Can my employer deduct money from my wages?

Tuesday, June 15th, 2010

(UK relevant – Pre-tax deductions, statutory deductions, voluntary regular deductions, deduction in retail employment, one-off deductions, exempt deductions, how to make a complaint)

There is no easy answer to this question. You are advised to read this article in full before deciding whether you think a particular deduction from your wages is lawful or not.

The employment legislation (Employment Rights Act 1996, sections 13-16) sets out rules for the “protection of wages”. These statutory provisions apply to “workers”, defined as employees and anyone else who works under a contract, other than a person who is self-employed. The rules also, therefore, apply to agency staff, trainees, apprentices, fixed-term workers and contract workers. As a result, this article refers to “workers” rather than just “employees”.


The legislation prevents your employer from making deductions from your wages other than in certain defined circumstances. There are three specific situations where lawful deductions may be made. These are:

  1. where the law requires deductions to be made, e.g. income tax, National Insurance contributions, attachment of earnings orders, student loan deductions,
  2. where your employment contract makes specific provision for a deduction, and
  3. where you and your employer have agreed in writing to the deduction before the situation arises that would require the deduction to be made.

You will note that these situations all have two things in common:

  1. you know in advance that a deduction may be made in certain circumstances, and
  2. authority for the deduction and the circumstances under which it may be made are set out in writing.

Information about each of the different kinds of deductions is provided below. And, at the end, suggestions are made about what you can do if you think your employer has acted unlawfully or unreasonably.

Pre-tax deductions

The first deductions that your employer may make from your gross pay – assuming you have previously authorised the deductions in writing – are one or more of the following:

  • pension contributions, if you are a member of an occupational pension scheme
  • charity contributions, under an approved payroll giving scheme
  • purchases of partnership shares, under a Share Incentive Plan.

Statutory deductions

Then, your employer must calculate the income tax and National Insurance contributions (NICs) that are due on your earnings for the pay period. These deductions are permitted because they are required by law.

From what is left of your earnings after tax and NICs have been deducted, your employer must, if relevant to you, make the following deductions that are also required by law:

  • an amount that is due under an attachment of earnings order (court order), and an administrative charge for making the deduction
  • a student loan deduction.

Voluntary regular deductions

Any further voluntary deductions may be regular, i.e. deducted every time you are paid, or one-off. In either case, to be lawful, any such deductions must be authorised by a provision of your employment contract or by a document that you have signed in advance.

Common examples of regular deductions are:

  • trade union deductions
  • contributions to a personal pension scheme
  • social club membership fees
  • hospital fund contributions
  • loan repayments, including advances of wages
  • payments towards the purchase of clothing or equipment
  • stock or till shortages
  • payment for private use of a company car or van
  • contributions towards a benefit, e.g. private medical insurance, meals.

Under separate trade union legislation, it is unlawful for an employer to make a deduction of an amount that would be a contribution to a trade union’s political fund if the member has instructed the employer in writing not to make the deduction.

Deductions in retail employment

There are special rules that apply to deductions for stock deficiencies and till shortages in retail employment. The rules do not prohibit such deductions where there is provision in the employment contract for them to be made. Rather, the rules regulate the arrangement, requiring proper notice to be given of the amounts to be deducted and limiting the amount of the deductions.

One-off deductions

One-off deductions may be voluntary or compulsory and are often linked to termination of employment. Again, they are only lawful if they are defined in your employment contract or if you have given your signed agreement to them. Examples are:

  • a charge for damaging company property, e.g. damage to a company car that was caused by your neglect
  • a charge for non-return of company property, e.g. clothing or tools, on termination of employment
  • failure to work your contractual period of notice, e.g. a week’s pay deducted from your termination payments
  • recovery of an advance of expenses
  • recovery of holiday pay that has been paid in excess of your entitlement, e.g. you were entitled to two week’s paid holiday up to the date of leaving but you have actually taken three week’s paid holiday. See the FAQ – Can my employer deduct holiday pay from my final wages?

But note that deductions that are punitive in nature are only likely to be lawful if the amount of the penalty is a reasonable reflection of the actual loss to your employer. For example, if you should have given four week’s notice to leave your job and you only gave two week’s notice, and your employer deducted two weeks’ pay from your termination pay, that may not be lawful if the employer’s mmonetary loss caused by you leaving early was less than two week’s pay.

Your employer is also considered to have made a deduction from your wages if you are paid less than you are entitled to be paid under your contract. However, such a deduction would not be treated as unlawful if the underpayment was due only to an error made by the employer in calculating your gross pay.

Exempt deductions

The employment legislation also defines a number of kinds of deductions that fall outside of the statutory restrictions on deductions. In other words, your employer may make any of the following deductions without authorisation under your employment contract or without your written permission in advance:

  • your employer has made an overpayment of wages or business expenses to you, for any reason, and wishes to recover the overpayment
  • your employer is entitled to deduct a sum of money from your wages under the provision of disciplinary proceedings that operate under a statutory provision, e.g. in the fire service or police force
  • your employer is required under a statutory provision to deduct monies due to a public authority, e.g. a Council Tax Attachment of Earnings Order
  • you have authorised your employer in writing to deduct amounts from your wages to be paid to a third party, where the third party instructs the employer how much to deduct
  • you have been involved in a strike or other industrial action and your employer decides not to pay you because of your involvement
  • you have authorised your employer in writing to deduct money from your wages that is due to your employer under an order of a court or tribunal.

There are other issues involved if your employer wishes to recover an overpayment of wages or expenses. See the FAQ  – Can my employer recover an overpayment of wages from my next/future wages?

Making a complaint

Before making a complaint, check carefully whether or not your employer is entitled to make the deduction that you are concerned about. In particular, you should look to see if there is a provision in your terms and conditions of employment that allows your employer to make the deduction. Such a provision might appear in:

  • the “written statement of employment particulars” (commonly but inaccurately known as your “contract”) that you should have been given shortly after starting your job,
  • a staff handbook, or
  • a collective agreement made between your employer and a trade union.

If there is a specific written contractual provision that allows your employer to make the deduction, the deduction is lawful.

If you still believe that a deduction was unlawful, unless it is one of the exempt deductions listed above, you are entitled to make a complaint to an employment tribunal. Before making a complaint, you should endeavour to resolve the problem by following the stages of the your employer’s grievance procedure, including making an appeal if your employer does not accept your grievance. If you have not followed the relevant stages of the grievance procedure, the employment tribunal may take that into consideration when determining the amount of any award.

A complaint to an employment tribunal must be made within three months of the date that the deduction was made or within three months of the last of a series of deductions, unless it was not reasonably practicable for it to be made within that period of time. You do not have to have worked for the employer for a minimum period of time, and you do not have to be under a certain age. An employment tribunal may not award more than the amount of the deduction(s), although future changes in the legislation will allow tribunals to award compensation for any financial loss you may have incurred as a result of the unlawful deduction.

If you are aggrieved about a deduction that is one of the exempt deductions listed above, you cannot make a complaint to an employment tribunal. A tribunal will refuse to hear any case that is brought for one of the exempt deductions, even if your complaint is not against the fact of the deduction but, for example, against the manner in which the deduction was handled.

Your only recourse in the case of an exempt deduction is to sue your employer in the civil courts, e.g. the small claims court. You should take proper advice before taking such action, e.g. by visiting your local Citizen’s Advice Bureau (CAB). Information about the advice services offered by CAB are available at http://www.citizensadvice.org.uk.

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129 comments on “Can my employer deduct money from my wages?”


  1. Anthony Griffiths says:

    i work for Reliance security in Barrow in furness we where given a pay rise in april of this year back dated till the 1st January we recieved the rise and back dated wages in May
    Reliance Security never informed us how much the increase was but we where paid £7.56 an hour from £7.20 so all the Security Officers thought they had given us a 36 pence rise.
    We have know been informed that they have been over paying us by 20 pence an hour and they have decided that they are are going to take it back from us on a pro rater basis i always thought that if it was a payrise and that it had been paid for over 6 months which it has then it should stand and that they can not recoup there loss as they seem to be going take it back at about £100.00 a month with no conciltation with the staff at all can you advice where i legally stand
    regards
    anthony griffiths


  2. monica says:

    I have a friend who work’s for a privite school doing janitoral work and says that personal requires there employee;s to mantory make an contibution to a retirement fund even if they choose not to if they don’t they have to make a decision if they want to work for the company or not. Can they do this?


  3. Ian Congreave says:

    If the two questions on wage deductions have not yet been resolved, please post them on the Forum (see Link on this page) for answers.

