What To Do If Your Company Is Not Paying You On Time (Or Going Bankrupt) According To Malaysian Law!
In conjunction to one of the biggest Malay newspaper company shutting down and over 800 employees being laid off, what would you do if something similar happened to you? Not sure, well here are some steps you can take if the company you’re working for is going down under using the Malaysian Employment Law!
But before we dive deeper into this, here are some of the terminology that will be used in this article.
Labour Court: It deals mainly with the recovery of wages and other monies and employment benefits provided to employees under the Employment Act 1955 such as overtime pay, maternity allowance, salary in lieu of notice of termination and termination benefits.
Industrial Court: It’s a statutory tribunal established under the S.21 of the Industrial Relations Act 1967. It was set up to hear disputes between employees and their employers over rights and obligations that arise from the employment relationship and from the provisions of the Industrial Relations Act 1967. Most of the cases heard by the Industrial Court are claims by individual employees that the employee had been unjustly dismissed by his or her employer.
Manual Labour: A physical work that was done by people like a chef, radio operator, construction worker and etc.
Non-manual Labour: A person whose job involves the use of their mind like programmer, writer, senior technician and etc
My pay keeps getting delayed. What do I do?
Based on Section 19(1) of the Employment Act 1955, you’re to be paid within 7 days after the last day of any wage period (usually a month). For example, if you receive your salary on the last day of the month, then your next salary should be in before the 7th of next month.
So, if this has been going on for a while now, it means that your employer has extremely violated the said section. You can have a talk with your management to come to a mutual understanding, OR if that doesn’t work, it’s time to take legal action. How?
Here are the steps:
You can file a complaint by sending an official letter to the nearest Labour Department, email to [email protected], visit the nearest local Labour Department office or call 03-8000 8000. We would suggest you prepare the letter and visit the office because you know - the government office and efficiency doesn’t get along well.
Don’t forget to bring a copy of the supporting documents i.e. contract or appointment letter.
After that, you will be advised to wait for further notice from the Labour Department (while they do their own investigation).
The Labour Officer may contact the employer concerning your claim. If the employer accepts your claims and pays up, the matter is settled and you will withdraw the claim against him. If the employer disputes your claim, the Labour Officer will fix a date to hear your case in the Labour Court.
Both parties are required to attend the hearing. The complainant would be informed by letter (may be registered letter) and a summons would be issued to the defendant i.e. the employer.
You may choose to represent yourself, or by be represented by your trade union, by a lawyer or an official from the Malaysian Trades Union Congress (MTUC) - if you seek their help.
At the end of the hearing, the Presiding Officer makes an order either orally or in writing. Any party not satisfied with the decision of the Presiding Officer can appeal to the High Court within 14 days from the date of the decision.
If the defendant does not appeal to the High Court and does not want to obey the order of the Labour Court, the Labour Office will assist to enforce its Order in the Sessions Court in order to recover the money.
Yup, the process can be very long. Many of us get turned off by this, let it slip and move on with our lives but hey, if you think it’s worth the fight then go ahead.
I recently quit my job but my ex-employer owes me money. How long should I wait?
If you resign in good terms by following the company procedure i.e serving the notice period, then YES, they should pay you according to below act:
20. Payment on normal termination of contract
The wages, less lawful deductions, earned by but not yet paid to an employee whose contract of service terminates in accordance with section 11 (1) or of section 12 shall be paid to such employee not later than the day on which such contract of service so terminates.
Another way to put this into perspective is that when your contract with your company ended, and you’re leaving, your wages must be paid on the day you’re officially terminated. By rights, you shouldn’t be waiting for months for your salary to be paid.
To resolve this matter, you can go to the Labour Department Office and file your claim under Section 69 of the Employment Act 1955. Refer to Situation 1 to know what are the steps to take.
If I quit without notice, can I still get my salary?
