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Deduction of Wages

Thu, 07 Oct 2010 12:19:23 PM  (Last updated: Thu, 07 Oct 2010 03:48:53 PM)

Hi C.K,

I just joined this transportation company about 2 months back. The HR dept consulted me regarding a problem yesterday:

One employee (bus driver) was asked to indemnify the company for the damage of a bus engine as a result of broken block (I have no idea what that is) amounting to RM25k! (evidence from mechanic). The company alleged that as a result of the driver's refusal to stop the bus immediately when the lights and alarm went off, his action caused irreparable damage to the bus engine and the mechanic had to install a brand new engine. 

They have been deducting the driver's salary from May 2010 for RM200 each month. The company and the driver had even signed a letter of confirmation on such arrangement, which means the driver agreed to the deduction suggested by the company. 

In September 2010, the driver lodged a complaint with the Labour Office and thereafter we received a defendant's summon. The driver wants to claim back the wages deducted (RM200 x 4 months). 

I was told by the HR, that the company has been doing this for quite some time now (other drivers as well). This particular driver is the first to lodge a complaint.    

The HR dept told me that the reason for the deduction arrangement with the drivers is not to get back the money from them (since it always involve huge amount- beyond their capability), the main reason is to serve as a deterrent and warning to all drivers so that they will pay more attention to the condition of the buses that they are in charged of. This is like the situation whereby it is unfair for the company to pay for all the speed tickets, etc. 

Can you provide me with some useful insights regarding the above? 

KL Siew
Thu, 07 Oct 2010 03:48:53 PM

You should read Section 24 of the Employment Act on lawful deduction. I don't think your company's deduction are lawful and the Labour Department may order the company to pay back the wages so deducted. The law says only deductions according to 24 are lawful. I think the company can instead take out insurance for such items if possible.

"24. Lawful deductions.

(1). No deductions shall be made by an employer from the wages of an employee otherwise than in accordance with this Act.,,,,,,,"

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