If your boss refuses to pay you in Malaysia, what can you do?

Let’s begin by sitting back and imagining two scenarios:

Scenario 1: Taking the elevator up to the floor your office is on, lukewarm coffee in your hand, you smile a little as you’ll finally be paid for the last three months of work. You haven’t been paid for three months, and your boss promised you the money this month, all in one go. To you surprise, your boss is waiting for you at your cubible. “I’m sorry, Jimmy, your pay will have to wait a week,” said your boss.

Scenario 2: You hate your company you’re working for now, and you’ve been thinking of leaving for the past few weeks. Lo and behold, another company makes you a better offer; higher pay, better benefits, all the bells and whistles. You resign, and begin working at the new company. Wait a minute, your previous company still owes you half a month’s wages, and they refuse to pay you.

What in tarnation? In both cases, you’re broke, and this is also the proverbial straw that broke the camel’s back. Is there anything you can do?

Yes, turns out that there is

Before we get into the nitty gritty, there’s a catch. How we usually use the word “employees” is different from how it is used in the legal field. The Employment Act 1955 (Peninsula Malaysia only) applies to “employees” - defined as people who are earning less than RM2000 monthly. However, all is not lost. Section 69 of the Employment Act 1955 allows the Director General of Labour to settle disputes regarding wages for employees with monthly pay of up to RM5000. Also, if you’re a manual labourer, it doesn’t matter what your salary is. There’s a different Act governing people who earn above RM 5000 a month but that’ll be covered later in the article. 

So… when is your boss supposed to pay your wages?

Section 19(1) of the Employment Act 1955 says:

Subject to subsection (2), every employer shall pay to each of his employees not later than the seventh day after the last day of any wage period the wages, less lawful deductions earned by such employee during such wage period.

This means that you are to be paid within 7 days after the last day of any wage period (usually a month), meaning that your salary for October should be paid by the 7^th of November. The example in the introduction (3 months of nonpayment) is a very extreme violation of this section.

Section 20 gives us the law on payment of wages on normal temination 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.

This means that when your contract with your company is done, and you’re leaving, your wages must be paid on the day on the termination of the contract of service. 

Generally, when you, as a boss, terminates (fires) someone (HASTA LA VISTA BABY) or are terminated yourself, notice has to be given. Notice is when you let someone know that something is gonna happen within a reasonable time frame, although the parameters of a reasonable time frame differs according to situation.

If you DO terminate (or are terminated) without notice, you have to pay (or be paid) the sum that would have been accrued for the period of that notice under section 13(1). An example of this is if you were fired without notice, and the notice was supposed to be for 4 weeks, you would be paid including that period of 4 weeks.

Another situation is when there is a breach of the condition(s) in the contract of service under section 13(2). Misconduct by the employee [section 14(1)] and the employee being placed under risk that he didn’t sign up for [section 14(3)].

All of the information the above two paragraphs brings us to section 21.

1. When the employer terminates the contact of service of an employee without notice in accordance to sections 13(1), 13(2) and para 14(1)(a), the wages earned by the employee up until and including the day preceding the termination must be paid no later than on the day of the termination of the contract
2. When the employee terminates his contract of service without notice in accordance with sections 13(1), 13(2) and para 14(3), those same wages has to be paid no later than the third day after the day on which the contract was terminated.

TL;DR: When a contract of service is terminated, the employer has to pay their now ex-employee the wages they have earned in a set amount of time. Also note that the Employment Act only applies in Peninsular Malaysia and Labuan.

What if they don’t pay or refuse to pay the wages? 

What steps can you take to recover your wages?

There are a few options available. For the people whose monthly wages are RM 5000 and below, you can seek redress through filing a claim in the Labour Court. What is the Labour Court, you ask? It’s not a court, at least not in the traditional sense. Here it refers to Inquiries before the Director General of Labour as set out in section 69 of the Employment Act. 

Lets kick it up a notch. What if you earn MORE than RM 5000 a month as an employee? We look to the Industrial Relations Act 1967 for answers. Section 2 of the Act defines what a workman is:

...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.

So as long as you are an employee, you are considered a workman under the Act. You’re still covered! If you and your boss can’t settle things, the Industrial Relations Department will step in. 

1. If the matter still cannot be settled, the department will report to the Director General
2. The Director General will then try to help the parties reach a settlement (section 18). If that doesn’t work out, the Director will report to the Minister of Human Resources.
3. The Minister will then try to settle things (section 19A). If that falls through, then he may refer the matter to the Industrial Court for arbitration (a way to settle disputes).
4. After the case is heard in the Industrial Court, an order called “Award” will be given
5. Any party may then appeal to the High Court, up to the Federal Court

Most disputes involving wages involve (relatively) small amounts of money, so it’s not really worth hiring a lawyer to represent you. It’s totally fine to just represent yourself and don’t worry, because it’s not as formal as traditional court proceedings. The only time you’d need legal representation is when the case gets appealed to High Court or above.