Can an Employer Dock Wages?

Usually this question arises when an employer feels a little aggrieved or taken advantage of. 

Firstly take a deep breath and then check the employee’s employment agreement.

The Wages Protection Act prevents any deductions from an employee’s wages without their written consent except for the case of an overpayment.

If the employment agreement is silent on deductions then the answer is no you cannot automatically deduct from an employee’s wages.

If your employment agreement does have a clause allowing you to make deductions you can only deduct for the purpose outlined in the agreement.

For example, if your employment agreements contain a clause whereby you can only make a deduction for money owed on a staff account then deductions can only be made if that staff member has outstanding money owing on their account.

Another example is where a clause is included so that if an employee leaves employment without providing the required notice period then the balance of that notice period can be deducted from their final pay (including Holiday Pay). Caution should be exercised to ensure you are being fair and reasonable when weighing up the cost of the unworked notice period and the hardship to the company compared to the amount you are deducting.

Should you not have a clause in your employment agreement you can seek agreement from the employee to make deductions but get any such agreement in writing and have signed by both the employer and employee.  Note that the employee can withdraw this written consent at any time by giving two weeks’ notice. The employer does not have to agree to this withdrawal for it to be effective.

In regards to overpayments the employer may only recover an overpayment where it was not reasonably practicable for that employer to avoid making that overpayment.  You must consult with the employee prior to making any deduction in pay, and then you must begin the deduction within 2 months of raising it with the employee.

In all circumstances in considering deductions you need to be clear that you are not looking to punish the employee but seek reimbursement for real and appropriate costs.