  4. hi, my employer wants to recover overpaid wages 2 months of which was overpaid by no fault of my own in fact those 2 months I had no payslips. I am currently on the sick, I have offered to come to arrangement when back in work. Today they have rejected this and are threatening legal proceedings. This is great certainly not help me recover as on sick with stress

  5. sick pay scheme,
    My company has made a decision to not pay Sick pay to an employee this decision was made while the employee was still of sick covered with a doctors line and he was only off for three weeks ,he returned to work after the cut off date for that months wage and was told 5 days later!(he hadnt been warned previously this would happen to him if he was off again)
    his record shows the last time he was of for more than 1 day was 18 months ago ,the trend points to the fact he has been off 5 times in six years the longest absence being 5 weeks and total absence being 11 weeks,the company has said there is a trend in his absence.
    there is a set procedure agreed by union and company to follow but has this procedure has been over looked

  6. I have been working with a company for the last 19 months and last month company sent me on a day training. Last week I resigned from my position, giving four weeks notice as per my contract. I received an email from HR stating that there would be a deduction of £90.00 towards the cost of the training, as I resigned.I beleive that i am singled out for that deduction, as staff worked there for few month, sent out on a week training, didnt like their jobs and left but no there was no deduction from their final pay.


  7. Shannon Rule says:

    My company deducted $200.00 from my final check. It states on my check it is for cellular phone re-imbursement. I called my company because phone was returned. The HR states that I turned in a pulse ox that was lent to me by my boss, broken. It was old when she gave it to me, and used. The back which holds the battery did come off. Can this be done?


  8. Ian Congreave says:

    Syd, as you will have read in the article above, under the heading “one-off deductions”, your employer may only make a deduction of the kind you describe if it is defined in your employment contract, or you gave written authorisation before the situation arose. So, for example, if your employer asked you to sign an agreement before you attended the course, or there is a term in your contract, that, if you leave within a certain period, some or all of the training costs are repayable, the deduction will be lawful if the employer acts within the terms of that agreement.

    We recently had a very similar question on this subject raised on the PayPerShop Forum, at http://www.paypershop.com/phpBB2/viewtopic.php?f=39&t=1656, and you may also find the response there helpful.


  9. Nicholas says:

    I have had money deducted from my wages, I was given a written contract which i signed, but was not given my own copy and I have asked the owners of this Dominos Papakura to give me a copy of my contract and they said okay, 3 months later I am still waiting. Does this contract still count or is it non-in void? I am not the only person to have monies deducted and not the only person to not receive my own copy of my contract.

  10. My employer recently deducted $300.00 from my paycheck, and they are constantly taking money away without us being notified before they do it. The reason for the $300.00 was that a credit card transaction that I processed did not go through, so they took it out of my check. The transaction was made in July and they are charging me now in October. Is this legal?


  11. Ian Congreave says:

    Nicholas, you need to chase a copy of the contract again – your employer is required by law to give you “written particulars” of your employment with 8 weeks of starting the job. Without a copy, you can’t tell whether any deductions from wages are lawful or not. If you were asked to sign a contract, you should have been given a copy of your own to keep. If your employer still fails to give you a copy and you do not agree with the deductions, go and talk to an advisor at your local Citizens Advice Bureau.


  12. Ian Congreave says:

    Yadira, presumably you are in the US. The comments above and the forum question and answer apply to UK law. Other than laws relating to court order garnishments for child support, there are no specific federal laws governing wage deductions. However, many deductions that employers might make are unlawful if they reduce wages to below the level of the federal minimum wage. See http://www.dol.gov/whd/opinion/FLSA/2001/2001_02_16_7_FLSA.htm, although the guidance is a little complex.

    Otherwise, you may find that there are additional protections within your state labor laws and, for help, you need to explore the information provided on the website of your state’s Department of Labor. Many state DOLs have telephone helplines that you can call to ask about the types of penalty deductions that you describe.


  13. Steve Poulton says:

    I am a coach driver. My boss received a parking ticket for my coach being parked over 2hrs in a motorway service area. I told him I would sort out the ticket with the agency concerned – he said he would pay it and take the money out of my wages – I said I would give him a cheque to cover the fine and not take it from my wage – he has paid the fine and taken the money from my wages. I cannot argue the parking ticket because he has paid it (that constitutes acceptance of the fine) and I am out of pocket £60. What can I do as I would have won an appeal against the ticket because it was factually incorrect?

    PS: I have been employed by this company since March 2010 and I do not have my written employment contract yet.

  14. My company deducted my per diem for a room that I am in without my consent. There is no limit or set amount the room has to be in contract? This room is inexpensive and the company is paying nowhere near per diem state regulations. Is this legal?


  15. Ian Congreave says:

    Steve: Your employer is not permitted by employment law to deduct money from your wages unless there is written authority to do so – as explained in the article above. If, for example, your employment contract contains a clause that specifies what will happen in the event of you receiving a parking fine and that allows a deduction to be made in specified circumstances, the deduction is lawaful, but only if the specified circumstances exist. If there is no provision for making a deduction in this situation, the deduction is unlawful. If you are still dissatisfied with the situation, your first step, as always, is to use your internal grievance procedures. If that does not help, discuss the situation with an adviser at your local Citizens Advice Bureau.


  16. Ian Congreave says:

    James: You question suggests that you are located in the USA. Can you tell us in which state you live and we will try to help you further. However, we are not experts on US labor laws and you may be better reading up the guidance on your state Department of Labor site and, if available, using that department’s advice line services.

  17. hi there, can you please help me. i have been told today that the payrol department have made an error in calculating my holiday allowance. I work part time so holidays are pro-rated. My holidays run from jan to end of dec. I have been told that I now either have to work the hours back, or pay the value. This happened after a contract change. I questioned the change in allowance, and it was confirmed it was correct. I have now since used the holiday due to it being the end of the year. Can they ask for me to do this when it has been their fault and I had asked for this to be checked. I part time and therefore can not work extra hours, so I would have to pay this back, but i just doesnt seem fair that i have been allowed to use the holiday, to then have to pay it back. Your help and advise would be grately appreciated.

  18. Hi, I have gone on maternity leave and this morning checked my wages and my employer has deducted £300 for nursery fees (where I work btw) from my wages and said that as I am leaving she wanted to make sure costs were covered. I had no prior notice of this and now I cannot afford to pay all of my outgoings this month. My question is; is this lawful as 1 I am not leaving, I am on maternity leave and 2 I had no knowledge that this was going to happen. Many thanks

  19. Hi there, I have recently left a large energy company who have overpaid me by one and a half months (approx 2k). I now work for another company. Where do I stand with regard to paying this money back. Many thanks.


  20. Ian Congreave says:

    Amy J: First, you need to check whether your contract makes provision for repaying “overtaken” holiday pay and, if it does, check whether the circumstances in which it can be done match your current situation. Such a clause usually only applies when employees leave. If there is nothing in the contract, or the circumstances don’t apply, you have a good case to argue that it is unreasonable in the circumstances for your employer to require to to work extra or repay the holiday pay. Your first action should be to use your employer’s grievance procedure and argue that, as you were assured that you were entitled to the holiday, you should not have to pay it back and you cannot afford to do so. Make it clear that you understand that to take the money from your wages without any contractual basis or without your written authority would be an unlawful deduction from wages. You can show your employer the article above. If things get really difficult, you should seek advice from the Citizens Advice Bureau.


  21. Ian Congreave says:

    Lauren: As the article above makes clear, your employer can only deduct money from your wages if there has been an overpayment, or there is a written contractual provision for the deduction in the circumstances you describe. You need to contact your employer and make it clear that you believe that this is an unlawful deduction from wages and that you wish to raise a formal grievance under your employer’s grievance procedures to get the money repaid. You should make it clear that you are happy to come to some arrangement to cover any outstanding nursery fees. The last resort, if nothing works, is to discuss the situation with your local Citizens Advice Bureau.


  22. Ian Congreave says:

    Aran: If you accept that there really was an overpayment, your first decision is whether you have a moral obligation to repay it. If so, your former employer should be prepared to come to some arrangement, perhaps for the repayments to be made in instalments. On the other hand, if you feel it is unreasonable in all of the circumstances for the money to be repaid, you should first make use of your former employer’s grievance procedure and, if that does not work, seek guidance from your local Citizens Advice Bureau.

  23. My employer has reduced my hours, without any reason. This has caused a great drop in my wages. I was later inform that the hours were given to another worker. When I raised a grievance, it was ignore. Three months later, they have not responded to any of my grievances and my hours have not been replaced. However, I am now being bully and harassed by my managers for making a complaint. What is my next step? Can I take them to tribunal based on unlawful deduction?

  24. I had a boiler fitted by my previous empolyer with a gentlmans agreement to repay which I was doing. The company went bust owing me 4 weeks wages I was thefore made redundant,they started up again the same day as a new company. I left the new company very soon after when I received my wage slip they had deducted the cost of the boiler from my wages without consent. How do I stand with regards to getting my wages back?


  25. Ian Congreave says:

    Sheena, based on your comments you have the potential for taking a case to tribunal for an unlawful deduction from wages and, based on your employer’s conduct, for constructive dismissal. You should discuss this situation urgently with an adviser at your local Citizens Advice Bureau.


  26. Ian Congreave says:

    Jan, as there is nothing in writing regarding payment for the work, it is likely that the deduction from your pay is unlawful. However, as you do owe the money and the debt is now repaid, you may consider whether to just accept the situation and be rid of what appears to be a company with very questionable business practices. If you wish to explore recovering the deduction through the tribunal process, your local Citizens Advice Bureau will look at the situation with you in detail and guide you through the procedures to follow.

