UNLAWFUL DEDUCTION OF WAGES

Unlawful deduction of wages

Unlawful deduction of wages occurs when an employer makes deductions from an employee’s pay without proper authorization or a legal basis. In most countries, including the UK, employers are not allowed to withhold or deduct wages unless certain conditions are met. Deductions are generally lawful if:

• They are required by law (e.g., tax, national insurance)

• The employee has agreed in writing to the deduction

• They are allowed by the terms of the employment contract.

• A court order or tribunal requires the deduction.

• The deduction is for recovering overpayment of wages or expenses.

Examples of Unlawful Deductions

1. Without Employee's Consent: If an employer deducts money from wages without written consent from the employee (except in specific lawful circumstances).

2. Failure to Pay Wages: Not paying an employee for the hours they've worked, including overtime, bonuses, or commission that they are contractually entitled to.

3. Deductions for Damages or Losses: Deducting wages for things like cash shortages, breakages, or losses, without consent or a valid contractual clause.

4. Unauthorised Deductions for Benefits: Deducting amounts for benefits like accommodation or equipment without prior agreement in writing.

unlawful deduction of wages uk acas

According to ACAS if an employee believes they have had unlawful deductions from their wages, they may:

• Raise a grievance: This is the first step, where the employee should notify the employer in writing and attempt to resolve the issue internally.

• Claim to an Employment Tribunal: In some jurisdictions, the employee can file a claim with a tribunal or court if the issue isn’t resolved. The employee may be entitled to recover the amount unlawfully deducted, plus compensation.

The time limits to make such claims vary by country (often three months from the date of the unlawful deduction).