The Wages Protection Act 1983 addresses what deductions can be made from an employee’s wages. Under this legislation, an employer must pay the entire amount of wages owing to an employee without deduction. However, an employer may, with the written consent of an employee or on the employee’s request, make deductions from an employee’s wages.
Nevertheless, once an employee has given that consent, they may withdraw or vary it by giving the employer written notice. If that happens, within two weeks of receiving that notice or as soon as practicable the employer must stop or vary any deductions they are making.
If an over-payment has been made to an employee:
The employer may recover the amount of that over-payment if it was not reasonably practicable for them to avoid making it; and
Before recovering the over-payment, the employer gives the employee notice of their intention to recover it; and
Notice is given within particular timeframes, which are dependant on an employees particular circumstances; and
The over-payment is recovered not later than two months after this notice is given.
However, deductions can only be made if written consent of the employee has been given to the employer. Therefore, for example, if an employment agreement is given to an employee but they have not signed it, then they have not given their written consent to any deductions.
They may be found to have essentially agreed or assented to other terms in that employment agreement without a valid agreement being in force, however, no deductions could be made as under the Wages Protection Act they have not given their written consent, which is required.
Additionally, holiday pay, if the employee has given their written consent, then deductions can be made before paying them out on the end of their employment.
A further point to note under this legislation is that an employer can only pay wages to an employee in money, or cash. Many employers are not aware that an employer may only pay an employee by way of cheque or direct credit with the employee’s written consent. Without this written consent, or an employee’s written request, an employee must be paid money.
This article originally appeared in the Southland Times Work To Rule column. Mary-Jane Thomas is head of Preston Russell's employment law team. Contact her by clicking here
