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Mastering the Legal Standing for Salary Increments and Deductions

Updated: Jan 25

Salary Increments

Salary increments and deductions are important aspects of employment that impact both employees and employers. While most employees want salary increments, often times salary deductions are an unfortunate reality for many employees. It is essential to understand the legal standing of these actions to ensure compliance with the relevant laws in Malaysia.


Statutory requirements for salary increments and deductions


In Malaysia, the Employment Act 1955 is the primary legislation governing employment matters, including salary increments and deductions. Section 25 of the Act requires that every employer shall pay wages to an employee not later than the 7th day after the last day of the wage period. Any deductions from the employee's salary must be authorized by the employee and be for a lawful purpose such as income tax and employee's contribution to the Employees' Provident Fund (EPF).


Legal obligations of employers and employees


Employers have a legal obligation to comply with the relevant laws and regulations related to salary increments and deductions. They must ensure that any deductions made from the employee's salary are lawful and authorized by the employee. Employees have the right to receive their salaries on time and in full, without any unauthorized deductions.


In addition, employers are required to provide employees with a written statement of their employment terms and conditions, including salary and benefits. This statement must include details of any deductions that will be made from the employee's salary and the purpose of those deductions.


Penalties for non-compliance with salary laws


Employers who fail to comply with the relevant laws and regulations related to salary increments and deductions may face penalties and legal action. The Ministry of Human Resources has the power to take action against employers who violate the provisions of the Employment Act 1955, including the failure to pay salaries on time and making unauthorized deductions from employees' salaries.


Employees who have suffered from illegal salary deductions may file a complaint with the relevant authorities and seek remedies, including the recovery of the unlawfully deducted salary and damages.


Best practices for handling salary increments and deductions


To ensure legal compliance and fair practices, employers and employees can adopt the following best practices:


  • Ensure that they have a clear and fair salary policy in place that is communicated to employees.

  • Obtain written authorization from employees before making any deductions from their salaries.

  • Maintain accurate records of employees' salaries, benefits, and deductions.

  • Ensure that they understand their employment terms and conditions, including salary and benefits.

  • Employees should keep a record of their salary and benefits, including any deductions made.

WorkSmartly HRMS and Salary Increments/Deductions


WorkSmartly HRMS offers a range of features that can help organizations manage their payroll and salary increments/deductions. Some of these features include:


  • Automated payroll processing: WorkSmartly HRMS can automate the process of calculating and processing salaries. The software can take into account various factors such as taxes, deductions, and benefits to ensure accurate and timely salary processing.

  • Employee self-service: WorkSmartly HRMS offers employee self-service features that allow employees to view and manage their own payroll and salary information. This can help improve transparency and reduce the administrative burden on HR staff.

  • Compliance management: WorkSmartly HRMS can help organizations monitor and ensure compliance with the relevant laws and regulations related to salary increments and deductions. The software can generate reports on employee salaries and deductions, making it easier for organizations to stay on top of legal requirements.

Overall, WorkSmartly HRMS can play a crucial role in helping organizations manage their payroll and salary increments/deductions in a legal and compliant manner. By using HR software such as WorkSmartly HRMS, organizations can streamline their payroll processes, reduce administrative burdens, and ensure compliance with legal requirements.


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