An employee was asked to move her boss’s car.  She didn’t expect to crash it.  She didn’t expect that she would not be covered by insurance, and didn’t expect that her employer would end up taking money from her wages to pay the bill.

The employer may have felt that they were doing the employee a favour by paying the bill upfront and then recovering the money by weekly reductions in the employee’s wages.  However, the employee did not agree to this and ended up complaining to Fair Go.

Employers can only make deductions from an employee’s wages/salary if:

• The employee has given written consent, or
• The employer has made an overpayment of wages to the employee.

There have been several cases in the Employment Authority that have held this is a strict requirement, and in cases where it is unclear whether the employee has agreed or not, the employer will bear the burden of proving their was consent.

Employers should also be aware that if they make deductions from an employee’s salary without consent they face a penalty together with compensation for stress and hardship caused by withholding the employee’s wages.  In addition to this the employer will incur time and expense in preparing for and attending a hearing.

It is important for employers to know the law in relation to deductions from wages before ending up with an expensive claim and paying damages for any breach.

To ensure you comply with the current legislation before you make any employee deductions give us call on on freephone 0800 733 424 for a relaxed and confidential initial chat.