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.
Workers must be paid at least the National Minimum Wage.
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.
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This guide is for employers. If you are an employee looking for information about your rights at work please follow this link for employment law help for employees.