Deductions from wages

The Employment Act 2006 protects workers from having unauthorised deductions made from their wages.

Definition of Wages 

'Wages' means any sum payable to a worker in connection with their employment, including:

• Any fee, bonus, commission or other sums for work done and due under the contract of employment
  
  
• Holiday pay
  
  
• Any amount owed in respect of a payment for time off for:
  
  1. Trade union duties
     
     
  2. To look for work when given notice of dismissal by reason of redundancy
     
     
  3. To attend ante natal appointments or
     
     
  4. To perform duties as a trustee of a relevant occupational pension scheme
     
     
• Notice pay (either statutory or contractual - which is the highest
  
  

Lawful deductions

An employer can only make a deduction from a worker's wages if:

• It is a legal requirement (for example income tax and national insurance)
  
  
• There is a clause in the workers contract allowing for deduction to be made, or
  
  
• The worker has agreed to the deduction before it is made
  
  

Automatic unlawful deductions  

The following deductions from a worker’s wages are automatically unlawful: 

• Deduction of an employment agency fee; or
• Deduction of a work permit fee
  
  

Overpayment of wages

Where an employer inadvertently overpays a worker (wages or expenses reimbursement) a deduction to recover the overpayment will not be considered an unlawful deduction from wages under the Employment Act 2006.

Retail workers

Specific rules apply to deductions for workers employed in retail. Please see our guide below for more information. 

Dispute

If a worker believes an unlawful deduction has been made, they may be able to bring a complaint to the Employment and Equality Tribunal, which may award compensation. However, we recommend contacting MIRS in the first instance so we can assist with conciliation where possible.

The worker’s right may be enforced by a complaint to the Employment and Equality Tribunal made within three months of the relevant deduction or in cases involving a series of deductions the time limit runs from the date of the last deduction in that series.  

Contact us

Manx Industrial Relations Service

1. +44 1624 672942
   
   
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