  27. Hi

    My employer has emailed me to say that I took 28 days holiday last year when my entitlement was 24 days. All holidays are formally approved by the manager through a computerised workflow.
    He asked me to confirm acceptance that my 2011 allowance be reduced by 4 days.

    I replied that I did a lot of unpaid overtime in 2010 amounting to much more than 4 days and also I had a lot of travel time for work (flying abroad on a weekly basis for 6 months) also amounting to much more than 4 days, so I felt it was unreasonable to ask me to reduce my holiday allowance.

    My employer then said that he had approved 4 days of personal time off in addition to the 28 days. 4 days were for when I was stranded abroad after a holiday due to volcanic ash and no flights to the UK were available. He said and in light of the over time I had done he could compromise with 2 days holiday reduction instead of 4.
    He goes on to say that I have two options, I either accept the holiday reduction or have my pay reduced.

    Please can you advise if I have to accept one of these options, or what I should do.
    Thank you.


  28. Ian Congreave says:

    Zak, You haven’t mentioned how many days you work each week, but it sounds as if you are full-time so I will assume you work 5 days each week. The statutory paid leave entitlement for all UK workers for holiday years starting in or after April 2009 is 5.6 weeks, which equates to 28 days for a five-day worker.

    So I am puzzled that your employer says that your entitlement was 24 days – or is it 24 days plus bank holidays? Whatever the situation, you are entitled to at least 28 days in a holiday year. For your next holiday year, you are therefore entitled to at least 28 days, so your employer could only reduce your entitlement if your contractual entitlement is more than 28 days.

    Neither can your employer deduct anything from your pay without your written consent, unless there is a specific provision to do so in this situation in your contract.

    So, it looks as if your employer could only legally reduce your holiday entitlement by two days in the coming holiday year if your contractual entitlement is 30 days. It cannot go lower than 28.

  29. my company deduct 5% of my wages every week for a “retention”scheme,which they say is to cover any damages i may cause while out on site,i have not signed anything to allow this and i am employed.Is this allowed?


  30. Ian Congreave says:

    Matty, for the deduction to be lawful there must be written authority for it. If you haven’t signed anything, it may be that it is already a clause in your terms and conditions of employment. If you have a copy of your contract, you can check. If not, ask your employer where the written authority is for the deduction. If it is a “retention” scheme, presumably the money is still yours and can be returned to you at some time.


  31. Kirstie H says:

    Hello, i was deducted ‘Advance Recovery’ from my wages when i first started a job.
    Money was deducted for the first 3 months of employment and i didnt get anything back? I wasnt given an advance and wasnt told that this would be deducted.
    I then got deducted tax for 2 months pay.
    At the time i queried this and was advised that it was tax being deducted as i was on an emergency tax code but I wasnt earning enough to be taxed at all. I then sent off to HMRC re this & didnt get anything back. I then gave up until recently receiving a letter from hmrc saying i have underpaid tax for another year, i looked into this again.
    I have found that ‘advance recovery’ means i was given money in advance, but i wasnt. They had no right to take this money from me!
    The only problem is this was 5 years ago, is it too late to get my money back? And what are my rights?
    Thank you


  32. Ian Congreave says:

    Kirstie, It’s not possible to tell the rights and wrongs of this from your enquiry. An “advance recovery” sounds as if you were paid a sum of money on joining your employer and before your payroll record was created, which was then recovered through the payroll. If you had an “emergency tax code” at the time, you would likely have paid more tax at the time, but that would normally have corrected itself when you were given a proper tax code. It may be very difficult to do anything about this after five years but, if you still have all your payslips from that time and any related documents, you could visit your local Citizens Advice Bureau and see if they think anything can now be done.

  33. Hi, My employer accidently paid my wages into my old bank account back in October 2009. In realising their error they made an instant chaps payment into my actual bank account as I explained to them that i no longer have access to my old bank account.
    The reason I left my old bank was because I belived they had addedd charges to my account that I didnt agree with so we were in the process of a dispute.
    Payroll attempted to retrieve this money from my old bank and the bank refused to give them the money back.
    Payroll have written to me last week saying they are now going to reclaim this money as it was an overpayment (which it wasnt)! I dont see why I should pay this back as I didnt get paid twice and it seems wrong that they can leave it this long before demanding repayment.
    Where do I stand?
    Thanks


  34. Ian Congreave says:

    Mel, interesting issues here! If, as you indicate, your employer was at fault in making the first payment to your old bank account, I think you have a good case for refusing to repay the money that was later paid into your correct bank account. However, if you put yourself into your employer’s shoes (so to speak), your employer has paid your salary twice and rightly wishes to get one of them back. You don’t say why your bank refused to return the first payment to the employer, but I would have thought that you could play a large part in making that happen. Is it possible for both you and your employer to approach the bank together and insist on the money being returned? Your bank has no legal right to the money. That right lies separately, or jointly, (I don’t know which) with you and your employer. If the bank refuses to cooperate, you have recourse to the Banking Ombudsman. Your cooperation with your employer in approaching the bank may deter your employer from going ahead with plans to take the money from you.

  35. What about vacation deduction? And how many % by 2 weeks?


  36. Ian Congreave says:

    Val, we don’t understand your question – can you be more specific please. If you are based in the US, please tell us what state you are employed in.

  37. Hi I work in a restaurant and The management wanted to charge us for breakage of property. is that legal? Eg plates, glasses etc etc. They want to charge us the cost of the damaged property. I hope to get some answers. thank you


  38. Ian Congreave says:

    Tina, Whether or not such a deduction is lawful depends, as explained in the article, on whether there is a specific provision in your contract allowing the employer to do it. If not, then it is not lawful and it would only become lawful in future if you were to agree to such a deduction in writing and it would only then apply to breakages after you make the agreement.

    Another point to make is that it is normal in the case of breakages and damage for the written terms to authorise the deduction if they are caused by deliberate action or neglect on the part of the employee. If that is the case, the employer cannot lawfully deduct money unless an investigation shows that there was deliberate action or neglect.

    And yet another point is that a deduction would only be lawful if the amount deducted does no more than cover the costs incurred by the employer in putting the damage right. A lawful deduction should not cost more so as to become a penalty.

  39. I have worked for a bar for just over a year and recently came to the mutual conclusion that I was to be let go. When I went to collect my final pay which was to be ready for me to pick up a week ago, I was told I owe my employer money for the months in which he did not give a pay stub and apparently had not been deducting taxes. Can my employer go back and ask me to pay him back for the taxes he didn’t deduct? There was no employment contract signed.

  40. Anne, your question suggests that both you and your employer have a problem. If you have been paid at times during your period of employment without paying any tax and National Insurance contributions (NICs), you ought to have realised and queried it at the time. You still owe the tax and NICs due on those payments. Equally, if your employer has paid you without deducting tax and NICs, he has broken the law. You haven’t indicated whether your employer has actually deducted and tax and NICs from your final payment, so much will depend on what your employer puts on your leaver P45. I would suggest two things, first, when you have your P45, phone HMRC on 0845 300 0627 and discuss the situation. They should be able to tell you whether you owe any tax. When you understand the tax situation more clearly, then contact your local Citizens Advice Bureau and discuss with them the issue of deductions from your pay.

  41. In 2008 my employer implemented a protected pay agreement which had been agreed nationally with my union and which some employers have not implemented, ringfencing their employees.
    The agreement entails withholding £350/yr for 3 years at which point £1050 is to be returned to the employee as their salary is reduced.
    In 2008 and 2010 my employer informed me that the agreement had not been implemented and that no money had been taken. I’ve since discovered that this is not the case, the money having been taken.
    In effect this has left me with 6months and not the 3 years that the agreement intended to give me to prepare for the change in my financial situation.
    Am i right in saying that although the pay protection agreement was a collective agreement that my employer should have written to me before deducting wages?
    In addition, does my employers assurance that implementation had not taken place have any bearing on the issue?

  42. Steve: I found it hard to understand your situation clearly, for example whether the full amount has been deducted from your salary for the three years. It is also difficult to determine what your employer’s responsibilities are under the national agreement. Whether any deductions made by your employer were lawful or not depends on the terms of the national agreement. If the agreement required each employer to write to its employees confirming whether it was going to implement to withholding arrangement and your employer did not do so, it could be that any deductions made were unlawful – but I am not in a position to determine that. My suggestion is that you will get the best help from your union. Your union representative should know the situation in detail and help you sort out the matter.

  43. Many thanks for that, although my union have so far been less than helpful, i shall try again

  44. I am a sales rep for a large service industry. I have been here for 3 years and have always found it odd how they treat our “A/R” account, as they call it. Basically a rolling account of money owed back to the company for purchases of equipment, true ups on sales not meeting goal, Install fees that we pay to have equipment set up, and the list goes on. I noticed that this deduction is ALWAYS taken off the Gross Earnings, instead of the take home pay.

    1st question……Can they legally do that? (It’s not a qualified plan, or POP-125, etc).

