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LETTER | Your options when facing a proposed pay cut

LETTER | Pay cuts are one of many cost-cutting measures adopted by employers as a means of reducing overheads. Others include freezing new hiring, introducing unpaid leave, removing certain allowances, requiring employees to use up their annual leave, and reducing the number of working hours per day.

In relation to pay cuts, the following are some preliminary points to take note of:

Generally speaking, your employer cannot cut your pay without your consent.

If your employer has applied for Socso’s Wage Subsidy Programme, with regard to you, the employer cannot ask you to take a pay cut.

So, what are your options when faced with a proposed pay cut?

Option 1: Agree to the pay cut

This is the simplest option. You get to keep your job and your employer gets to cut your pay thereby reducing business expenses for the month.

However, this is not really an option if you are in a difficult financial position.

Option 2: Disagree with the pay cut and continue working

If your employer does not unilaterally cut your pay, life goes on. However, in the long run, this may not be sustainable for your employer who may then resort to retrenching employees. 

If you are one of the more recent employees, you are at risk because the general retrenchment principle is last-in-first-out.

If your employer unilaterally cuts your pay, you have the option of quitting and reporting the matter to the Industrial Relations Department. The matter may then get referred to the Industrial Court.

Option 3: Disagree with the pay cut percentage/amount and counter propose a smaller pay cut

This is an option in theory but in reality, employers are generally not open to negotiation.

Option 4: Disagree with the pay cut and propose a mutual separation

This is where you and your employer agree to part ways and your employer pays you a certain amount as separation benefits. Usually, the amount is one month's salary for each year of employment. However, this is negotiable.  


The viability of each option depends on your particular circumstance. Know your rights and options then proceed to make an informed decision.

Disclaimer: The contents of this article are intended for general information only and should not be construed as legal advice on a specific set of circumstances. Professional legal advice should be sought separately on any specific set of facts. 

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.

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