If you quit without serving the notice for whatever reasons, you need to pay your employer, for example, 2 months salary as compensation to the company as indemnity in lieu of notice in case you’re unable to work out the 2 months notice period. This can be referred to below act:
21.Payment on termination of contract in special circumstances and on breach of contract
1. Where an employer terminates the contract of service of an employee without notice in accordance with subsection 13(1) or (2) and paragraph 14(1)(a)
a) the wages, less any deductions which the employer is entitled to make under section 24, earned by such employee up to and including the day immediately preceding the day on which the termination of the contract of service takes effect; and
b) in addition, where the employer terminates the contract of service under subsection 13(1), the indemnity payable to the employee under that subsection, shall be paid by the employer to the employee not later than the day on which such contract of service is so terminated.
2. Where an employee terminates his contract of service with an employer without notice in accordance with subsection 13(1) or (2) or subsection 14(3), the wages, less any deductions which the employer is entitled to make under section 24, earned by such employee up to and including the day immediately preceding the day on which the termination of the contract of service takes effect shall be paid by the employer to the employee not later than the third day after the day on which the contract of service is so terminated.
Similar to the previous situations, as an employee, you can file your claim under Section 69 of the Employment Act 1955 at the Department of Labour if you’re not getting your payment.
“What about the employers? What're our rights?” Yes, boss - you guys can do something about it too. You can make a claim for indemnity for Termination of Contract Without Notice to get back the amount in lieu of the notice from the absconded (fled) employee under Section 69C of the Employment Act at the Department of Labour office.
They will send the letter to the employee and your ex-employee. Both will be required to meet at the Labour Office to settle your claims. If you’re lucky, the ex-employee will turn up, but if they don't, you don't have much choice.
The company I work for went bankrupt. Do I still get paid? What are my rights?
Usually, when a company goes bankrupt or insolvent, it will result in business closure, which will then lead to the termination of the entire workforce. This is different from “retrenchment”, where only some of the employees are terminated.
Supposedly, the employers need to inform the Labour Department if they are going to close down their business or retrench their staffs. They need submit an employment notification retrenchment form (PK Form) to any Labour Office. Failing to do so will cost them a fine of RM10,000.00.
If you’re currently facing this issue, here’s what you should know: Employees who fall under the Act (mainly employees whose monthly wages do not exceed RM2,000 and/or are involved in manual labour) are covered under the Employment (Termination and Lay-Off Benefits) Regulations 1980 (Regulations).
Take note that these Regulations provide certain termination benefits (refer below table) are payable to employees who are terminated or laid off.
Length of Employment
Side note: To qualify, the employee must also have been under a continuous contract of service for a period of not less than 12 months.
The payment should be paid by the employer to the employee not later than 7 days after the relevant date. If your employer fails to comply with this Regulations shall be guilty of an offence and you should file a report at the Labour Department.
My salary is more than RM2,000. Can I still file a complaint for not getting my salary?
Good news is YOU’RE STILL COVERED! This is because you’re still an employee or a “workman” as defined under Section 2 of the Industrial Relations Act 1967.
“…any person, including an apprentice, employed by an employer under a contract of employment to work for hire or reward and for the purposes of any proceedings in relation to a trade dispute includes any such person who has been dismissed, discharged or retrenched in connection with or as a consequence of that dispute or whose dismissal, discharge or retrenchment has led to that dispute.”
What makes it different from the Employment Act is that it defines "employee" based on the amount of wages and on the type of occupation of the employee. Industrial Relations Act, on the other hand, used the word "workman", which simply means any person employed under a contract of employment without being restricted to the digits of your salary or the type of occupation.
The process is for you to make a claim is still the same until you and your employer can’t come into an agreement. This is when the Industrial Relations Department will get involved.
It’s Time to Learn To Detect Bullsh*t!
If you don’t feel good about something, don’t wait until the company closes down. Be proactive about it - lodge a complaint to the Labour Department if you have to. The problem can be as simple as not paying your medical claims. The more you wait, the difficult it is to find the solution.
Also, maybe it’s time for you to brush up your resume (we at Ricebowl provide a lot of help on that). Even if you decided to stay a bit longer because you have this hopes that things will get better - hedge your bets. You should behave like you’re about to be laid-off.
That aside, we hope you learn a thing or two about your rights as an employer in Malaysia and what can you do if the said situations happen to you (touch wood!). Don’t forget to share it with your family and friends too!