Take care when making deductions from wages!
All savvy employers know they need to ensure their contract of employment allows for making deductions from wages for things like overpayments made in error or to have employees repay training fees. If the contract or a written agreement doesn’t allow for it then you face the potential of an unlawful deduction from wages claim at tribunal.
However it appears there is another factor to take into account now….

In a recent employment appeal tribunal case a company had an agreement with their employees that if they left within two years of completing a specific training course, they would repay the fee which would be deducted from their final salary. An employee resigned so the company made the deduction, however this reduced her pay below that of the National Minimum Wage. In this case the EAT found in favour of the employer as the employee had resigned and so was therefore responsible for the event that led to the deduction and therefore this exempted it from NMW calculations. Similarly if the employee’s misconduct had led to a dismissal it could be argued they were responsible for the deduction and therefore this also exempted it from NMW calculations.
However what this has highlighted is that if the employer had dismissed on the grounds of redundancy for example, the employee would not be responsible for the event that led to the deduction, it would therefore be taken into account in calculating whether the National Minimum Wage had been paid. There may be other circumstances when a deduction is due to an event that is no fault of the employee and as such may be considered in calculating if the NMW has been paid or not.

 

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