generalwages

Unlawful deductions from wages — when your employer can and can't deduct

An employer cannot deduct from your wages unless required by law (tax, NI), authorised by your contract, or you've agreed in writing before the deduction. Otherwise it's unlawful and you can claim at tribunal.

Last reviewed: 27 May 2026 by panel solicitor2 min read

The short answer

An employer can only deduct from your wages if (1) required by law, (2) authorised by your contract, or (3) you've agreed in writing before the deduction. Anything else is unlawful and you can claim at tribunal within 3 months less one day, with up to 2 years' arrears. Legal basis: ERA 1996 s.13.

The protection

Part II of the Employment Rights Act 1996 (s.13-27) protects workers (not just employees) from unlawful deductions from wages.

A deduction is only lawful if:

Required by statute — income tax, National Insurance, court-ordered deductions, student loan repayments.
Authorised by a contractual provision that you have a copy of, or that has been notified to you in writing before the deduction is made.
You have given written consent before the deduction was made.

What counts as "wages"

Wages include: basic pay, holiday pay, sick pay (statutory and contractual), bonuses, commission, fees, notice pay (PILON), and statutory family-friendly pay. Tips and gratuities are wages from 1 October 2024 (Employment (Allocation of Tips) Act 2023).

Not wages: expenses, loans, redundancy pay (covered separately), pension contributions in payment.

Common unlawful deductions

Deducting "till shortages" without prior written consent.
Deducting "training costs" on departure without a clear pre-signed agreement.
Withholding final pay because of "damages" claimed by the employer.
Reducing pay below the National Minimum Wage (NMWA 1998 + ERA 1996 s.13).
Not paying for time worked (e.g. "off the clock" closing duties).
Failure to pay accrued holiday on termination (WTR 1998 reg 14 + s.13 ERA).
Deducting against agency workers' parity-rate top-ups.

Retail employees — special protection

For retail workers, deductions for cash shortages or stock deficiencies are capped at 10% of gross wages in any pay period (s.18 ERA 1996).

Bringing a claim

Claim at the Employment Tribunal within 3 months less one day of the deduction (or the last in a series). ACAS Early Conciliation first.

You can claim a series of deductions reaching back up to 2 years (the "Deduction from Wages (Limitation) Regulations 2014" cap).

What to do now

Get a copy of your contract and any policy authorising deductions.
Ask in writing for a clear explanation of any deduction.
Keep all payslips.
If unresolved, start ACAS Early Conciliation — it's free.

What to do this week

If you spot an unexplained deduction on your payslip, write to HR within 7 days asking which contract clause or written consent authorised it — silence often forces a refund without a tribunal.

Sources

Employment Rights Act 1996 Read on legislation.gov.uk
National Minimum Wage Act 1998 Read on legislation.gov.uk
Working Time Regulations 1998 — sections 13, 14 Read on legislation.gov.uk

Last reviewed 27 May 2026 by an SRA-authorised solicitor on our panel.

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