Deductions may only be made from an employee’s pay if they are required by law, agreed to by the employee or are overpayments in some circumstances.

The Wages Protection Act 1983 sets out the way wages must be paid, and prevents unlawful deductions from wages. Employers can make a deduction from pay if:

  • the deduction is specifically required by law, for example, PAYE tax, student loan repayment, child support
  • the deduction is for a lawful purpose, is reasonable and the employee has agreed to or asked for the deduction in writing. ‘Agreed in writing’ includes a general deductions clause in the employment agreement, but an employer must consult with the employee before they make a specific deduction under a general deductions clause. The employee can vary or withdraw their written consent to a deduction by giving notice in writing at any time. The employer must then vary or stop the deductions within two weeks of receiving the notice or as soon as practicable
  • the deduction is to recover an overpayment in limited circumstances
  • a court directs that a deduction be made.

If an employer takes money from an employee's pay without written consent (freely given, ie the employer can’t threaten or pressure the employee to agree), the employee could contact us or take an action in the Employment Relations Authority to get the money back (as long as it’s not more than 6 years since it happened).

Agricultural sector

Specific information relating to deductions is available for the agricultural sector.

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