As an Employer, you might wish you could dock an employee’s wages for loss or damage to property or equipment but in reality it is unlikely to be possible. There are very few situations in which an employer can actually deduct wages or reduce a worker’s pay packet.

Employers (and not the employees themselves) will often be held liable for the conduct of their employees. This is the case even if the employer had no intention to cause harm and played no physical role in the harm. Employers are responsible for directing the behaviour of their employees and accordingly, share in the good as well as the bad results of that behaviour – even when it includes damage to property or equipment. Liability is typically assigned to the employer in this instance (not the employee) for employee negligent acts or omissions in the course of their employment.

It’s not uncommon to see general consent provided in the employment agreement which gives authority to deduct – however, recent legislative changes (a result of the minimum standards legislation that came into effect 1 April 2017) means employers must still consult staff before doing so. In a situation where an employer wants to recover some costs because the employee has lost or damaged some property or equipment, the employer will need the employee’s consent.

The employee can still withdraw his or her consent to a deduction and if an employee does object to it, then it can be problematic for the employer and probably unlawful for the employer to deduct.

In summary, an employer needs to have an employee’s written permission to make deductions from their pay – this has not changed. A clause in the employment agreement which states that the employer is entitled to make reasonable deductions will be sufficient written permission, however as a result of the recent legislative change, employers are now required to consult with an employee before they make a deduction from the employee’s pay – even if the employer has their written permission. In most cases a simple email to the employee will suffice from the employer advising that an amount will be deducted from their pay in a coming pay period and the reason for the deduction inviting their comment within a set timeframe, before the deduction is made.

Act Now!

If your company doesn’t have Employment Agreements in place for your employees, or has outdated ones which need updating to meet current legislation, we can help! Give us a call on 0508 424 723 or email info@safebusiness.co.nz.