Shortfalls in tills or missing stock are a frustrating conundrum many retail employers face.

You have enough things to do than play detective. Sometimes it will be an honest mistake – the employee is handling cash, gift cards, debit and credit cards and store discount cards and transactions can go amiss. Other times they may be malicious intent behind the employee’s actions.

You will want to recover the costs, but what is the best way to do this?

Can employers make deductions from their employee’s wages for their cash shortages or stock deficiencies?

The law allows an employer to make deductions from employees’ wages. This includes where the deduction is permitted by statute, set out in the employee’s contract of employment, permissible due to the worker providing their written consent or as a result of an overpayment of wages.

This is why it’s particularly important for retail employers to ensure that their employees’ contracts of employment are drafted clearly and robustly by a HR and Employment Law expert. They should set out that in respect of any shortage or deficiency of stock or cash, the employer is entitled to deduct an amount equal to the full amount or value of the shortage or stock deficiency.

But even with this contractual provision, employers need to take care. Retail employees have extra legal protections regarding deductions of wages. If you make a deduction from their wages unlawfully, you could find yourself facing an Employment Tribunal claim. This could result in hefty financial awards and reputational damage!

What can retail employers deduct?

When you wish to make a deduction for these reasons, bear in mind the following rules:

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Retailers supported by Ellis Whittam

How can Ellis Whittam help your retail business?

We help over 13,500 retail businesses across the country. Trusted by BIRA and Toni & Guy, we help our clients get the outcomes they want to achieve. Whether you need advice about deductions of wages, Sunday working, theft and dishonesty, misconduct, performance, absences or grievances, our legally qualified staff can give you pragmatic and commercially savvy guidance and support. 

Contact us to find out how we can help.

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We combine the service quality of a law firm with the certainty of fixed-fee services to provide expert, solutions-focused Employment LawHR and Health & Safety support tailored to employers.

Call us on 0345 226 8393.

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