Deductions from your salary: what an employer may and may not take

Wages are protected by law, and an employer may not deduct whatever it likes. The Wage Protection Law sets out a closed list of permitted deductions — everything else is unlawful, even where the employee «agreed».

What may be deducted

Income tax, national insurance and health insurance.
Contributions to a pension fund or study fund under the applicable arrangement.
Union dues or organisation handling fees, where such an obligation exists.
A defined debt of the employee to the employer, where the employee consented in writing.
An advance actually paid against salary.
A sum set by a court judgment or an attachment order.

What may not

«Fines» imposed by the employer — for lateness, for a mistake, for a broken item. The law does not recognise such deductions.
The value of damage, without a judgment or written consent given after the debt arose.
Till shortages, stock losses or alleged damage, so long as they have not been proven in a proceeding.
Sums that would leave the employee without the protected portion of the wage.

Why «consent» often does not help

A blanket consent signed at the start of employment — «I agree to any deduction» — is not valid. What is required is specific consent, to a particular known debt, given after that debt arose. This is the distinction on which many employers fail.

Deductions in the final account

The employer has no free hand at the end of employment either. Setting off «prior notice not given» is possible only where the employee genuinely gave none, and damages cannot be set off without a proceeding. Severance not paid on time becomes withheld wages, with everything that follows.

How to read the payslip

Take each deduction line separately and identify its legal basis.
Compare gross to net and look for unexplained differences.
Confirm that pension contributions actually reached the fund and were not merely deducted — the fund statement shows this immediately.
Keep payslips for the whole period; the limitation period for labour claims is seven years.

If money was deducted unlawfully

An unlawful deduction is treated as withheld wages, with the penalty that follows. Ask in writing for the legal basis of the deduction, keep the answer and the payslips, then demand repayment. This is one of the easiest labour disputes to prove — everything is visible on the payslip itself.

Pension contributions that never arrived

Failing to transfer money deducted from wages to the fund is a particularly serious breach and, in certain circumstances, a criminal offence. If the fund statement shows missing months, that is the moment to act rather than waiting until employment ends.

This article is general information and does not replace legal advice.