Is an employer entitled to deduct your wages?

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Earlier this month well known frozen yoghurt chain Yogurberry faced charges and fines upwards of $25,500 over alleged illegal deductions from staff wages. Yogurberry allegedly paid backpackers as little as $8 an hour, which was up to ten dollars below the legal wage. The chain also allegedly failed to pay employee superannuation or give employees a uniform allowance and payslips, which are also breaches of Fair Work laws.

According to the Australian Fair Work Ombudsman, Natalie James, $582,000 of deducted wages have been recovered over the past three years through legal action from take-away food outlets in Australia alone.

Although illegal, there are often cases in which employers deduct wages from workers without agreement from the employee, the court, or the Fair Work Commission.

When can an employer deduct wages?

Under only a few circumstances is it legal for employers to deduct wages from employees. These circumstances rely upon whether or not deductions have been agreed upon by parties prior to or during employment. Employers are allowed to deduct employee wages only if the employee agrees to the deduction in writing and it is for the employee’s benefit, if there is a court order or the Fair work Commission allows for the deduction, or if the deduction is agreed upon within the employee’s registered agreement.

Instances in which the employee is under the age of 18, a parent or guardian must agree in writing for wage deductions to be made. Under all other circumstances employer deductions from wages are not legal in conjunction with the Fair Work ACT 2009 Sect 324.

What’s the penalty for illegally deducting wages?

According to the Fair Work Act 2009 Sect 324, a fine of up to $33,000 can be imposed for each Fair Work breach. In the case of Yogurberry, where the chain faced fines upwards of $25,500 for illegally deducting employee wages and failing to adhere to other Australian Fair Work laws, the fine was relative to the amount of deductions made and the number of employees, who each received back payment for the lost income.

If you believe your employer might be deducting from your wages illegally, or if you would like more information about Fair Work laws in Australia, don’t hesitate to contact Owen Hodge Lawyers on 1800 770 780.

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