Can Employer Cut Wages Without Warning?

Q.

I work for a limited company as a digger driver. This week I was 7 hours short on my payslip. Some of my work mates also were short.

There was no explanation so I phoned my boss who told me he could not afford to pay all the wages. Is he allowed to do this without bothering to inform us?

A.

The short answer to this is ‘no’. The legally accurate answer to this is also ‘no', but the slightly longer and perhaps more realistic answer is ‘no, but...’.

Legal Pay Reductions

Looking at the facts first, there are only a few instances in which it is acceptable for an employer to make reductions in employees pay. The first instance is for legal deductions such as tax and national insurance, which are usually taken at source and detailed on your payslip.

The second legally acceptable situation is when deductions are made for union membership, pension contributions or other agreed payments relating to your employment. These need to be agreed in advance, detailed on your payslip and written into your Employment Contract.

There are also circumstances that can be considered acceptable but are less common, such as if the worker has been genuinely overpaid and the employer is getting back the money, although this can only be done to a maximum of 10% of salary per payslip. If a worker has taken part in Industrial Action, deductions can be made and if there is a court order connected to the employer, such as an attachment of earnings for non-payment of council tax.

The final situation where deductions are acceptable relate to shop workers and missing stock, although again this can only be deducted at a maximum of 10% payslip and must be agreed in writing.

It is the prior agreement in writing that characterises all the legal wage deductions and it is this that is missing in your situation, as well as, more importantly, a fair reason for the deduction in the first place.

What to Do

Unless you now feel like your situation relates to one of the above situations, you would certainly have a case to report your employer – perhaps you could start by speaking to your local Citizens Advice Bureau.

However, the country is still gripped by a global economic downturn and more and more people are loosing their jobs. If you feel like your boss gave you a fair explanation and you can swallow the pay reduction, you may be better placed to ride out the difficulty. Perhaps you and your colleagues could call a meeting with your boss to ask about the current situation of the company, and say that you can be fair if you are kept informed.