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06/08/2010 10:26:57 www.clicklegalservices.co.uk Administrator Posts: 374

What is a “deduction” from salary? When can they be made? A deduction is simply a complete or partial failure to pay wages. An employer can only make certain deductions from an employee’ salary in certain situations: Where required by law – i.e. when deducting NI. Where it is provided for within the contract. There needs to be a specific clause allowing for the particular deduction to be made. Only after the written copy of the contract showing the term has been given to the employee – can a deduction be made. An example perhaps is in respect of payments into a pension scheme. The deduction has been agreed in writing before the event giving rise to the deduction – and in any event, the clause has to provide for a deduction from wages. An employer can make certain deductions however, regardless of the above: Where the employee has been genuinely overpaid. Where he/she has taken part in industrial action. Where there is a Court or Tribunal Order ordering the employer to deduct. Special rules relate to shop workers – in that not more than 10% of the gross wage – if the deduction relates to stock/cash shortages. The fact that an employer has the right to deduct – even in cases of overpayment – does not necessarily mean they can or they should; particularly if the employee was genuinely and reasonably unaware of the overpayment at the time, and has spent the money – or otherwise altered his position. In these types of case, the employee may have an argument to say that to then deduct, is unfair. There is a 3 month time limit to bring any such claim, so early action is essential. edited by www.clicklegalservices.co.uk on 06/08/2010 edited by www.clicklegalservices.co.uk on 06/08/2010

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