    2nd questions……Can I write these off as unreimburesed employee expenses as an employee of the comapny? (This is an expense to me, that I have to pay and it affects my take home pay/ income).

    Any input would be GREATLY appreciated.

    Thanks,

    Concerned.

  45. Chris: You have separately told me that your work base is in Pennsylvania. I’m sure you also appreciate that the information provided in the article above relates to payroll matters in the UK. Although I have a broad understanding of payroll matters in the US, I am not an expert and I have to research questions such as yours.

    The US makes special arrangements for the payment or reimbursement of business expenses, just as in the UK. If I understand your situation correctly, you have a rolling expense account, whereby you have a pot of money loaned to you by your employer which you use for business purposes and, I assume, account for them regularly by the presentation of receipts.

    Both federal and PA state revenue rules make provision for exempting such an arrangement from withholding tax.

    The federal rules are explained, for example, in section 5 of Publication 15. Payments by an employer of business expenses are not subject to withholding tax if they are made under an “accountable plan”. There are three conditions – employees must
    “1. have paid or incurred deductible expenses while performing services as employees. The reimbursement or advance must be paid for the expense and must not be an amount that would have otherwise been paid by the employee,
    2. must substantiate these expenses within a reasonable period of time, and
    3. must return any amounts in excess of substantiated expenses within a reasonable period of time.

    I presume you will be able to determine whether your employer’s reimbursement arrangement meets those conditions. If the conditions are not met, reimbursement is treated as being made under an “unaccountable plan”, and the payments are subject to withholding.

    Publication 15 is available at http://www.irs.gov/publications/p15/ar02.html

    PA Revenue rules make a similar provision, although not defined in the same terms. Payments that are “compensation” are subject to state withholding. Page 7 of the Employer Withholding Information Guide, available at http://www.portal.state.pa.us/portal/server.pt/community/employer_withholding/14495, excludes reimbursement and allowances from the definition of “compensation” if
    1. the expenses are allowable business expenses,
    2. employees are required to, and do, account for these expenses, and
    3. the amount reimbursed is the exact amount of the allowable business expenses.
    The document also defines “allowance business expenses”.

    So, it seems to me that, as long as the reimbursed expenses or allowances paid to you by your employer can be distinguished from your salary and commissions and you are required to account in full for your business expenditure regularly, they are not liable for either federal or state withholding.

    Somehow, I could not imagine that your employer, a major national provider of payroll services, would get this wrong!

  46. Hey, I have some court fines that have gone to collections, and I’m trying to get them dealt with. The tickets have gone to collections because I didn’t set up a payment plan in the 6 month grace period and I believe they have now gone to collections. Can collection agencies take money out of your paycheck when I become employed?

  47. Sean: You have separately told me that you work in Washington state. The 2006 Wage Payment Act allows various types of deductions from pay and these include court-ordered garnishments, even if they reduce pay to below the minimum wage.

    For further information, see http://www.lni.wa.gov/WorkplaceRights/Wages/PayReq/PayDeduct/default.asp and http://www.lni.wa.gov/WorkplaceRights/Rules/WAC296-126/296-126-028.asp.


  48. Andrew says:

    Hi Ian

    My partner works as a dispatcher for a taxi firm and has had a deduction taken from her net pay (they usually pay by cheque, but in this instance it was cash – I can only assume to ‘hide’ the deduction as it is not itemised on her payslip).

    The reason given was that a booking was taken for a ‘long’ job (rather than a 2 minute hop to the local train station) where usually deposits are taken at the time of booking, in this instance my partner forgot to take the deposit. However, there is also an onus on the dispatcher at the time to ensure that the deposit is registered against the booking before sending the taxi out to collect to client.

    What happened was, when the taxi arrived at the pick-up point, there was no client to be collected so effectively the taxi driver lost the income from the fare. This, apparently, is what the deduction is for.

    Also, my partner has been employed for over four months and has not yet received a contract or ‘letter of employment’ – nor has she had sight of a ‘Staff Handbook’ of any sort…. So, is this deduction legal? I don’t think so, but would like to make sure..

    Thank you for any advice you can offer.

  49. Andrew: As explained in the article, a deduction is not lawful if the contractual basis for it has not been been provided in writing in advance of the situation giving rise to the the deduction. So, if your partner has not received a document setting out her terms and conditions of employment (which by law should be issued within 2 months of starting a new job), this deduction must be unlawful. She should appeal to her employer against the deduction immediately in writing, on the basis that there is no written authorisation for the deduction and, if there is no satisfactory result, she needs to discuss the situation with your local Citizens Advice Bureau.


  50. karthi kumar.k says:

    My employer says that any amount paid, by the new employer to compensate the notice period amount recovered by the old employer, is fully taxable. Please comment on this. I lost almost £ 500.

  51. Hey i am working at my job for 5 years now. and my employeer gave me a cheque for 200 which she says is a advance.. however i did not ask for it. Does she have the right to take this money out of my cheque at the end of the month? Even if i did not ask for it in the first place? and i never signed anything.

  52. Karthi: You provided the following additional information:
    “I paid around £2000 to my previous employer towards Notice Period payout. (Paid 1 month salary for 1 month notice period). The new employer agreed to compensate and gave letter saying that I am elligible up to £3000. I claimed £2000 and they deducted tax on that. I lost around £500. The new employer says it is Taxable amount.”

    I’m afraid you are describing a process that I have never heard of before. Notice periods are not bought and sold, they are a statutory right – the employer must give notice of dismissal or redundancy – employees must give notice of resignation. If the employer does not give the correct period of notice, any shortfall must be paid as if the employee had been at work. You may be better discussing the situation with the Citizens Advice Bureau, which may be more familiar with the process you are describing. Or, does any other reader understand this situation?

  53. Jo E: Why would your employer suddenly give you £200 that you did not ask for? Very strange! An advance of wages is, in effect, a loan and an employer should ask you to sign for receipt of the money and for your agreement to repay it by deduction from your future pay. In the absence of such a written agreement, as explained in the article, an employer has no authority to deduct the money from your wages. I am not suggesting that you should not repay the £200 if it was a loan – I am sure you will do the right thing – but this is a common mistake made by employers. There is no automatic right to recover an advance of wages from future wages unless the agreement is put in writing at the time of advance is made.


  54. Dave Chappell says:

    I have been on a trip receiving perdium each month. My employer sends the perdium via fedex for the previous month. I get January perdium on Feb 28. Is there a required earlier time frame that they should send it?

  55. US federal laws only set the maximum per diem rate you can use without treating part of the per diem allowance as wages for tax purposes. See http://www.irs.gov/publications/p1542/index.html. As far as I know, there are no federal rules governing when per diem payments should be made. You may wish to check your state’s department of labor website to see if there are any state rules on the subject.


  56. Andrew says:

    Hi Ian

    Thank you for your time in answering my question (a few up the board from here). I thought that was the case but really appreciate you confirming it.

  57. Hi, I left my job after 4 weeks employment due to a death in my family requiring me to be at home full-time. I gave a weeks notice as required, and my boss told me not to work my notice, but is refusing to pay me my wage for the final week I did work.I emailed him to ask when I would recieve my wage and he responded by saying he wanted a call plan of all the clients I had visited durng my last week, which I sent through straight away, but he is now ignoring my attempts to get in touch with him, refusing to answer my calls, ignoring e-mails and letters, etc… Is he entitled to refuse to pay my last weeks wage, and am I entitled to recieve a wage for the weeks notice which he didn’t allow me to work?

  58. Nikki: As explained in the article, employment law treats failure to pay contractual wages as an unlawful deduction. Employment law also requires employers to pay “a week’s pay” during each week of notice. You need to discuss the situation urgently with an adviser at your local Citizens Advice Bureau, who will show you what to do to enforce your rights.

  59. I am a paid on call volunteer, meaning when I am called in I am paid. But I am on call many more hours than paid. Part of our handbook states you will be part of an association. As part of the association, there is $10 taken out of my paycheck for “membership activities”. It does not state anything other than this. Recently the membership decided to use the funds to pay for family members to go bowling. I objected stating it is for membership use only. Family members can come, but must pay. I was told it could be used for anything the members decide upon. I still objected stating we did not have enough money to pay for all of the family members. No response to that.
    Can this money be used for family members.
    PS. Until recently, I was under the impression, this fund was used to purchase cards, flowers, etc for members. I was told it is not. Nothing is spelled out as to what this money is used for.

  60. Janet: As I mentioned in my email to you, we specialise on UK payroll and some aspects of US payroll are something of a mystery. I presume that what you are describing is a “voluntary employee beneficiary assocation”, controlled by its members (or trustees representing its members) and with no direct links with the employer (other than some financial support).
    The trustees or committee should be able to provide you with written rules for the the association, defining how the funds may be used. I can only suggest that you speak with a trustee first of all and, if nothing in writing can be provided, that you obtain some local employment law guidance.
    If the association is the Wisconsin EMA Association, you will find a lot of information at http://www.wisconsinems.com/

  61. i work for the NHS and have been over paid. I made them aware of this in November 2010 and i am still being overpaid. This all stems from a change of hours contract which i signed however i was not given a copy of this niether was it explained to me, they are trying to say to me to take extra hours to pay the money back, but i am unwilling to do so as i feel their lack of duty of care and lack of addmission from them seleves in this mistake. They also made errors in my payment.

