Is My Employer Allowed To Make Deductions From My Pay?

No deduction may be made from your wages unless either:

1. It is allowed by your contract or;
2. You have agreed in writing to the deduction or;
3. It is allowed by statute, for example deductions for PAYE tax and national insurance.

If a deduction is made from your wages:

1. The term of your contract allowing the deduction must have been shown to you or;
2. If your contract is not in writing, you must have been notified in writing about the deduction before it is made

Sums wrongfully deducted from your wages must be repaid by your employer.

Your 'wages' includes bonuses, commission, holiday pay, statutory sick pay or statutory maternity, paternity or adoption pay. 'Wages' do not include payments under loan agreements, expenses, benefits in kind, pay in lieu of notice or payments related to redundancy.

HOWEVER, an employer can make deductions without your consent:

1. to reimburse themselves for having overpaid your wages
2. to deduct wages where you take part in industrial action.

OVERPAYMENTS
Your employer can generally recover overpayments made to you by mistake of fact (such as a clerical error) provided the overpayment was one you should have noticed; and provided you have not, in good faith, incurred expenditure you otherwise would not have incurred.

However, your employer cannot recover an overpayment made to you by mistake of law such as a mistake as to the meaning of your contract, the correct tax deduction or NI payment. This area is very tricky and you should always consult your local ETAS Direct representative using our online questionnaire, who has access to specialist advice.