‘You owe me!’ – The pitfalls of making deductions from wages

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Andrew Rayment explains how employers who deduct monies from employees without checking their right to do so are heading towards an expensive tribunal claim

As an employer, have you ever found yourself in a situation where you need to make a deduction from an employee’s wages? Are you confident that you know the legal rules about when you can and can’t make deductions from wages?

Picture the scene: one of your workers has had to take three weeks off work because of a bad back. He is paid statutory sick pay but there is no company sick pay scheme to top this up. He has three young children to support and you know he is going to struggle to make ends meet. You therefore agree to ‘top him up’ to his full wages for the three weeks as a ‘loan’ to help him out. You agree with him, however, that the loan is to be repaid when he is in a better situation. You put the payment through payroll so he receives the money as ‘wages’. It is all done on trust, so nothing is written down or confirmed in writing. […]

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