  62. Jane: You appear to have a personal dilemma here. You recognise that you are being overpaid, and continuing to be overpaid, but you are not willing to repay the money because your employer is not putting the situation right. I think you must first decide whether or not you are entitled to the extra money and, if not, should you not be putting it to one side so that you can repay it in due course? Your next step is perhaps to use your employer’s grievance procedure and raise a formal written complaint about these issues.


  63. Richard says:

    I work for a small IT company. In November 2010 I agreed a specification & Price with my client and a large PC manufacturing company.

    I request regular requotes from the supplier to maintain consistant profit in the build. Early March my client recieved a number of units and detailed a missing componenet.

    I checked the quotation from the supplier and the component was indeed missing. My supplier did not quote correctly, I missed the component as did my admin team. The client is a major client and my MD agrees we need to take swift action to resolve the missing component.

    The only problem is that the exposure could be £100 or potentially in excess of £1000 and my employer has sighted that I must prepare myself…quoting Whatever the costs maybe you will be responsible for them and that I must understand this…..I have not accepted this yet and am in the process of getting advice. I assume my employer is intending to deduct my wages.

    After 6 months working with this company I love my job and the company I work for but I fear that if I dispute this I risk my job. I have recently undertaken a review of my performance with managagment where I was expecting to receive a significant payrise and despite a number of solid acheivements various e-mails congratulating me on my solid work ethic and performance I was given the choice of leaving the company based on not acheiving contractual targets or taking a reduction in my annual salary……I took the reduction!!!

    I spent a year away from the industry and am now just rebuilding old relationships and building up solid opportunities although I could look for alternative employment I would be in a position where I would have to start all over again and I do not want to do that. Plus having to explain 6 months employment only will make it difficult to get another job as any potential employers may question my ability to perform.

    It just appears that the deck is stacked in my employers favour. Please advise.

    Many Thanks

  64. My company announced restructuring after being bought out a year ago. They identified 13 key rolls that are no longer required and asked us to put down our preferences to new rolls being created.
    On posting my preferences I was told that the roles available are £6000 a year less than I am currently on and that redundancy wouldn’t be offered.
    I have a current contract with the company and am not prepared to sign a new contract for the reduced salary. Is there any way the company can avoid paying my redundancy and notice period ?

  65. Richard: I’m not in a position to advise you on the decision you are considering on the job situation, but I can confirm, as indicated in the article, that a deduction from wages must have advance written authority for it to be lawful. If your contract does not already contain a provision allowing your employer to recover costs from your wages, then such a deduction would be unlawful.


  66. Bob Patchett says:

    Richard
    Your problem seems to be lack of clarity in the contract you have with your employer. As Ian says, your employer may not deduct anything from your wages unless this has been made clear to you in advance and in writing. Certainly your contract should make clear what increase in salary is due for what performance.
    I can understand your concern if you are picking up old relationships, but from what you say you seem to be on a loser with this company. Are they likely to treat you any better in future, do you think?
    If you choose to stay, I suggest that you renegotiate your contract of employment with them, making clear your responsibilities and the salary v performance formula.
    However, if you leave, it is better to do so after short rather than long service. You can tell any interviewer that the job and you were not suited to each other so you got out while you could. If your employer does make an unauthorised deduction from your salary, do not hesitate from taking action in the Employment Tribunal. If you win your case, then you have a sound rationale for leaving that you can demonstrate to potential employers. However, I suggest that you put the matter in the hands of a sound employment law solicitor.
    Good luck!
    Bob Patchett


  67. Bob Patchett says:

    Chris
    Although the transfer of your company’s ownership probably is covered by TUPE, nevertheless your employer is entitled to make changes for good business reasons.
    Your contract of employment cannot be changed without your agreement. If, however, there is a really good business reason, the employer consults over a reasonable period with the people affected, considers and responds to their comments, and then gives full notice, it can terminate your contract of employment and offer you a new contract embodying the terms it originally sought. This is a way that your employer may change your terms of employment by, say, reducing your salary. If your employer has done all this, then you really are in a “take it or leave it” situation. If it has not done this, then you can take it to court and demand that your original terms and conditions are upheld or, if you have chosen to leave, claim constructive dismissal. Very tricky, and you would be wise to engage a solicitor.
    Redundancy is not for the employer to offer. Either it exists or it does not.If your employer needs fewer people because there is less work, then a situation of redundancy exists and the employeer needs to follow an appropriate procedure which means extensive consultation with the people concerned or their representatives. And the choice of people to be dismissed needs to be done fairly.
    It sounds to me as though redundancy does exist, therefore I suggest that you get a copy of a Guide to Redundancy that you should be able to pick up from any JobCentre, ACAS or CAB office. Get one for your employer while you are there.
    I hope you get this sorted.
    Bob Patchett

  68. I left my employment on 28th February 2011. I was deducted £230 for sickness that I did not realise was happening. I have found out why and have been deducted 3days not 2.5. so Am chasing for that half day back. But I am also not sure if the lawfully deducted this money. It does state in my contract as per here.
    1.1. If you are absent from work due to sickness, injury or other incapacity, and provided you fully comply with the provisions of this clause, the Employers will pay you Statutory Sick Pay (SSP); additionally after you have completed your probationary period of employment and subject to sub-clause 19.3 you will also be paid your normal basic salary (less the amount of any SSP to which you may be entitled) for five working days in any 12 month rolling period starting with the first day of your sickness absence. Any further payment by the Employers is entirely at the absolute discretion of the Employers. Any discretionary payment that is made will include any SSP to which you may be entitled and will take account of any social security benefit for which you may be eligible (whether or not you are claiming it).

    But I was never told I had gone over my limit etc?. This has left me short as had to pay my study back which I got a letter about so I knew this was to be deducted.

    Any help will be brilliant.

  69. I am a mechanic for a dealership in Georgia, USA. I was driving a vehicle into my bay when the sensor didn’t work on the bay door. The door came down on the hood causing minor damage. A few weeks later I noticed my paycheck was lower than it should be just to find out that they are deducting repair cost from my check. This is being done without notification or authorization. Is this unlawful?

  70. Thanks Bob

    The situation did continue, with my refusal to not change my terms and conditions. I now have a notice of redundancy during which a consultative period will be in process. What dissapoints me is the only time salary was discussed was after we applied for the roles. In truth it wouldn’t of mattered how much research I did for the interview, I wouldn’t of taken the job. I could of been looking for work 4 weeks ago. I am the only person in the company who will go through redundancy and there are others on similar pay schemes who found roles which fitted there salaries. I hope my letter saying I wouldn’t expect to change my terms and conditions doesn’t stop me recieving my redundancy for my years spent there.

  71. Leroy: I have not been able to find any specific labor laws in Georgia governing deductions from wages, other than legal garnishments. My suggestion is that you contact a local employment advice center or DOL One Stop Center.


  72. cheryl says:

    can you help i was overpaid by about £30.00 thought it was a tax rebate then 2 weeks later heard a wisper wages department had made a mistake and were taking the money back, ive had no letter, email commuinacation from them regarding this yet they took it from my wages but this did not show up on my wageslip

    so im thinking the tax man will surely think ive underpaid my tax
    its not a huge amount but the principle not being told and no apology and what will i come across down the line with the tax man
    ive sent them a emial explaining this but they dont think they have done wrong

    can you advise

  73. Becky: The sick pay rules as defined in your contract are very clear, so the important question is whether you have ‘fully complied with the provisions of this clause’ and whether your employer has done the same. Payment for sickness over and above your entitlement is discretionary, so it would be reasonable to expect your employer to tell you whether they had used their discretion, i.e. they had actually sat down and considered your particular case, and what the decision was in your case. I suggest that you write to your employer, referring to this clause, and ask them to explain why the deduction was made and what they had decided when they exercised their discretion. Depending on their response, you then have the option of taking all of the details to discuss with an adviser at your local Citizens Advice Bureau.

  74. Cheryl: I suspect that there is little you can do about this, other than complain about the lack of communication. As explained in the article, deductions that are made to recover a payroll overpayment are not unlawful and you are not protected in law against such deductions. However, it is reasonable to expect a good payroll department to apologise for the error and explain what has happened and the action that will be taken to recover the overpayment – even spreading out the recovery if appropriate. If you feel aggrieved at the situation, you have the option of using your employer’s grievance procedure.
    It is difficult to tell from your question what actually appeared on the payslip. If you are concerned that the deduction has not been made correctly and that your tax is incorrect, you will need to ask your payroll department for an explanation.


  75. cheryl says:

    Thanks for message back.i have np grievence about giving the money back its just the way they went about it and the week they took it back was not shown on my wage slip the just did not place the said amount showing into my bank , hence im assuming the tax man will now think ive paid my tax short

    ive complained several times and so far as yet no apology

  76. I do hope you can advise i was given a pay rise in January 2011,i have since been told that the pay rise should not have happened in January and should have started in March 2011 and i am to pay back the extra i was paid in Jan and Feb. Where do i stand with this, is this legal?

