Deductions from pay

• Most people at work are protected from having unauthorised deductions taken from their wages by their employer, including protection against complete non-payment.
• This protection applies to employees, workers, apprentices, Crown servants and anyone who works on board a ship which is registered in the UK (unless you work normally outside of Great Britain, are not normally resident in Great Britain or are employed under merchant shipping legislation).

What counts as wages?

Wages are what your employer pays you in connection with your employment (whether provided for in your contract or not) including:

hourly pay, or weekly pay or annual salaries,

overtime pay, shift pay, risk payments, bonuses, sales commission and performance related pay

contractual or statutory holiday pay

• contractual sick pay and maternity, paternity and adoption pay
• statutory sick pay and maternity, paternity and adoption pay
• pay for time off for trade union duties or training
• any vouchers provided by an employer which can be exchanged for services or benefits, e.g. childcare vouchers, lunch vouchers or eye test vouchers

The following do not count as wages:

• payments relating to pensions, a retirement or redundancy pay
• expenses
• loans or advances of wages

When can an employer make deductions from your wages?

Your employer can only withhold your pay or make deductions from your wages other than:

• those allowed by law, (for example National Insurance, income tax or student loan payments);
• those that are permitted under the terms of your contract or
• those agreed with you in advance in writing (e.g. your trade union subscriptions or pensions contributions)

An employer can also make deductions where:

• you have been genuinely overpaid.
• you took part in industrial action.
• a court order or an order from an Employment Tribunal authorises it

Your employer cannot make a deduction which will reduce an employee's pay below the National Minimum Wage rate (except in the case of the accommodation offset). This is the case, even if you agreed to the deduction.

Your employer also cannot seek to gain your retrospective agreement to a deduction. A deduction will only be lawful if you agreed in writing to a deduction before your employer makes the deduction.

Deductions from shop-workers

There are addition protections for deductions made from a shop-worker's pay.

If you are a shop-worker your employer can make deductions for cash shortages or missing stock, in addition to other legal deductions.

Your employer cannot deduct more than 10% of your gross pay on any one payday. They must also give you written details of the deduction on pay day. Any deduction for missing cash or stock must be made within 12 months of the employer discovering the shortage.

What can I do if my employer has not paid me or has made an unlawful deduction from your wages?

If you have not been paid properly you can make a complaint to an Employment Tribunal on the grounds that your employer has made an unlawful deduction from your wages.

Alternatively, your employer may be able to make a claim for breach of contract to an Employment Tribunal or a court. You should seek advice before making such a claim.

It is always a good idea to seek advice from your union rep or from the ACAS Helpline before taking steps to enforce your rights.

For more information please go to the section on enforcing your rights.