The law defines wages to include any fee, bonus, commission, holiday pay or other emolument of employment; it also includes Statutory Sick Pay; Statutory Maternity Pay; a guarantee payment; any sum payable for reinstatement or re-engagement; and non-contractual bonus payments.
An employer may not make deductions from an employee’s wages or receive any payment from an employee UNLESS the deduction is required or permitted by law OR the employee has given his prior written consent to the deduction.
However certain deductions are permitted including the recovery of overpaid wages or expenses and certain statutory deductions.
Also a written agreement – in the contract of employment for example – may authorise other deductions to be made.
Special rules apply in relation to staff employed to carry out retail transactions with the general public. Deductions in relation to cash or stock deficiencies may only be made to the extent that they do not exceed 10% of the gross amount of the wage payment to the employee from whom they are deducted and if they are made within 12 months of the discovery of the shortage.
Employees must receive a written itemised pay statement at or before the time that payment of wages or salary is made to the employee. It must contain the gross amount of wages or salary; the amounts of any variable or fixed deductions from that gross amount and the purpose for which they are made; the net amount payable; where the net amount is paid in different ways, the amount and method of payment of each part payment.
However, a standing statement of fixed deductions may be given to the employee, and if so the statement given with each payment need only give the aggregate amount of fixed deductions.
The guidance on this site is intended mainly for employers and business owners, because Lawrite, which publishes this site, is a provider of HR and legal support services to employers.
If you are an employee looking for help with a problem at work, please follow the link below for more information for employees and where you can find an employment law guide written specifically for employees, explaining your rights at work, how the employment tribunal system works, how the law protects you against discrimination at work, and other useful information:
Download the Lawrite Employment Law Documents package for templates for employment contracts, contractor agreements, HR policies and procedures in staff handbooks, HR letters, health and safety policies and statutory statements, employment law and health and safety law guides, with legal updates included in annual subscription, from just £125 a year.
The Lawrite Employment Law Service - from £295 a year - also includes unlimited telephone legal advice from employment lawyers.
Free pdf e-book for employers, business owners and managers about HR, employment law and your business.