    Many thanks

  77. Jon: It depends on whether the pay rise in January was contractual. Did you receive a letter or other document specifically stating that the pay rise was effective from January? If so, the pay rise was contractual and you were lawfully entitled to it. If your employer deducts it from your pay, the deduction would be unlawful. However, if you were given the increase in error, without any contractual basis for it, then it is an overpayment which, as explained in the article, your employer can recover without it being unlawful.

  78. Hi Ian, It was a verbal agreement and the rise was actioned from the 1st of January, i have my Pay slips as proof, however i do not have the pay increase start from date in writing, i do have a witness to the verbal contract. It was not paid in error. I am not sure what i should do.


  79. Ian Congreave says:

    Jon, in that case you need to raise a formal grievance over the issue, using your employer’s grievance procedure. The procedure should also include an appeal process if the first response in negative. Beyond that, if you want to take it further, we usually suggest a visit to your local Citizens Advice Bureau.

  80. i am on maternity leave at the moment & my work accidentally paid me someone elses monthly wage. They noticed the mistake a few days later but did not tell me until 2 weeks later & to be honest i did not notice as i have not been exactly splashing the cash on maternity pay. The amount they paid me went straight to my overdraft. I told my manager not to pay me my maternity money until the overpaid amount was paid back. That was about 5 weeks ago & now i have no money left & wont be getting any for about another 5 weeks. I have asked them if i can pay some back weekly so ni still get some money per week to live on & they have said no. Can they do this?


  81. eimear says:

    a friend was paid both his and someone elses wage in one week and his employer never contacted him about the mistake therefore he never noticed, for the following number of weeks he recieved his pay as normal. then about 3/4 weeks later he did not recieve any pay and was not notified in advance this was going to happen, when he contacted his employer they said they were not paying him for that week as he had previously been over paid. can they do this?


  82. Darren says:

    My partner has handed in her notice at work. She was threatened that it requires 4 weeks notice as per her contract, but mostly from courtesy (other employees having had no problem with 1 weeks notice, and also they are paid weekly). She is in her penultimate shift, and they have deducted money for training from her wages now that she is leaving. She is in the middle of a greivance procedure with the manager, which is why she has decided to leave (I won’t go in to all that).

    Also, whilst she was off sick last year for 6 months, undergoing several treatments and tests for a suspected brain tumour, she did not receive any holiday pay for the 3 weeks she had already booked. We have seeked some advice from my employer, and they state she is entitled to that holiday pay from last year, any holiday pay accrued this year, that they can’t deduct money for training as it’s a necessity for her job (mentally ill patient care), and also she is not duty bound to give 4 weeks notice as she is paid weekly.

    Is this advice correct? Any help would be greatly appreciated.

  83. Stephanie: Your employer should be more reasonably in the circumstances and come to a mutual arrangement to spread out the repayment. I suggest that you your employer’s grievance procedure to raise the issue formally so that your employer has to take the issue seriously. Also, in principle, your employer should be paying your SMP in full and not deducting anything from it to recover the overpayment. If you do not get a satisfactory response, visit your local Citizens Advice Bureau for more specific guidance.

  84. Eimear: In principle they can – you will see in the article above that there is no employment protection where an employer makes an overpayment of wages and recovers it from future wages. However, a good employer will always discuss the situation and agree a repayment plan, over a number of weeks if the employee would otherwise be financially embarrassed. If your friend cannot afford to have the money recovered in one go, he should make the situation clear to the employer and, as the error was partly the employer’s (your friend should also have noticed), suggest a short-term loan with repayments over a few weeks.

  85. Darren: The starting point for these issues is what is specified in the employment contract. Does it require your partner to give four week’s notice? If so, she should expect to do so, but the employer has the option of accepting a lesser period. The employer can only enforce the full notice by deducting money from the final pay if the contract allows that, and then only as much as reasonably represents the financial loss to the business of her leaving early.
    Similarly with the costs of training – what does the contract say? If the nature of the job is that the employee must attend the training and cannot legally do the job without the training, it could be argued that the employee should not have to repay the costs. However, if the contract clearly states that a proportion of the training costs will be recovered from final pay if the employee leaves within a certain period and your partner agreed to attend the training on those terms, it would be difficult to argue at a tribunal hearing that there was an unlawful deduction from pay.
    If you partner booked holiday but fell sick, the employer should treat that as sickness absence (and pay accordingly) and reschedule the holiday. Your partner may therefore be entitled to payment at termination for the undertaken holidays.
    What is spelled out in writing in the contract is very important. If your partner is aggrieved in any respect, she should first of all use the employer’s grievance procedure to highlight the issues, and if there is no resolution at the end of the procedure, your local Citizens Advice Bureau will look at the whole situation with you and advise what should be done in terms of making a tribunal claim.


  86. Hannah says:

    I have just been told that my allowance for doing an on-call rota has been overpaid for the last 18 months. They have spelt it out very clearly how I can pay it back but I feel very frustrated that this is not my mistake and nor was it clear on my payslip (ie it just stated on call allowance). Are they able to go back to previous financial years? It is not a large amount of money – but it is a principle.

  87. Hannah: The trouble is, there is more than one principle. As the article above mentions, the protection of wages legislation does not provide protection in the case of an overpayment of wages. It does not specify a time period over which the overpayment may have occurred. If your employer does recover the money and you decide to sue your employer in the small claims court, two of the principles that the court will consider are: (1) has there been unjust enrichment? i.e. have you unreasonably benefitted financially by your employer’s error, and (2) has there been a such a change in your situation that it would be unreasonable for you to repay the money, e.g. because you have spent it in good faith? If you feel that, in all the circumstances, looking at the matter from both sides, recovery would be unreasonable, then you should get legal advice, perhaps from the Citizens Advice Bureau.

  88. My collegues and I were paid a standby allowance for the period 2007 – 2009. Now our employers have decided that this was an incorrect payment and want to reclaim the money. The allowance claims were authorised and signed off by our line managers at the time and those of us who were claiming the allowance were assured by the line managers that this was correct procedure. The emplyoyers have calculated that had we claimed overtime for this period (based on an average of overtime claimed from 2009) we would have been paid much less. Since we claimed the allowance in good faith can our employers take back this “overpayment”?

  89. Tim: From your description of the situation, I doubt that your employer is entitled to recover the money. If you think it appropriate, you should use your employer’s formal grievance procedure to object to the recovery, stating that the payments were contractual because your managers confirmed that you were entitled to them, and because the period of time for which they were paid shows that the employer was happy with the contractual nature of the payments. If you employer is adamant that you must repay the money, you need to get legal advice, perhaps from your local Citizens Advice Bureau


  90. Ariadna says:

    Need some advice with a particular situation in the UK. I’ve been offered a job via email and accepted it. Have asked my boss three times in nearly three weeks to provide me with a contract (written agreement) and he kept getting aggressive (bullying really) by saying “who told you to ask for his” (!!!???) and “ya ya…..I’ll get you a contract”. After nearly three weeks, we started having disagreements, because we hadn’t have an established written set of rules from the very beginning (re: working hours, expenses, etc). I said to him that we couldn’t keep going like this unless he told me in writing exactly what he wanted (basically a contract). Next day he called me to the offices and tried to make it look like it was my fault for our disagreements (with no contract at all), started making an assessment (on which basis?) and said that he was concerned because of the hours I worked (mostly at night), etc. I said to him we couldn’t go on like this and he agreed and returned the equipment (laptop and mobile phone). I was wondering if I would still get paid for the period that I worked for him (although I didnt’t have a contract) and how would I get back my P 45. Thanks for the help.

  91. Ariadna, You shouldn’t expect to get the P45 back – you properly presented it to your new employer and, if you do eventually get any money out of him, it will have to be taxed by him using the tax code on the P45. By law he should give you a P45 for your employment with him, but it doesn’t sound as if you are likely to. I see no reason why you should not try to get your wages out of him. An employment contract exists even if it is not in writing and his failure to pay is an unlawful deduction from wages. You need to visit your local Citizens Advice Bureau as soon as possible, taking with you any and all evidence you have that the employment existed, presumably the exchange of emails between you, and obtain advice on the best way of getting your wages, either through an employment tribunal or small claims court.

  92. My daughter quit her part time job as they wanted her to work more hours and times that conflicted with her college committments. Her last day of work was Saturday 4/2/11 and she was told she could pick up her check on Monday 4/4/11 which would have $40 deducted because she left the Air Conditioning on after closing the store one night.

    This appears to be completely illegal as my daughter had no clue about this “policy” the owner says she has. Are we correct in our assumption?

  93. hi, i work nights for a hotel where i am alone on my shift in charge of a 107 room hotel. For years we were exempt from breaks because of working alone, which i was fine with. Now they are dedeucting 30 min breaks every night even though i work alone. They said that i could sit in the back office for the break, but if the phone went or a guest came to the desk surely i would have to deal with it and therefore could never actually take the break. Can they do this? Im losing £15 a week because of this.

