Steven Sim warns against salary deductions as disciplinary measures

Steven Sim warns against salary deductions as disciplinary measures

A RESTAURANT chain has come under scrutiny for allegedly implementing salary deductions for various infractions potentially violating labor laws.

The issue surfaced after a purported list of “wrongdoings,” including taking medical leave or excessive toilet breaks, circulated online, along with penalties of up to RM500 for individual employees or entire staff, even those on holiday.

According to Human Resources Minister Steven Sim Chee Keong, such practices contravene Part IV of the Employment Act 1955, which prohibits employers from making deductions other than those permitted by law, such as for Employees Provident Fund, Social Security Organisation, or income tax.

“Employers cannot deduct salaries except for items allowed by law, such as Employees Provident Fund, Social Security Organisation and income tax.

“Salary deductions cannot be used for other purposes, including so-called disciplinary measures. Disciplinary measures must be addressed through a proper procedure of domestic inquiry,” the minister reportedly told English daily New Straits Times.

The minister urged affected individuals to report to the Labour Department for further action. The restaurant chain’s name was not disclosed in the report.

Aside from the cited examples, Part IV of the Employment Act allows deductions for specific circumstances like overpayment of salaries, trade union fees, or salary advances but not as disciplinary measures.

Section 24(1) explicitly states, “No deductions shall be made by an employer from the wages of an employee otherwise than in accordance with this Act,” with violations punishable by fines of up to RM50,000.

The circulated list outlined penalties including RM100 fines for medical leave, RM500 for failure to notify absence, and RM100 or RM500 for excessive toilet use during work hours. Smoking or vaping during work, negative reviews online, absenteeism, lateness, customer order errors, mobile phone use, uniform negligence, bullying and sexual harassment also incurred fines.

Moreover, the list’s preface emphasised shared responsibility among staff including those on holiday, with penalties uniformly applied if infractions went unreported, aiming to foster teamwork and accountability.

“All responsibility lies with everyone. It also applies to staff on holidays that day. If not reported, all these penalties will be evenly imposed on all staff. (The objective is) to improve teamwork and act responsibly.”

The list faced backlash on social media, prompting calls for authorities to intervene. While the restaurant claimed to have filed a police report, no further details were disclosed.