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The Employment Rights Act 1996 (ERA) protects individuals from having unauthorised deductions made from their wages. It is unlawful for an employer to make a deduction wages except in three situations, such as:

  1. the deduction is required or authorised by statute; or
  2. it is authorised by the worker's contract; or
  3. the worker has given their prior written consent to the deduction.


There are exceptions to the protection offered by the unlawful deductions regime and thus falls outside the employment tribunal's jurisdiction. This includes:

  • Overpayment of wages or expenses: Deductions made in order to reimburse the employer in respect of an overpayment of wages or an overpayment in relation to expenses incurred by the worker in carrying out their employment and;
  • Strike: Deduction made by the employer on account of the worker’s having taken part in that strike or other action.

Who is protected?

The Act offers protection to all workers. This includes not only employees but also individuals who have entered into other contracts to perform any work or services.

Right to complain

An employee has the right to complain only if the employer has made a deduction, or has received a payment or has recovered an amount exceeding the permitted limit. There must be an actual deduction in wages as a threatened deduction.

What are ‘wages’?

The Act sets out a wide definition of "wages". This includes any sums payable to the worker in connection with their employment, including:

  • Any fee, bonus, commission, holiday pay or other emolument referable to the worker's employment, whether payable under their contract or otherwise
  • Statutory Sick Pay, Statutory Maternity Pay, Statutory Paternity Pay and Statutory Adoption Pay, Statutory Shared Parental Pay.
  • Sums paid during suspension on medical grounds,
  • Sums payable pursuant to orders for reinstatement or re-engagement by the employment tribunal,
  • Payments in respect of expenses incurred by the worker in carrying out their employment,
  • Redundancy Pay and Garden Leave Pay

This is not an exhaustive list.

What is a deduction?

Unlawful deduction of wages amount to a breach of contract. However only an actual deduction can be the subject of a complain.

A deduction is when an employer pays a worker less than the net amount of the wages properly payable. On that occasion, the deficit counts as a deduction (unless there is an error). An assessment of the contractual position of the worker and the employer is carried in order to establish whether the deducted amount falls within the definition of wage as explained above.

Contact KLG – Employment Lawyers for Employees in London, Reading, Slough, Watford, Maidenhead & Henley

If your wages have been deducted unlawfully, please contact us at Kalra Legal Group on 08081685860 where we offer a 15 minute no obligation consultation call where we can discuss the matter and advise you on subsequent steps and measures.

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