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Can a company enact a monetary penalty policy to its employees? What rights do they have? What law to refer to?

Mon, 11 Aug 2014 09:51:58 AM  (Last updated: Mon, 11 Aug 2014 12:19:18 PM)

I would like to know whether there is any Act, Enactment and/or regulations giving rights to employer to impose or create a policy imposing monetary penalty to its employee?

I'm unable to find any Act, Enactment and/or regulations providing such right or empower the employer to impose any monetary penalty against its employee.

I did some research and found out that;
1.       Only building owner ( or long lease holder ) can impose monetary policy against its employees and all tenants/residents of the said building. Reason being the building owner has control over the building, its management and they are subject to action taken against them by the local authorities/govt agencies for non compliance of any Act, rules and regulations eg non smoking area at common areas fall under the Govt policy for smoke free zone. Please take note the monetary penalty policy shd govern everyone in the building not a particular group of people.
2.       There was an IR court case, where the employer had a policy of penalizing RM100.00 against employees who failed to come to office on time. Action was taken against the employees and the employees referred the matter to IR Court. The matter went for full hearing and though it was settled prior to any decision but the chairman gave remarks that company/employer has no authority to impose monetary penalty against its employee. This however exclude the employer rights to take any disciplinary action against the employee for misconduct or to sue employee for breaching its contract of employment for instance failure to fulfill the required resignation notice.



KL Siew
Mon, 11 Aug 2014 12:19:18 PM

Of course there is no law to say employers cannot impose such a penalty, but there may be consequences if the penalty is carried out. Section 24 of the Employment Act is the law you should refer to for such a deduction of salary. But you must be aware that some employers do provide attendance allowance to encourage employees to be punctual  and the allowance would be reduced for coming late each time. In such a case, the deduction will be OK and it is not contravening Section 24.

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