    Thanks for your help

  94. Hi Ian,

    I am hoping that you can provide me with some advice. I work in the public sector in a role which requires me to work weekends and shifts. On joining the role nearly 8 years ago I was told that my shift allowance was 14% and that I also was entitled to claim weekend working enhancements. For as long as our department has been around (30years) we have recieved weekend working enhancements. This has therefore formed part of our wages.
    Recently, people who have recieved promotion have been asked to change onto an unsocial hours allowance to replace the 14% shift allowance -which we all agreed to. We didn’t sign anything and just received a letter stating that the 14% was to be changed and the other terms of our contract would remain unchanged.
    Our employee if now stating (4 years later) that this allowance should include the weekends and that we shouldn’t have been claiming for them anyway as it is not in our contracts that we are entitled to them. They are therefore stopping the whole department from claiming weekend working allowance.
    Surely if they’ve been paying it for so long we become contractually entitled to it or it forms part of our wages? Can they just stop us from claiming this? It is a chunk of our wages that we can’t afford to do without as we are on low paid wage anyway.

    Thank you in anticipation,

    Gemma


  95. Roy Boyd says:

    In January 2010 I recieved a PAYE code from HMRC for the year 2011/2012. I recieved my pay at the end of April and noticed that my employer was using a different code. I was told that they had checked there system and theirs was correct. I was asked to produce my copy of the code which I did the following day. The company then ammended their system and told me that they would collect the underpaid tax from my pay at the end of June which they did. In October 2010 I recieved a P800 caculation from HMRC stating that there had been an underpayment of Income tax on my behalf. I wrote to HMRC suggesting that there may have been an error of behalf of the employer. HMRC informed me that my employer had infect made an error and they were persueing him for the underpaid tax. My employer has informed me that as he made the error he is leagally liable and has agreed to pay. However he has demanded that I should pay the company back the tax as they made a mistake in operateing my pay suggesting that I have recieved an overpayment. P.S HMRC informed my that they have not told my employer to collect the tax from me. Can he do?.

  96. John: You have told me separately that your daughter works in California. The deduction is more than likely unlawful. You will find detailed coverage of the deduction rules in California on the Department of Industrial Relations website, at http://www.dir.ca.gov/dlse/FAQ_Deductions.htm.

  97. Shaun, The Working Time Regulations entitle you to a 20-minute unpaid break if you are required to work more than six hours – off-site if you wish – and, if that is not possible, you must be provided with compensatory rest at another time. See http://www.direct.gov.uk/en/Employment/Employees/WorkingHoursAndTimeOff/DG_10029451. You may, therefore, wish to indicate to your employer that you will be taking your half-hour break off-site, and see what happens. If you are not allowed to do so and you have to be on-site and on-call, that indicates that you are entitled to be paid under your contract. Depending on the result, you could use your employer’s grievance procedure and, if that does not help, you may wish to consult an adviser at your local Citizens Advice Bureau.

  98. Gemma,I got a little confused trying to work out what is happening. An employee’s terms and conditions of employment may be defined in writing or can become established over a period of time although unwritten. As it is not possible for me to consider the full situation, I would suggest that you consult your union representative on the issue and/or appeal against your employer’s action using your internal grievance procedure. Otherwise you can consider discussing the situation in detail with an adviser at your local Citizens Advice Bureau.

  99. Roy, In the situation your describe, the tax legislation allows HMRC to move the liability for unpaid tax from the employee to the employer. If HMRC has, in fact, done this, then your employer is liable in law to pay the tax, not you. That is why you appealed against having to pay the tax in the first place! You should make it clear to your employer that he has no lawful authority to recover the unpaid tax from you and, if the problem continues, discuss your options with your local Citizens Advice Bureau.

  100. Hi, I wonder can anyone advise me if i have a legitimate gripe with my company. I am a merchant seaman, a couple of trip ago i left my passport onboard my vessel when i went home on leave. My opposite number onboard the ship handed my passport to our office, who in turn telephoned me to tell me they would post the passport on to me recorded delivery. I agreed to this on the telephone. Not mention was made of cost by either party. When my next payslip arrived i found i had been deducted £25 for the cost of postage for my passport. They didnt ask or inform me of the deduction. i have not recieved a legitimate bill to prove this was the correct price of the postage nor has anyone from my office contacted me about the postage cost, just the deduction.

  101. Nick: The first thing to check is whether your contract of employment includes authority to make this deduction. If not,and there is nothing in writing anywhere, then, yes, you have a “legitimate gripe”. Whether or not it is worth pursuing for £25 is for you to decide. If the principle is important to you, ask first of all to be informed where the authority for the deduction is and how much the actual postage was. Beyond that, you could make a formal complaint through your employer’s grievance procedure, or take legal advice from the Citizens Advice Burea.

  102. Hi Ian, I did some damage with the forklift in the stores. I was working there throuh agancy and after the accident I lost my job and on top on that they keep my week wages to cover the bill for the damages.Is it legal to do that?

  103. Greg: As you will have read in the article, there must be a statement in writing about such a deduction for it to be lawful. So, do any of the documents given to you by the agency or by the business for which you worked state that such a deduction would occut? If there is such a statement, do the circumstances specified match what happened to you and does the amount that it says can be deducted match the amount that you have not been paid? If there is no such statement – in other words you were not told in writing that money would be deducted from your wages if you caused damage – the deduction is not lawful and you should visit your local Citizens Advice Bureau (CAB) immediately to obtain proper legal advice on what action you can take. If you do discuss the issues with the CAB, they will also likely want to know the circumstances of the damage and the likely costs incurred by the business in making repairs.


  104. susan davies says:

    i am self employed and paid by commission can the company deduct money from my commission when a third party does not pay


  105. Michelle Booth says:

    I work for the NHS and have recently been upgraded which was then backdated to the 1st April 2010. This month I was supposed to receive my upgrading and my back pay but I have actually received less than my previous monthly salary! Why? During 3 months of last year, prior to my application for upgrading, I worked overtime to reduce waiting lists – this was voluntary and included weekend working. I was paid an overtime rate of time and a half. Since my upgrading was backdated to April last year, I have had all this overtime monies reclaimed as my new grading is not paid overtime and has to take time in lieu instead. Can they just take this money back in a one off deduction? I am a one parent family and this deduction means that I will struggle to meet my monthly outgoings. I will accept that the money has to be repaid, but would have preferred the option of a monthly agreed affordable deduction. Any advice????

  106. Michelle: You are very generous is expressing a willingness to repay the money, especially as you were paid for it in return for work you actually performed. However, if the terms of your upgrading were that your new terms and conditions would be backdated and those terms and conditions were in writing and made it clear that you have to repay the money, then it is likely that you have to repay it. But for your employer to take the full payment in one go, presumably without discussing it with you first, is most unreasonable behaviour by an employer. I would suggest that you use your internal grievance procedure immediately to object to the single deduction and to insist on a more reasonable approach.

  107. Susan: The answer is Yes, but only if your terms and conditions spell out clearly in writing that, if a client defaults on a payment for which you have already received commission, a specified portion of that commission must be repaid. If there is no such provision, the deduction is likely to be unlawful.


  108. Stacey says:

    Hi,
    I worked at a large well known retail company for the past 4 years while studying at University. I left the company on the 5th March 2011 and am now unemployed. My final wage paid on the 28th March. I was overpaid by around £300 but I didnt realise as it simply paid part of my overdraft off (part of being a student!). Anyway, my manager rang to say that they know about the mistake and head office will contact me in writing to sort out giving the money back. Since this I haven’t heard anything else about it.
    Due to the overpayment going straight into my overdraft, and now being unemployed, I dont have any money in my account. Can the company still take the money out of my bank account at anytime even though I am not employed by them? Can I suggest that the money is paid back once I am back in employment?
    Thanks in advance

  109. Stacey: Your former employer cannot take money from your account, even if it were in credit (unless you have authorised a direct debit!). If you do receive a letter asking for the money back, you first need to consider whether it is reasonable for the employer to ask for its return, e.g. because you genuinely believed at the time that the money was yours. If you feel you should repay it, by all means write back and say that you do not have the money but will be happy to repay it in agreed instalments when you are working again.


  110. susan davies says:

    i work for provident plc on a self employed basis my wages are commissiom based so i only earn on money that i collect. the company have introduced what they call a pot scheme where there are three pots good fair and bad if you can get a customer to increase there payments to get them back to good they will reward you either £5, £10, or £15 on the other hand if they continue to fall they will charge you £5, £10 or £15 depending which pot they are falling into, this includes customers that are going to debt recovery, last week i had 20 increment for good pots but a 60 deduction for bad pots and my commission wages were 151 so i ended up with 111 can they deduct this amount from my wages in any given week as it is well ove 10% we were not given a new contract to sign to say we agreed with the changes


  111. Ian Congreave says:

    Susan: You state that you are self-employed and, if that is true, the statutory provisions in the article do not apply to you. You and Provident are, however, bound by the terms of your contract and any changes to the payment arrangements should be agreed in advance. If you believe that Provident is in breach of the contract, you have access to the courts if you you cannot resolve the problem amicably, but you do not have access to the employment tribunal options.

