Can your employer deduct your salary?

Your employer can, in some circumstances, deduct your pay. Find out if your wage deductions are authorised or unauthorised, and how to get your money back.

What counts as authorised deductions?

In some cases, your employer can take money out of your pay. These are known as ‘authorised deductions’. Usually, your employer is legally obliged to make these deductions.

If you’re unsure why money has been deducted, the best thing to do is talk to your employer to find out why. It could be a genuine mistake, or they may have a good or authorised reason.

Authorised deductions include:
  • Statutory deductions

Statutory deductions are those that your employer must make, by law. Income tax and National Insurance fall into this category. They should be labelled as such on your payslip. If you think you’re paying too much tax, you may be on the wrong tax code – the code used to work out how much tax you should pay. Chat to HR or call HMRC to make sure.
  • Student loan repayment

If you went to university, your student loan – or ‘graduate tax’, as Martin Lewis calls it – will be taken directly from. The amount you pay will depend on when year you started your course. Plan 1 is for those who began before September 1st 2012, who must pay 9% of their salary if they earn over £1615 a month or £372 a week, over 25 years. Plan 2, for those who started after September 1st 2012, will pay 9% of their income if they earn £2124 a month or £511 a week, over a 30-year period. Post-graduate loans are charged at 6% once you get paid £1750 a month/£404 a week or more.
  • Pension contributions

Legally, your employer must enrol you into a workplace pension if you’re an employee over the age of 22, you earn at least £10,000 a year, and you usually work in the UK. This is separate from your personal and basic state pension. This is an opt-out scheme, meaning if you don’t specifically ask to be taken out of the scheme, your contribution will be automatically deducted from your pay. The amount you’ll pay depends on the type of pension you have, and also sees your employer and government top-up your pension pot.
  • Court order debts

Sometimes a court may decide that, in order to repay your debt, a sum will be deducted from your wages each month. Your employer must abide by this ruling. However, if your financial circumstances change, you may be able to apply to the courts to change the order using the government’s forms.
  • Accounting errors

Mistakes happen – and if your employer has paid you too much, they’re well within their rights to take that money back. If you notice you’ve been paid the wrong amount, you should inform HR straight away. Don’t spend it!
  • Money you owe

If you owe your employer money for whatever reason, they’ll be able to deduct that directly from your pay. This should be agreed upon in advance. This also includes property damage or loss – if you break your work phone or laptop, for instance, they could deduct the amount to replace it.
  • Industrial action

An employee who has engaged in lawful industrial action may see a deduction for the hours they’ve missed from work.

What are unauthorised deductions?

Unauthorised deductions, as the name suggests, are deductions from your salary or wage that your employer has absolutely no right to make. If you’ve worked for it and it isn’t authorised, it’s against the law for an employer to withhold or deduct your pay.

Talk to your employer immediately if this has happened.

Excluding authorised deductions, an unauthorised deduction occurs when:
  • It’s not mandated by law
  • It isn’t in your contract
  • You didn’t agree to it in writing

What should I do if deductions have been made?

Always raise the matter with your employer when a deduction has been made. They’ll be able to explain why pay is missing, or if the payroll department has made an error, they’ll be able to rectify the mistake.

If you disagree with a deduction, you might want to make an unpaid wages claim. In the legal world, ‘wages’ usually count as:
  • Your basic salary or wage
  • Holiday pay
  • Statutory sick pay
  • Statutory parental pay
  • Commission
  • Tips
  • Redundancy pay, notice pay, and pay in lieu of notice
  • Any money your employer owes you

You can’t just take your employer to an employment tribunal. The process, instead, sees you inform the independent body for employees and employers, ACAS.

The organisation will then ask you and your employer to attend early conciliation, to see if a legally binding agreement can be mediated between both parties. If the talks break down, you’ll then receive a certificate permitting you to take the case to a tribunal.

However, if you’re seriously considering making a claim for unpaid wages, it’s worth first discussing the issue with an employment solicitor. They’ll advise on whether you have the right to make a claim, and how best to do it.

Tribunals can be stressful, confusing, and take up a lot of time, so you’ll want to make sure you’re fully prepared – a solicitor will help you make a success of your claim.

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Steve Clark

Steve creates helpful guides for The Law Superstore. He enjoys digging deep into new areas of the law, supporting partners, and translating legalese and jargon into plain English everyone can understand.

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