers Can Deduct SalaryWhen it comes to salary, it can be said that everyone becomes sensitive to the point that some keep secret the value of the salary received from their own partner. Not to mention if the employer decides to deduct salary from the employee’s pay.

Therefore, Section 24 of the Employment Act 1955 outlines the legal deductions that can be made by employers. It is important for employers and employees to be aware of this matter.

In Section 24(1) it clearly says that no deduction can be made by an employer from an employee’s salary other than what is contained in the Act. This means that any deductions made such as contribution deductions must be in accordance with the Employment Act.

Even so, an employer can deduct salary only under these 4 situations:

  • There are excess payments made by the employer due to mistakes by the employer

  • Deduction of indemnity payable to the employer by the employee upon termination of the contract without notice

  • Deduction to recover salary advance money as contained in Seskyen 22 regarding salary advance

  • Deductions permitted by other written legislation (EPF, SOCSO and SIP)


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Based on this it is clear that the employer cannot arbitrarily cut the employee’s salary for personal reasons. Deductions are only made if there are payment errors or advances and other mandatory deductions.

On the other hand,  employer can deduct salary if the employee makes a written request for

  • Payment of trade union registration or any loan involving a trade union

  • Payment of any shares of the employer’s business offered for sale by the employer and purchased by the employee

So it is also clear here that any deduction of the employee’s salary can only be made if there is a valid written request. Employees also need to be aware that salary deductions can only be made for union reasons or the purchase of the employer’s business only.

In the meantime, salary deductions can also be made if the employee’s written request is approved by the Director General. This includes payments in EPF, SOCSO and EIS.

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