In New Zealand, your wages are protected under the law. Employers don’t have free reign to deduct amounts from your pay, even if they believe they have a valid reason. The Employment Relations Act 2000 and other legal protections make clear what’s fair game for deductions—and what isn’t.
First, it's important to understand that your wages or salary are legally protected under the Wages Protection Act 1983. This means that any deduction from your pay must either be:
Required by law (such as income tax or student loan repayments), or
Agreed to in writing by you, the employee.
The spirit of these rules is to ensure your pay is not docked unfairly or without proper agreement.
What Employers Can Deduct
Statutory Deductions: There are some amounts that your employer must deduct from your pay by law. These include:
PAYE tax: Your employer is legally obligated to deduct tax from your wages and pay it to the Inland Revenue Department (IRD).
Student loan repayments: If you have a student loan, these deductions are made automatically once you earn over the repayment threshold.
Child support payments: If required by a government order.
KiwiSaver contributions: If you’re enrolled in KiwiSaver, your employer must deduct your agreed percentage and add their contribution.
Deductions You’ve Agreed To: Beyond the mandatory items, your employer can only deduct money from your wages if you’ve agreed in writing. Common examples include:
Union fees: If you’ve agreed to have these deducted.
Repayment for services or benefits: Such as agreed contributions towards a gym membership or health insurance arranged through your workplace.
Overpayments: If your employer accidentally overpays you, they can deduct the overpaid amount, but only after consulting you and ideally setting a fair repayment schedule.
What Employers Can’t Deduct Without Consent
Unauthorised or Discretionary Deductions: Your employer cannot decide on their own to deduct money from your wages for something like a broken piece of equipment or a customer who left without paying. Even if you accidentally damaged something at work, the employer must have your explicit written consent before deducting anything from your pay.
Penalties or Fines: Employers cannot deduct penalties or fines for performance-related issues or misconduct, unless you’ve given prior written consent. For instance, they cannot dock your pay for being late to a shift, unless you’ve agreed to such deductions in your employment agreement.
Disciplinary Deductions: The law strictly forbids wage deductions as a form of punishment for workplace infractions or disciplinary reasons.
It’s important to note that you can withdraw your written consent for certain deductions at any time. If you do, your employer must stop making those deductions promptly. However, if you owe money that you previously agreed to repay via wage deductions, you may still have to arrange another method of repayment.
A common source of tension is when an employer wants to deduct money for a loss, such as theft by a customer or damage to company property. Here's the legal position:
Your employer must have your written consent before making such deductions. This consent must be given voluntarily and not under pressure.
If you signed an employment agreement that includes provisions for such deductions, they may still need to discuss and seek fresh consent, particularly if the circumstances are contested.
Your wages are yours—protected by strong laws that prevent unfair deductions. Always be aware of your rights and seek clarification if your employer intends to make any deductions. Remember, any consent given must be voluntary, and you can revoke it when needed. If in doubt - talk to the professionals. mathewswalker.co.nz | 0800 612 355
Disclaimer: The information provided in this blog is for general informational purposes only and should not be considered legal advice. While we strive to keep the information accurate and up to date, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained on the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. For specific legal advice tailored to your situation, please contact a qualified legal professional.
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