Failure to Pay Salary

What does salary include?

Salary is more than just the money you get at the end of the month. Salary includes all benefits and entitlements, and includes things such as:

1. Annual leave
2. Overtime payment
3. Public holidays
4. Sick leave
5. Termination
6. Wages or salary

Under Section 19 of the Employment Act 1995, employers must pay their employees salaries within 7 days after the last day of the salary payment period.

For example, if you are paid on the 30th of every month, your employer must pay your salary by the 7th of the next month.

What happens if my employer is late in paying my wages?

If an employer fails to pay their employee’s wages on time, they may be guilty of wage default under section 19 of the Employment Act 1955. Under section 18 and 19 of the Employment Act 1955, if an employer is late to pay their MDW’s wages by more than 7 days, you may consider making a complaint at the Labour Office. Once the complaint is submitted, the Labour Office will investigate the employer and review all the evidence. The evidence and documents that the Labour Officer may look at include:

1. Employment contract
2. Receipt of wage payment
3. List of payments made by employer to employee

The investigation may add pressure on the employer to quickly pay the employee to avoid negative consequences. If that happens, then the Labour Office will consider the complaint settled and closed.

However, if the employer disputes the complaint, and says that they do not need to pay the employee, then the Labour Office will set an appointment to hear the case (i.e. hear both sides of the story).

Both the employer and employee must attend the Labour Office hearing. Both parties can either represent themselves or have a lawyer. At the end of the hearing, the Presiding Officer (the judge) will decide who ‘wins’ the case and order the losing party to pay the winning party.

Both the employer and employee can appeal the decision of the Presiding Officer to the High Court. The deadline to do this is 14 days from the judgment.

Unlawful deduction (cut) of wages

Under section 24 of the Employment Act 1955, it is illegal for employers to deduct wages from an MDW. There are only a few circumstances where an employer is allowed to deduct wages:

• If the employer has paid extra wages, the employer is allowed to deduct the next month’s wages
• When the MDW breaks the contract without notice and leaves work immediately, the employer can cut part of the salary due to her if she does not serve the full notice period
• If the MDW asked her employer for an advance (early payment) of salary, the employer can cut part of her salary, without interest)

If your employer had deducted your wages, you may consider making a complaint at the Labour Office (explained above). You may wish to get help and support from a lawyer or NGO to submit the complaint.

MDW Employment Contracts

In Malaysia, MDW contracts are a standard form that should be used for all MDWs. However, if an MDW wants to make a formal complaint about her work (for example, salary issues), the standard employment contract does not have the employer’s full address and it also does not state what the MDW’s job duties are. If you thinking about making a complaint at the Labour Office, make sure to write down your employer’s address in full (as you may need to send documents to your employer’s home).

Termination of employment contract

Under section 57(b)(1) of the Employment Act 1955, if your contract is broken (by either yourself, your employer, expiry of your visa), your employer must inform the Director General of the breaking the contract. If your employer fails to do so, they commit a criminal offence and may have to pay a fine.

What are terminal entitlements?

Terminal entitlements refers to payments made at the end of employment.

Under Section 20 of the Employment Act 1955, an employer must pay a resigning employee’s salary on their last day of work.

If the employer fails to pay the salary on the last day, the employee can submit a case against the employer in the Industrial Court (see below).

Do I still get terminal entitlements if my contract is broken without notice?

Under section 21 of the Employment Act 1955, if an employer breaks the contract without notice to the employee, the employee is allowed to receive wages in place of the notice. This basically means that instead of your employer giving you notice to break the contract, your employer can pay money.

Similarly, if an employee breaks their contract without notice to the employer, the employee should pay the employer wages in place notice.

The amount that should be paid in place of notice is generally the notice period length. So, if your contract has a notice period of 1 month, the person who breaks the contract without notice will have to pay the other person 1 month’s wages.

If the employer breaks the contract without notice OR without payment, the employee may submit a case under section 69 of the Employment Act 1955 at the Industrial Relations Department.

What can I do if my employer breaks my contract without notice and doesn’t pay me?

Under section 69 of the Employment Act 1955, an employee can submit a case to the Industrial Relations Department.

The Department will try to help the employee and employer reach an agreement without having to go to court. However, if an agreement cannot be reached, it will be moved up to a higher ranking officer – the Minister of Human Resources. Even then, if that fails, the case can go to the Industrial Court for a judge to decide.

The judge will then hear both sides and their cases, and then decide who ‘wins’. If either party is unhappy with the result, they may choose to appeal the decision.

Helpful tips

• If you want to, you can try to reach an agreement with your employer before taking action. However, you may want to discuss this with a lawyer or NGO first to understand if this is the best option for you.
• Consider filing a civil claim against your employer. It is possible to apply to the court for a civil claim for compensation (money). However, before doing this, it is important to understand the strength of your case first – consider contacting a lawyer or NGO to help you do this.
• Keep evidence carefully. If you have salary receipts, make sure you keep these in a safe location so that if you need to provide evidence, you have it available.
• Do not stay in a place where you may be harmed or injured. If it is unsafe to stay with your employer, remove yourself from the area and seek help immediately.
• Do not delay taking action. Usually there are strict time limits to making a case so it is important to take action immediately.