Deductions from pay - employees

If the amount you have been paid differs from what is expected, speak with your employer first to check what has happened. Your employer can then either correct the mistake or explain why there is a change in your pay.

Employers can make deductions from pay if

  • The employment contract allows for the deduction
  • You agree to the deduction in writing
  • Law requires it. Eg tax and national insurance
  • Missed work due to strike or industrial action
  • An overpayment was made.  There are exceptions to this, for example, a simple factual miscalculation resulting in an overpayment.  

 

Retail working deductions

An employer can deduct a maximum of 10% from weekly or monthly gross pay for retail workers to cover mistakes or shortfalls, for example with cash or stock.

This does not apply to final pay when leaving a job.

If the employer wishes to deduct pay in this way, they should notify the employee as to the reason in writing.

Being overpaid

If you have been overpaid, your employer has the right to claim the money back. They should inform you as soon as they detect the mistake.

If the overpayment is a small amount in a weekly or monthly pay, employers normally deduct the amount at the next pay day.

If the overpayment is large or has occurred over several months, the employee and employer should agree a fair way to resolve the issue. This usually takes the form of a payment plan agreed between both parties.

Deductions from pay and the minimum wage

Certain deductions reduce pay for minimum wage purposes. This becomes a minimum wage issue when it risks reducing the employee’s pay below their minimum legal entitlement. For more information visit GOV.UK – Calculating the minimum wage

 

If you do not agree with a deduction

If you do not agree that a deduction should be made, speak with your employer and attempt to resolve the issue, either informally or by raising a formal grievance citing the nature and basis of the complaint.  

If you cannot find an agreement with your employer, you could make a claim to an employment tribunal.

Use the online form to complain about not being paid the National Minimum Wage, visit GOV.UK Complain about pay and work rights

If you do not agree with a deduction

If you do not agree that a deduction should be made, speak with your employer and attempt to resolve the issue, either informally or by raising a formal grievance citing the nature and basis of the complaint.  

If you cannot find an agreement with your employer, you can make a claim to an employment tribunal.

Last updated: 30 June 2021