An Employer’s Guide to Unlawful Deduction of Wages

Unlawful deductions of wages claims could be filed against you if an employee claims you illegally deducted money from their paycheck. What are your legal options if this happens, and how can you avoid future conflicts with your employees? That’s what we are going to take a closer look at here.

What Constitutes an Unlawful Deduction of Wages?

Only one of two reasons can be used to deduct money from one of your employee’s paycheck:

If the deduction/s are required by law — for example, tax and/or National Insurance deductions are required by law.

Alternatively, if the employee has consented to the deduction/s being made.

So, if you’re wondering if you, as an employer, can deduct money from your employees’ paycheck, the answer is yes, but only if the deductions meet these two legal requirements.

Any other deduction, by extension, will be illegal.

THE LAW: Sections 13–27 of the Employment Rights Act 1996 govern unlawful wage deductions.

What are Wages?

The obvious answer to that question is the money an employee gets every week/fortnight/month after plenty of hard work. The law has its own definition though, and that’s…