No employer may unilaterally act to reduce the pay of any employee. By doing so, he is violating the employee's contract of service. It does not matter if the employee comes under the scope of the Employment Act or not. If it happens to an employee who is under the protection of the Act, then the employee may seek remedy through any labour office. If it happens to an employee who is not, then the employee may take demand that his original salary to be restored, failing which he can claim constructive dismissal and seek reinstatement under the Industrial Relations Act, 1967.

If it is really necessarily to reduce the salaries of employees, then the employer should seek the consent of the employee. By sharing hard facts & information on the business, and showing employees the alternatives in a open and truthful manner, it is unlikely that any employee will want to see his employer go under, or to lose his job - it is more likely that the employee will give his consent and hope to see things through. 

And make sure that this consent is in written form.
 
 
 
 

The points made under our Q&A on Labour Laws apply only to West Malaysia.  Sabah and Sarawak employees come under their own respective Labour Ordinances, which appears to protect "labourers" and not any job other that labourers.
 
 
 

Obligation To Notify Labour Office Before Retrenching.... 

The HR Minister's orders remain effective.  An employer who have plans to retrench an employee must notify the nearest labour office of his intentions one month in advance.  Failure to do so is an offence