    However, if you only work for Provident and your work is ongoing, you may, in fact, meet the conditions for designation as a “worker”, even though you handle your tax affairs as self-employed. That could allow you to make claim for unlawful deduction fromw wages. If that is a possibility, you can get good advice from your local Citizens Advice Bureau.


  112. Daniel says:

    Is my employer allowed to deduct mistakes on miss-rings?

  113. Daniel, The article above only makes brief reference to deductions in retail employment, but the UK protection of earnings rules do allow employers to make deductions for cash shortages and stock deficiences, but only if that is included in writing in your employment contract.

    A strict procedure is given in law, briefly as follows:
    – You must be informed in advance of the total liability.
    – On the next payday, you must be given a written demand for the full amount, but no money may be deducted.
    – On the next payday, and on any subsequent paydays, a deduction may be made of no more than 10% of your gross pay for that payday.
    – The procedure cannot be started more than 12 months after the shortage is first discovered.
    – On termination, anything outstanding can be deducted, without limit.


  114. Kevin Meehan says:

    Hi there,

    Due to unforeseen circumstances i have just had to quit my job without giving the proper notice. My contract says that the company are entitled to deduct a £35 penalty from my final salary if this happens. I have also taken 13 days holiday this year but calculated on a pro-rata basis have only earned 11.5 days. Since I have worked only one day in the current pay period, my final salary due is only £53 and if the company deducts the £35 plus the 1.5 days holiday I have taken, will I owe them money? and do they have the right to claim that money from me?
    Thanks in advance.

  115. Kevin: The starting point is, does your employment contract clearly state in writing that, on termination of employment, your employer can deduct (1) £35 if you do not give your contractual period of notice, and (2) the value of any “overtaken” holiday? If the deduction is in writing in your contract then, yes, your employer can lawfully deduct the amounts from your final wages. And, yes, if you do not have enough final pay to cover the deductions, your employer is entitled to ask you to pay over the difference. But, make sure that the terms of the deductions, as specified in the contract, are met by your employer. For example, has your employer correctly calculated your holiday accrual up to your leaving date? Both parties must apply the terms of the contract correctly.


  116. Steve says:

    My company has just been sold. What i would like to find out is can the new owners change my wages.

  117. Steve, Assuming that your question relates to employment in the UK, your situation may be covered by the Transfer of Undertakings (Employment Protection) Regulations, commonly known as “TUPE”. The TUPE provisions apply, for example, where some or all of the activities of one business are being transferred to another. In this situation, the employment contracts of the employees affected by the transfer are preserved and must be maintained by the new owner. You will find guidance on this on the Directgov website, at http://www.direct.gov.uk/en/Employment/Employees/BusinessTransfersandtakeovers/DG_10026691.


  118. ELENA says:

    My work announced last month they will be imposing a 10% pay cut on everyone in the company and that if we were not in agreement with that we were to put it in writing and submit it 5 days later as the cut off date. they also announced that the first three days sickness will be unpaid. I returned to work from a week off holiday, was told the letter to agree to the reduction in my wages was in my drawer could i sign it and hand it in. I have declined this offer as there is no indication how long the pay cut will last just that it will be reviewed in july, very open ended!.people at work who have signed and handed in the forms were under the impression they had no choice in the matter. what protection do i have job wise if i am like many others who is resisting any pay cut?


  119. justin says:

    my partner recently had a accident in his comapny van, it was his fault as he went up the back of another van. The company he works for has decided to deduct the cost of this damage for the other vehicle from his wages . can they do this the cost is 665.00.

  120. Justin: As the article above shows, your partner’s employer must have written authority in advance for this deduction. The authority may be in the employment contract or perhaps in a manual provided for drivers of company vehicles. If there is no such authority, the deduction would be unlawful. Even if there is authority, it would be normal for recovery of damage costs to be defined in terms of who was responsible and the circumstances of the damage, including whether or not it was deliberate or due to neglect. There would normally be an investigation into these matters before a decision is made about a deduction from wages. Another issue is whether or not the £665 represents the employer’s loss from the incident. If the employer can make an insurance claim to cover the damage, it would be improper to recover the costs twice. If the employer insists on making the deduction and it appears to be unlawful or unreasonable, your partner must use the employer’s grievance and appeal procedure to object to the deduction and, if that does not work, a visit your local Citizens Advice Bureau would be sensible.


  121. David says:

    I am a full time (5 day per week Manager) my company allow 28 days holiday per year (29 this year due to the addition of an extra Bank Holiday).
    Can you firstly clarify 28days holiday is accurate – they say this includes all public holidays…
    Secondly, I recently broke company policy (with no financial loss or implications to the company)they have decided instead of taking disciplinary proceedings that they will deduct £2000 from my pay (bonuses and commissions equating to 1/2 of my wages)this month – is this legal..?

  122. David: to clarify the holiday situation first of all. The Working Time Regulations provide entitlement to 5.6 weeks paid leave each year, which equates to 28 days for a 5-day worker. The are no statutory rules relating to bank holidays. Any day of paid holiday, whether or not it is a bank holiday, counts towards your 28-day entitlement. Your employer was under no obligation to provide an extra bank holiday this year – it could simply have counted as part of your 28 days.

    There are two issues with the deduction – first, there must be written authorisation for it in your contract in advance of the situation arising that prompts the deduction – if not, it is unlawful. Secondly, even if there is such a contractual provision, a court or tribunal may well find a punitive deduction of £2,000 excessive if there was no financial loss to the business. Suggesting a deduction instead of disciplinary action is a bad move for the company – it doesn’t make the deduction lawful and you may still be able to take legal action to recover the deduction. Discuss the situation with the Citizens Advice Bureau if you need to take the situation further.

  123. i am a self employed window fitter in january i was alledged to have cut a bt cable i don,t recall doing this but this week my company have deducted £130 from my wages without informing me.can they do this?

  124. Ian: If you are really self-employed, the “protection of wages” provisions in employment law do not apply to you. Whether or not the company you work for is entitled to deduct the money depends on the terms of the contract you have with the company.

    However, your reference to the company deducting money “from my wages without informing me” makes me wonder whether you are really self-employed. Self-employed workers do not have wages – they submit an invoice to their client. If the contract with the client makes it clear that the worker is liable for the costs of any damage, then the client may refuse to pay some or all of the invoice.

    So, your reference to “wages” suggests to me that, in reality, you may be a “worker”, as defined in the article above. If so, the employment law provisions may apply and the deduction would be unlawful if the situation entitling the company to make it were not clearly stated in your contract. Look at http://www.hmrc.gov.uk/paye/employees/start-leave/status.htm to see if you are a “worker”. If you are a “worker”, take up the issue with your “employer” and if that is not successful, pay a visit to your local Citizens Advice Bureau.

  125. Elena: Apoligies for the delay in responding to your question. I aksed a colleague with more experience in your issues to make some comments, and he has replied as follows:

    “There is good news and bad news, but I’m afraid that the bad news wins.

    Your employer cannot change your contract of employment without your permission unless the contract so provides. It must seek your agreement to any cut in wages or other benefits. If nevertheless it does make cuts, your options are:
    (a) Accept the cut.
    (b) Leave and claim constructive dismissal on grounds of breach of
    contract, in which case you would probably win and receive compensation, but be out of a job.
    (c) Remain in employment but take your employer to court for breach of
    contract, in which case the court would probably order the employer to restore your contract to what it was.

    If you choose to do (c), or if you indicate that you do not accept the proposed changes, the employer is likely instead to discuss with you why the cuts are necessary and then give you notice to terminate your current contract but offer you continued employment on a new contract that embodies the reduced salary and benefits. This move is likely to stand up in court.

    I suggest that you discuss the issue with your employer, explain any genuine hardship that the wage cut will cause you, but then, assuming the employer argues back that the cuts are necessary for business survival, accept the reduction and hope that business picks up. You could in the meantime look around for alternative employment that gives you the salary you need, but it is better to do this while still in employment.”

  126. thanks for the the advice ian,but just to clear up i am actually self-employed,i submit an invoice every week, using the term wages i am just refering to the the money that enters my bank account.


  127. WERNER says:

    i am a plumber and i have a hearing comming up, i would like to know what my rights are.

    at one of the sights that i worked on, a wall fell over due to the heavy rain, but about a meter away a dug a trench for the pipes to be laid.

    my boss wants me to cover the cost of the wall. it happen over a weekend when i was not on duty.

    Please can someone give me advise as soon as possible.

    Thanks

  128. Werner: As explained in the article, your employer can only make a deduction from your wages in a situation such as this if there is already a clause in your contract permitting it. If there is no such provision and your employer persists, you should use your employer’s grievance procedure and, if that does not work, you can obtain help from your local Citizens Advice Bureau.

  129. This article is now closed to further questions. Most of the possible deduction scenarios are discussed in the article and in the many questions that have been answered above. Always make sure you use your employer’s grievance procedure before considering legal action to recover an unlawful deduction. The Citizens Advice Bureau provides excellent legal advice on these matters.

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