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  • Writer's pictureMathews Walker Team

Can an employer deduct from your wages?

Navigating the world of wage deductions can be confusing, especially when you're not sure what your rights are as an employee in New Zealand. Unlawful wage deductions can significantly impact your finances and well-being. Understanding when an employer can deduct from your wages and when they can't is crucial to protecting your income and ensuring you’re treated fairly.


Wages

What are wage deductions?

Wage deductions are amounts taken out of your gross pay for various reasons. These can include tax obligations, KiwiSaver contributions, student loan repayments, and sometimes specific costs related to your employment. While some deductions are mandatory and lawful, others require your explicit consent. Knowing which is which helps you safeguard your earnings.


When can an employer deduct wages?

In New Zealand, certain deductions from your wages are lawful if they meet the criteria set out in the Employment Relations Act 2000 and the Wages Protection Act 1983. These include:

  1. Mandatory Deductions: Deductions required by law, such as PAYE tax, ACC levies, KiwiSaver contributions, and child support payments.

  2. Court-Ordered Deductions: Deductions ordered by a court, such as fines or legal penalties.

  3. Employee-Authorized Deductions: Deductions you have agreed to in writing. This might include union fees, insurance premiums, or repayments for loans you’ve taken. It’s important that you give explicit and informed consent for these deductions.


Unlawful wage deductions

Unlawful wage deductions happen when your employer takes money from your wages without your permission or for invalid reasons. Examples of unlawful deductions include:

  1. Unauthorized Deductions: Any deduction made without your written consent or not required by law. Even if you owe your employer money, they cannot deduct it without your permission.

  2. Penalties for Mistakes: Deductions for losses due to mistakes you made, such as cash shortages, damaged goods, or theft, unless you’ve agreed in writing.

  3. Excessive Deductions: Deductions that reduce your wages below the minimum wage are unlawful, even if you’ve agreed to them.

  4. Deductions for Business Costs: Deductions to cover business costs, like uniforms, training expenses, or equipment, without your prior written consent.


If you think your wages have been unlawfully deducted

If you believe your wages have been unlawfully deducted, here’s some steps you could take:

  1. Review Your Pay Slip: Check your pay slip for any deductions and compare them with your written consent agreements or legal requirements.

  2. Communicate with Your Employer: Address the issue directly with your employer, giving them the opportunity to rectify any mistakes.

  3. Seek Legal Assistance: If the issue is not resolved, seek advice from a legal professional specializing in employment law (like us!)



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