The Employer’s Liability for Deducting Wages: A Closer Look

It is the duty of each employer to pay employees remuneration within the period agreed upon individually when signing the contract. The employer is obliged to pay the employee a fixed amount agreed upon by both parties. Can the employer reduce the amount of remuneration without the employee’s knowledge? What consequences can you face as an employer?

The law in the Constitution

By signing a contract with a future employee of your company, in accordance with the law, you do not have the option of deducting the employee’s remuneration. It would be a violation of the law to lower his/her salary.

According to section 13 of the Employment Rights Act 1996 the following situations are an exception:

• The deduction is required by law (such as income tax or national insurance contributions)
• The employee has given their written consent to the deduction
• The deduction is necessary to recover an overpayment of wages or expenses
• The deduction is required to satisfy a court order or a tribunal award.

The employee can seek a declaration, payment or repayment of the unlawfully deducted amount and in some circumstances, unlawful deduction of wages compensation for further financial loss. If you are ordered to pay compensation, you will have to pay when you get the written judgment. If you don’t pay within 14 days of the judgment, you may also have to pay interest on the amount you owe.

Visit of the labour inspector

One of the consequences that can happen to you for not fulfilling the contract is a visit by a labour inspector who has been informed earlier by the employee about the failure to pay a specific amount of money. This is called a monocratic reconciliation and is intended to establish the evidence of the case before the inspector.

At the moment when the labour inspector issued a decision on the employee’s right, and you would not comply with it, it is possible to initiate enforcement proceedings against you.

Have you experienced a reduction in your salary and do you know how to claim your rights? Go to gowork.uk and advise employees looking for answers!