Question

Dear HR Professionals,

We have two employees (one from Production and the other from the Warehouse).

Both employees were found not following the Company's work processes and SOP thus resulting to wrong material used for manufacturing which means loss materials, time and OT payout due to no paperwork issued but just verbal communication.

Above mistakes happened before but were not brought up. Thus, to deter such practice happening, is it right for the Company to punish the employee to make them pay a token sum
of money as a lesson for them to learn.

If this is acceptable, how do we do it? Await your sharing.

Thank you.

Christina

Reply 1

My opinion is:

1. First need to understand the reason of why employees did not follow the SOP & work instruction, could it be the internal training or OJT is insufficient? have to evaluate.

2. The immediate superior/manager did not take the necessary action prior to the last mistake made as his/her role and responsibility, they should be also responsible for the outcome.

3. The proper disciplinary procedure should take place, HR has the responsibility to ensure the guideline been communicated to all employee too.

4. Either informal and formal written warning need to be executed

5. If the training is required to follow the SOP, it needs to officially record it down, if any repeat mistake, it can follow up with a PIP (Performance Improvement Plan)

6. It is unfair for the employee to have to pay for the damage as penalizing the lost, in short, the company has to ensure the proper communication to educate employee.

Above are my viewpoint and practice.

FH

Reply 2

Unless stated in the employment contract, you will not be able to make your employee liable for the payment for the loss suffered. Even if stated in the employment contract, the deduction can not be more than 20% of the employee's monthly salary. Beyond the monetary penalty, other areas should also be considered to ensure a holistic approach:

Operations Policy and Procedure

- Are the P&P clear and sufficient to mitigate and could have prevented the incident?

Monitoring

- Was there sufficient monitoring and communication made to the employees? If no, where is the gap?

Human Resources

- If unable to enforce the penalty, what is the impact on their performance appraisal/review?
- How will this impact their careers with the company?

The concern of dishing out a penalty is the impact or the message to your current employees. Will they (Other employees) be concern about making the same mistake and stop doing to prevent committing the mistake. How will the other employees view the company?

The above is for your consideration and to facilitate the decision making as they are too many at stakes for a simple answer as a bystander.

Elvin

Reply 3

It is not right to impose such a penalty on employees even if you have concrete proof. You can definitely terminate their employment due to such errors. But no penalty. However to "deter" is not a good solution. The overall production SOP should be reviewed and to why it is not followed is
also a cause for concern. Is there a problem with the management, supervisors and the ground people? Is there any risk management in place too? You may want to even want to include insurance cover for such manufacturing errors should it reach your customers.

KS

Reply 4

Getting cash from them or deduct salary is touchy because the Basic wage is highly regulated by MOM for workers’ livelihood. As this was related to poor work performance which caused company losses, cutting their performance bonus and announcing (reinforcing) the right work procedure would be a deterrent to others falling into the same negligent in future.

Dksw

Reply 5

We had the same problem where the SOP is not followed, this resulted wrong parts were sent and it cost us $$ and reputation to our customer. We issued a warning letter and it is effective. The department manager highlighted to all and emphasized that SOP must be followed. Also, the manager's KPI is also affected.

Dan

Reply 6

Excerpts from MOM’s website under Types of Deduction Allowed –

For damage or loss of goods or money. Your salary will be deducted if you damage or lose goods or money that you are responsible for. Before deducting your salary, your employer should:
Hold an inquiry to determine if you are directly at fault. Not make any deductions until you have had the opportunity to explain the cause of the damage or loss. Not deduct more than 25% of your one month's salary. The deduction must be made as a one-time lump sum payment.

Samuel