An employer cannot simply take money out of a worker’s pay. Part 2 of the Employment Rights Act 1996 restricts deductions, and a short pay packet can itself count as a deduction. The provisions discussed here apply in Great Britain (England, Wales and Scotland); GOV.UK says there is a different way to claim in Northern Ireland.
The basic rule in section 13
Section 13(1) says an employer must not make a deduction from the wages of a worker unless the deduction is required or authorised by a statutory provision or a relevant provision of the worker’s contract, or the worker has previously signified agreement or consent in writing. A “relevant provision” means a written term of which the employer gave the worker a copy before making the deduction, or a term whose existence and effect the employer notified to the worker in writing beforehand. Two timing rules protect workers: a contract variation does not authorise a deduction for conduct or events before the variation took effect, and consent given after the event does not authorise a deduction for conduct before the consent (section 13(5) and (6)).
Underpayment counts as a deduction
Under section 13(3), where the total wages paid on an occasion is less than the total properly payable, the shortfall is treated as a deduction. That covers unpaid commission, an unpaid bonus that the contract makes payable, or hours simply not paid. Section 13(4) creates an exception where the shortfall is attributable to an error of any description on the employer’s part in computing the gross amount payable so an error of that kind in working out gross pay is not treated as a deduction under that subsection. The guide on employment status explains who counts as a worker.
Deductions that are excepted
Section 14 lists deductions to which section 13 does not apply. They include reimbursing the employer for an overpayment of wages or of expenses, deductions after statutory disciplinary proceedings, deductions the employer must make under a statutory requirement and pay to a public authority in accordance with its determination, deductions under arrangements the worker agreed to in writing for paying a third person, deductions on account of participation in a strike or other industrial action, and deductions the worker agreed in writing to satisfy a court or tribunal order requiring payment to the employer. Because each exception has conditions, a deduction labelled as one of these is not automatically lawful.
Retail workers and cash shortages
For workers in retail employment, section 18 caps deductions made for cash shortages or stock deficiencies at one-tenth of the gross wages payable on a pay day, and the first deduction must be made within twelve months of the date the employer established the shortage or ought reasonably to have done so. Section 21 applies a similar one-tenth limit to demands for payment made on a pay day. These limits sit on top of the normal requirement that the deduction is authorised.
Claiming to an employment tribunal
Section 23 allows a worker to complain to an employment tribunal about an unauthorised deduction. The complaint must normally be presented within three months beginning with the date the wages were paid or, for a series of deductions, the last deduction in the series. A tribunal may allow a further reasonable period if it was not reasonably practicable to claim in time. The section also provides that the tribunal will not consider deductions from wages paid more than two years before the complaint was presented, subject to exceptions in subsection (4B). Where the complaint succeeds, section 24 lets the tribunal order the employer to pay the amount deducted.
GOV.UK says a claimant must tell Acas before making a claim, and that the time limit is put on hold while Acas helps to resolve the dispute. The steps are explained in the guide to Acas early conciliation and time limits, and a settlement reached with an employer is covered in settlement agreements at work.
FAQs
Can my employer deduct for a uniform or a mistake?
Only if a statutory provision or a written contract term already notified to the worker allows it, or the worker signified consent in writing beforehand; consent given afterwards does not cover earlier events.
Is an overpayment recoverable?
Section 14 excepts a deduction made to reimburse the employer for an overpayment of wages or expenses, so section 13 does not apply to it.
Is there a limit on how far back a claim can go?
Section 23 refers to a two-year limit on the wages paid before the complaint was presented, with exceptions, in addition to the three-month claim period.
The bottom line
In Great Britain an employer may deduct from wages only where the law, the contract or the worker’s prior written consent allows it, and a shortfall in pay can itself be a deduction. A worker who thinks money has been wrongly withheld has a short time limit for a tribunal claim, generally three months, so the dates matter. This is general information, not legal advice.
Sources
- legislation.gov.uk, “Employment Rights Act 1996, section 13: Right not to suffer unauthorised deductions”
- legislation.gov.uk, “Employment Rights Act 1996, section 14: Excepted deductions”
- legislation.gov.uk, “Employment Rights Act 1996, section 18: Limits on amount and time of deductions”
- legislation.gov.uk, “Employment Rights Act 1996, section 23: Complaints to employment tribunals”
- GOV.UK, “Make a claim to an employment tribunal”