An employer is allowed to make the following deductions from an employee’s wage:
- Any deduction required or authorised by law (e.g. PAYE or PRSI)
- Any deduction authorised by the term of an employee's contract (e.g. pension contributions, or particular till shortages)
- Any deduction agreed to in writing in advance by the employee (e.g. health insurance subscription, sports and social club membership subscription)
Special restrictions are placed on employers in relation to deductions (or the receipt of payments) from wages, which -
- arise from any act or omission of the employee (e.g. till shortages, bad workmanship, breakages), or
- are in respect of the supply to the employee by the employer of goods or services which are necessary to the employment (e.g. the provision or cleaning of uniforms).
Any deduction (or payment) from wages of the kinds described at a. or b. above must satisfy the following conditions -
- the deduction (or payment to the employer) must be provided for in the contract of employment in a term whether express or implied and, if express, whether oral or in writing
- the amount of the deduction (or payment to the employer) from wages must be fair and reasonable having regard to all the circumstances including the amount of the wages of the employee,
- the employee must be given at some time prior to the act or omission, or the provision of the goods or services, written details of the terms in the contract of employment governing the deduction (or payment to the employer) from wages. When a written contract exists, a copy of the term of the contract which provides for the deduction or payment must be given to the employee. In any other case, the employee must be given written notice of the existence and effect of the term.
Any deduction (or payment to the employer) arising from any act or omission of an employee, in addition to meeting the requirements set out at (I) to (iii) above, must satisfy the following conditions:
- the employee must be given particulars in writing of the act or omission and the amount of the deduction (or payment) at least one week before the deduction (or payment) is made,
- the deduction (or payment) must be made no later than 6 months after the act or omission became known to the employer. However, if a series of deductions (or payments) are to be made in respect of a particular act or omission, the first deduction (or payment) in the series must be made within the 6 month period.
Where an employer makes a deduction from wages (or receives a payment from the employee) to compensate for loss or damage arising from any act or omission of the employee, the deduction must comply with the conditions set down at (i) to (v) above. In addition, the deduction (or payment):
vi. must be of an amount not exceeding the loss or damage sustained by the employer,
A disciplinary fine, where provision for such is made in the contract, may be deducted as well as a deduction for loss or damages. Any such fine would, of course, be subject to the conditions set down at (i) to (v)
Any deduction (or payment to the employer) from wages for the supply to the employee of goods or services which are necessary to the employment must meet with the requirements set out at (i) to (iii) above. In addition, any such deduction (or payment) must comply with the following conditions:
- the deduction (or payment) must not exceed the cost to the employer of providing the goods or services. In other words, the employer should not stand to profit by the sale of the goods or services to the employee,
- the deduction (or payment) must be made no later than 6 months after the supply of the goods or services to the employee. However, if a series of deductions (or payments) are to be made in respect of the supply of a particular good or service, the first deduction (or payment) in the series must be made within the 6 month period.
NOTE - Non-payment of wages or any deficiency in the amount of wages properly payable by an employer to an employee on any occasion will be regarded as an unlawful deduction from wages unless the deficiency or non-payment is attributable to an error of computation.