Employees with Pay Cuts Should Be Allowed to Work Less Hours

Businesses that perform austerity measures by cutting their staff's salaries should also consider lowering the working hours of their workers. Independent economist Prof Emeritus Datuk Dr Zakariah Abdul Rashid suggested that this can be done through reducing the hours of work each day, or by shortening the workweek.

Experts say the move will have an all-round positive effect on not only employers and workers but on the country as well. This is because it enables those affected to look for means of supplementing their income, which could stimulate the economy.

Zakariah said on the part of companies, they would be able to reduce operating costs and need not retrench workers, which could cost more if they choose to rehire and retrain new workers in future.

“As for employees, they will be able to do other jobs at the same time. This will give them more spending power, which will certainly help in bolstering the economy.

“Additionally, the move will also address the issue of people’s welfare. I know many companies will not care about implementing this, but for the economy, this will be a vital move,” he said.

The Malaysian Institute of Economic Research former executive director added that it was also permitted under the law to execute such a policy, although the Human Resources Ministry has to be informed of any salary cuts.

Lately, many companies had to retrench their workers as a result of the recent global pandemic.

Zakariah was asked what actions could be taken by businesses to ensure they are able to operate at a lower cost, without hugely affecting the livelihood of their workers.

This comes following moves by many companies nationwide to either lay off their staff or cut salaries as they try to survive amid the economic impact of the global pandemic.

According to the Department of Statistics, the unemployment rate in April had spiked to 5%, the highest in the country in 30 years, and it is expected to grow even further until the end of 2020.

Malaysian Employers Federation executive director Datuk Shamsuddin Bardan said those taking a pay cut should be allowed to work fewer hours, to allow them to do supplementary jobs.

He said such a practice was not unusual, as it has been performed by companies during challenging times in the past. “This is a move that benefits both parties. Employers get to reduce their costs and keep their staff in employment, and the worker has an option to earn extra income.

“There are a few ways of doing it. Bosses can reduce the hours of work daily, cut down the working days, or simply ask staff to work a full week straight and take the following week off,” he said.

To ensure a fair deal, Shamsuddin advised that employees should be given additional off days that are proportionate to their salary deduction. “So if you reduce their pay by 20%, then they should similarly work 20% fewer hours each month.”

Shamsuddin added that any agreement should be in writing, and employers should also pay full salaries once their business picks up to pre-pandemic levels.

“I must also remind employers who are considering cutting salaries or shortening work hours to notify the Labour Department, failing which they could face a fine of up to RM10,000 for each offence,” he said.

Source: The Sun Daily

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