Whilst the usual case is to have a general clause in your employment agreements allowing you, as the employer, to deduct any overpayments etc. from the employee’s wages, you should not rely on the general clause to cover all situations.
The general rule must be that if you want to make provisions for deductions from an employee’s wages then a specific clause needs to be included in writing in the employee’s employment agreement or other supplementary agreement.
For example, if:
- there is accommodation provided to the employee and the cost of commercial cleaning the employee’s accommodation, if required, when they leave is to be deducted; or
- you send an employee away for a course, and the employee is to repay you for the cost of their airfare over the following 6 months.
You do not have to go to the trouble of drafting a whole new agreement, a simple addendum to the Employment Agreement can be added and signed by the employee noting the agreement and payment terms.
Deducting money from employees without the required provisions included in your employment agreements may mean that you become subject to an investigation by the Labour Inspector and possible penalties. An unlawful deduction could render an employer liable to a penalty under the Employment Relations Act, which is a maximum of $5,000.00 for individuals or $10,000.00 for companies.
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