Julie Dunane CG Professional

Can I Deduct Monies From an Employee’s Wages?

Julie Duane, Legal Counsel at CG Professional.

Employers are often left with the question of whether they can recover monies from an employee when an employee has caused damage or negligence to company property. This article seeks to explore the right to deduct monies from an employee’s wages and the circumstances which may give rise to this right.

The law

Section 13(1) of the Employment Rights Act 1996 states:

An employer shall not make a deduction from the wages of a worker employed by him unless:

  1. the deduction is required or authorised to be made by virtue of a statutory provision or a  relevant provision of the worker’s contract; or
  2. the worker has previously signified in writing his agreement or consent to the making of the deduction.”

There are therefore two potential avenues which an employer can rely on in order to make a deduction from an employee’s wage.  The first provision which relates to a statutory instrument could relate to an overpayment of wages which would entitle an employer to deduct monies from an employee’s wage with or without their consent in writing.

The second avenue relates to a deduction from an employee’s wages which may be due to them being required to pay an excess payment, recovery of training fees and/or another reason.  In order to rely on section 13(2) of the Employment Rights Act 1996, an employer must demonstrate that the employee has signified, in writing, their consent to the deduction of those monies.  A failure to do so could constitute an unauthorised deduction of wages.

How can the employer establish this?

One of the ways employers may seek to rely upon the deduction of wages for negligence etc is by getting the individual’s employment contract to identify ways in which monies may be deducted from them and ensuring that they have a signed copy of that contract.

Alternatively, where an employer pays out for an employee’s training fees and wants to add an additional layer of security, then a separate training agreement may be more appropriate. This could then provide the employer with a tiering system for the repayment of those fees if the employee were to leave the business during a certain time period.

If you have any questions about this article or have any questions regarding the preparation of these documents, please do not hesitate to contact a member of the CG Team who will be more than happy to assist.