A recent decision out of Christchurch confirms that employers cannot deduct money from wages without written agreement from their employee. H. (aged 18) started work in December 2005. His job was fitting windscreens at a car yard. He did not have a written employment agreement.
In late April 2006 he had an accident in his employer’s work van where he scraped the side of a client’s vehicle. There was a dispute at the hearing as to whether H. had been told he was not allowed the drive the work van prior to the accident. H. did not accept that he had been told that he could not drive the van.
In any event H. was told after the accident by his employer that they only had third party insurance and not full cover. A quote was obtained to repair the damage caused to the work van and it was $900.00. The employer decided to deduct this from H.’s pay. For nine weeks $100.00 was deducted from H.’s wages. H. said he did not verbally authorise the deduction. The employer said that H. did.
In May 2006 H. was given a written warning about his appearance. H. continued to work but in May 2006 H. resigned and claimed he had been constructively dismissal.
I have dealt with constructive dismissal before. That means an employee claims that he has resigned only because an employer has acted unfairly or unlawfully.
The Authority agreed with H. It turned out that one of the reasons that H. resigned was because he had been told that if he stayed at work his employer would continue to deduct money from his wages for damage to the van. He was told that if he left the debt would be wiped.
Essentially I think the Authority saw this as a bribe which was particularly difficult for the employer because the employer had no right to deduct the money from his wages anyway.
The Wages Protection Act 1983 specifically states that no employer can deduct anything from anybody’s wages without written authorisation (once again if there had been a written employment agreement with a clause that allowed deductions the employer would have been in a much stronger position).
The employer ended up paying:
$6,069.44 gross lost wages.
$8,000.00 compensation.
$300.00 penalty for failing to provide an employment agreement.
$500.00 penalty for making deductions without written authorisation.
Costs.
From 1 April 2008 the minimum wage for employees aged 16 years and over rose to $12.00 (gross) an hour. This does not include new entrants and employees subject to the minimum training wage.
The training wage rose to $9.60 (gross) an hour. The training wage applies to people doing recognised industry training involving at least 60 credits a year.
There is no longer a minimum wage for youth. There is a new entrants minimum wage. The new entrants minimum wage is $9.60 (gross) an hour. This will apply to some 16 and 17 year old workers.
This article originally appeared in the Southland Times Work To Rule column. Mary-Jane Thomas is head of Preston Russell's employment law team. Contact her by clicking here
