The Employment Relations Authority has fined an employer and the director of the employer for unlawful deductions from employees’ wages.

The employees of a service station had wages deducted whenever a customer drove off without paying.  The ERA held that such deductions are unlawful and both the employer and the director of the employer were penalised for the breaches.  The fine for the employer was $20,000 and for the director $3,000.

The company claims to have removed the deduction clauses from its employment contracts and to have repaid the workers who had deductions made.

Employers should be very cautious when making deductions from employee’s wages for the actions of employees and this can only be done with the agreement of the employee.  That agreement has to happen on each occasion of a deduction. A general provision for deductions in an employment agreement cannot suffice.

Alan Knowsley
Employment Lawyer Wellington