When is the docking of pay legal?

This blog explores situations where you may be able to deduct wages and the legal considerations you should take into account as employer.

Recently, commuters in London have faced travel disruption due to a 24-hour strike on the underground, and across Europe, plunging temperatures have made getting to work more difficult. 

In situations such as these, you may want to consider docking wages, but don’t get caught out – make sure you understand the rules on wage deductions and seek legal advice if you are unsure.

Can I dock pay if a worker cannot turn up for work due to public transport strikes or bad weather?

There is no automatic legal right for a worker to be paid if they cannot get into work, but you may be required to pay if you have any contractual or customary arrangements in place. If you decide that you will pay for absence as a result of bad weather or travel issues, make it clear to your employees that this is for a limited period only.

If bad weather conditions or constant strikes plague you year after year, consider implementing a policy which establishes how you deal with absences and pay matters in these circumstances and communicating it to your staff so that they are aware.

Remember that employers have a duty to ensure the health and safety of their employees; therefore you should never encourage your employees to drive in dangerous weather conditions. Try and be flexible and consider whether there is someone who can cover the work at short notice, if the employee can work from home or a work site that is closer to them or if they can make up the time at a later date. Employees who can only work if they are in the actual workplace, such as shop assistants, can normally be required to take the day as unpaid or as annual leave.

Can I dock pay if an employee is late to work?

If this is specified in the employee’s contract, you may dock a worker’s pay if they are late for work in certain circumstances. However, schemes that impose excessive penalties for lateness, or deduct pay for periods longer than the actual lateness, have been criticised by a recent Parliamentary Committee and could fall foul of national minimum wage rules.

Can an employee bring a claim to an Employment Tribunal?

If you have made an unlawful deduction from a worker’s wages, the worker can bring a claim in the Employment Tribunal to recover the amount of the deduction. The claim must be brought within three months of the date of the last deduction.

The law clearly specifies the circumstances in which an employer can make deductions from workers’ wages. This includes where the deduction is:

• Authorised by Statute, for example to pay income tax, National Insurance or student loan repayments.
• Set out in the worker’s Contract of Employment, for instance where the employer has a contractual right to deduct money in repayment for a loan the employer has provided to the employee.
• Permissible due to the worker providing their written consent, for example the employee has agreed to make pension contributions.
• As a result of an overpayment of wages.
• Due to the fact that the worker has taken part in a strike or industrial action.
• To fulfil the terms of a court order.

If you are unsure, check with your Employment Law Adviser before taking action.