Disclaimer: This is a general explainer, not legal advice. The Employment Act 1955 mainly applies to Peninsular Malaysia and Labuan. Sabah and Sarawak have their own labour laws.
Just because HR says something is “company policy” does not automatically mean it overrides Malaysian employment law.
In many workplaces, employees treat anything said by HR as the final word.
Pay deducted for breaking a rule? “Company policy.”
Asked to leave immediately? “Management’s decision.”
Pressured to resign instead of being formally dismissed? “It will look better for everyone.”
However, HR does not operate above the law. While the department may manage workplace policies and disciplinary matters, employers must still comply with Malaysia’s employment laws.
Here are some things HR can and cannot actually do.
HR can enforce company policies
HR can remind employees about attendance, performance, workplace conduct, dress codes and other internal rules.
It can also issue warning letters, investigate complaints and begin disciplinary action when an employee is suspected of misconduct.
However, company rules should be communicated clearly, applied fairly and remain consistent with the employee’s contract and the law.
Writing something in an employee handbook does not automatically make it legally enforceable.
HR cannot deduct your salary simply as punishment
Under Section 24 of the Employment Act 1955, employers may only make deductions that are permitted by the Act or another written law.
This means HR generally cannot introduce a financial penalty simply because an employee broke a workplace rule.
For example, an employer should not arbitrarily deduct RM50 from someone’s salary for arriving late or using their phone during working hours.
That does not mean lateness or misconduct must be ignored. HR may still take appropriate disciplinary action under company policy, such as issuing a warning or beginning an inquiry.
The key difference is that disciplinary action and salary deductions are not the same thing.
HR can make certain lawful deductions
Some deductions are allowed, but they must follow the law.
These may include:
- Statutory deductions such as the employee’s EPF, SOCSO, EIS and income tax contributions
- Recovery of an accidental salary overpayment made within the previous three months
- Recovery of a wage advance that was provided without interest
- Payment in lieu of notice owed by an employee who leaves without serving the required notice
- Certain deductions requested by the employee in writing, such as payments to a registered trade union or cooperative
Other deductions may require both the employee’s written request and prior approval from the Director General of Labour.
The total deductions made in one month generally cannot exceed 50% of the employee’s wages, although the Act provides several exceptions, including certain deductions from an employee’s final salary.
HR cannot make you pay for damage without a proper legal basis
Some companies assume they can automatically deduct the cost of damaged or missing property from an employee’s salary.
However, Section 24 does not provide employers with a general right to make deductions for every loss or damaged item blamed on an employee.
The company should first establish what happened, allow the employee to explain and identify a lawful basis before making any deduction.
An internal policy saying “employees must pay” does not necessarily make an automatic salary deduction lawful.
HR can investigate misconduct
If an employee is accused of misconduct, HR can investigate the allegation, collect evidence and ask the employee for an explanation.
Depending on the situation, HR may issue a show-cause letter or conduct a domestic inquiry.
Under Section 14 of the Employment Act, an employer may dismiss, downgrade or impose a lesser punishment on an employee for misconduct after due inquiry.
The employee should be told what they are accused of and given a reasonable opportunity to respond.
HR cannot assume that an accusation proves misconduct
A complaint against an employee does not automatically mean the employee is guilty.
The company should assess the available evidence and listen to the employee’s explanation before deciding on disciplinary action.
The punishment should also be proportionate to the misconduct. Not every mistake justifies immediate dismissal.
If a dismissal is challenged, the employer may be required to show that it had just cause or excuse for terminating the employee.
HR can terminate an employee when there is a valid reason
Employees are not protected from every form of termination.
An employer may dismiss an employee for reasons such as proven misconduct, poor performance, redundancy or another valid operational reason.
However, the company must follow the relevant legal and contractual process. This may include giving notice, paying salary in lieu of notice, documenting performance concerns or conducting an inquiry.
The exact procedure depends on the reason for dismissal and the circumstances of the case.
HR cannot force you to “resign voluntarily”
A resignation should be made voluntarily.
If an employer threatens, pressures or deliberately makes an employee’s position unbearable to force them to resign, the situation may amount to constructive dismissal.
Possible examples include:
- A serious and unjustified pay cut
- An unreasonable demotion
- Major duties being removed or changed without proper justification
- Persistent harassment or victimisation after the employee raises a complaint
- Being told to resign or face an unjustified consequence
However, not every unpleasant workplace experience amounts to constructive dismissal. It normally involves a serious breach of the employment contract, and the facts of each case matter.
Employees facing this situation should obtain advice before resigning because their actions and timing could affect any future claim.
HR cannot withhold statutory contributions as punishment
Employers are legally required to make the relevant statutory contributions for eligible employees.
For example, employers must remit EPF contributions monthly by the required deadline.
These obligations do not disappear because an employee has resigned, been dismissed or is involved in a dispute with the company.
HR also cannot use contributions that are already due as leverage to force an employee to return company property, sign a document or accept the company’s version of events.
HR is not always a neutral party
HR may help employees understand workplace policies, raise complaints and resolve conflicts.
However, employees should remember that HR is part of the company. Its responsibility includes protecting the organisation and ensuring that it complies with employment laws.
This does not mean HR is automatically against employees. It simply means employees should keep their own records instead of relying entirely on verbal assurances.
Save copies of important documents such as:
- Employment contracts
- Payslips
- Warning or show-cause letters
- Emails and relevant messages
- Attendance records
- Performance reviews
- Resignation or termination letters
Where can employees seek help?
For disputes involving unpaid salary or unlawful wage deductions, employees can approach the Department of Labour of Peninsular Malaysia, better known as JTKSM.
Its Labour Court handles claims involving salary and other payments owed under an employment contract or legislation.
Employees who believe they were dismissed without just cause or excuse should file a representation with the Department of Industrial Relations Malaysia.
Under Section 20 of the Industrial Relations Act 1967, the representation must generally be filed within 60 days of the dismissal. It may also be submitted during the dismissal notice period.
Do not wait several months before seeking advice, especially when a dismissal or forced resignation is involved.
Kaya Bestie summary
HR can create and enforce reasonable workplace policies, investigate complaints and take disciplinary action.
However, it cannot treat company policy as being more powerful than the law.
Salary deductions must have a lawful basis, misconduct should be properly investigated and resignations should not be forced.
Employers must also continue fulfilling their statutory contribution obligations.
Most importantly, keep written records and act quickly if you believe your rights have been affected.
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