What deductions can my employer make from my pay?

Your employer is entitled to make deductions from wages for certain purposes and in certain circumstances. These fall into three main categories:

1. Deductions authorised by statute

  • Income tax and National Insurance contributions (NICs); and
  • Court or tribunal orders (although the latter must be agreed in advance in writing by the worker).

2. Deductions which can be permitted by the contract of employment

Examples might include deductions from pay for fines related to traffic offences committed when driving company vehicles, or damage to machinery caused by a worker's negligence.

The circumstances in which deductions from wages are permitted must relate to matters arising after the worker has agreed to the deduction. Retrospective agreement would not make such deductions lawful. The employer must give the worker a written copy of the part of the contract of employment where the worker has agreed to such a deduction.

Workers in retail employment have extra protection, limiting deductions for cash shortages or stock deficiencies to a maximum of 10% of any one pay packet, except for the final one.

3. Deductions which can be covered by advance written agreement

These include permission to deduct union subscriptions or payments to charity. The worker may withdraw his or her written agreement to such deductions.

Note: This content is provided as general background information and should not be taken as legal advice or financial advice for your particular situation. Make sure to get individual advice on your case from your union, a source on our free help page or an independent financial advisor before taking any action.