There are several scenarios where you might need to deduct from an employee’s pay and wages.

But, is it legal?

In short, it depends.

You can only make a deduction in certain circumstances, and you must follow what it says in the individual’s employment contract.

Otherwise, you could be making an unlawful deduction of wages.

So, it’s essential to take some time to familiarise yourself with these scenarios and understand the legal risks of changing someone’s pay.

There are a few key points to remember.

✅ You can make deductions if they are legally required or authorised by law or statute. This might include PAYE, tax, National Insurance and earnings orders.

❌ However, you must not make deductions from your employee’s pay unless there is a provision in their employment contract which says you can.

✍️ Before making any deductions, you must tell your employee in writing the full amount they owe and clearly make a demand for the payment. Then your employee has to agree to the decision before you go ahead.

Don’t forget, a deduction must not reduce anyone’s pay below the National Minimum Wage rate (with some exceptions), even if they have agreed to it. 💸

There are a few other points to wrap your head around, and it can be a lot to take in.

Don’t worry, we’ve got you covered. An HR consultant can guide you through the key rules and legal risks of changing someone’s pay and ensure you are acting lawfully.

Get in touch today for an informal chat 0333 2005153