Most employment agreements will have what is called a “deductions” clause. This clause usually specifies that the employer is allowed to deduct money from an employee’s wages for things such as holidays taken in advance and overpayments. However, at all times deductions must be made in accordance with the Wages Protection Act 1983.
The Act is clear that an employer is required to pay the entire amount of wages to an employee, without deduction, when they fall due, SUBJECT to 2 exceptions.
The first exception is where the employee has given their consent to a type of deduction being made or where they have requested a deduction be made. This is when the Employment Agreement contains the abovementioned deductions clause. An employee is allowed, under the Act, to vary or withdraw a consent by giving the employer written notice of that change, and the employer is required to give effect to that notice within two weeks of receiving it, if practicable. This effectively means the employee can nullify a deductions clause at the same time they resign, however most don’t do this.
The other exception is where an employer may recover an overpayment without the actual consent of the employee where the employee has been absent from work without the employer’s authority, or has been on strike, locked out, or suspended without pay.
When the employer wants to recover the overpayment, there are a few rules they have to abide by; these are-:
1. Firstly it must not have been reasonably practicable for the employer to avoid paying the overpayment;
2. The employee has to be given notice of the employer’s intention to recover the over payment.; and
3. The overpayment must be recovered no later than two months after that notice is given.
This is just an outline of the rules – if you are an employer it is best to seek advice before deducting monies where you think there may be a dispute.
