“That’s coming out of your wages” is often a phrase you might hear from an employer. To give some common examples, where this might occur is where you might damage property in the workplace or even an employer taking amounts out of your wage to top up a cash register that hasn’t balanced after your shift. However, if your employer has ever actually taken deductions from your wage for those reasons, or any reasons similar, they may be breaching national employment legislation.
In Australia, most employees and employers employment conditions fall under the provisions of the Fair Work Act 2009. This legislation outlines the rights of employers and employees in the workforce.
Under the Act, an employer must pay the amount of wages payable to the employee in full. However there are exceptions to this, these are outlined in section 324 of the Fair Work Act. Employers are permitted to take deductions from an employees wage where:-
- the employee has authorised the deduction in writing and the deduction is principally for the benefit of the employee; or
- the deduction is authorised by the employee in accordance with an enterprise agreement (where a workplace has a registered agreement and the award doesn’t apply); or
- the deduction is authorised under the modern award or an FWC order; or
- the deduction is authorised by or under a law of the Commonwealth, a State or a Territory, or an order of a Court.
If any deduction is being made that does not fall into the above categories of permitted deductions, then an employer is breaching section 324.
It is also important that employers and employees are aware that although some deductions may be authorised in writing within employment contracts that are entered into between an employer and employee, those clauses may not be enforceable. Under section 326 of the Act a term of a modern award, an enterprise agreement or a contract of employment has no effect if that term is:-
- directly or indirectly for the benefit of an employer or a party related to the employer and is unreasonable;
- where the employee is under the age of 18 and the deduction or payment is not agreed to in writing by a parent or guardian.
Some examples of certain circumstances where deductions are allowed may be the deduction of health insurance fees made by an employer that is a health fund or a deduction for a loan repayment made by an employer that is a financial institution.
Further, a deduction is reasonable if the deduction is for the purpose of recovering costs directly incurred by the employer as a result of the voluntary private use of particular property of the employer whether the employee was authorised to use it or not.
A case example which occurred in the Northern Territory is Andreas Bader v Cyclone City Cleaners Pty Ltd  NTMC 044. In this case, the defendant employer withheld wages on the grounds that the employee had caused damage to a company vehicle. Despite having a clause in the employee’s contract requiring the employee to pay for the damage, the Court found the deduction was not allowed by virtue of section 326 of the Fair Work Act.
If you are an employee who believes their employer is making unfair deductions from your wages or if you are an employer who thinks that a contract they may have with an employee might breach the Fair Work Act, please do not hesitate to contact our office.