Renowned for its expertise in workplace relations and employment law, CCIWA’s legal practice Business Law WA assists businesses of all sizes.
Our specialised team of lawyers ensures your organisation remains legally compliant, safe, and productive amid workplace law changes.
Here are this month’s frequently asked questions from our Members about deductions, answered by our Business Law WA team.
Q: Can we ask an employee to pay the costs for missing a training class?
A: Employers must be cautious when seeking reimbursement of training costs from employees under the Fair Work Act 2009 (Cth). According to the Act, it is prohibited for an employer to require an employee to personally incur expenses or reimburse the employer if:
- The requirement is reasonable under the circumstances; and
- The expense benefits the employer or a related party.
Since training costs generally benefit the employer, demanding reimbursement from an employee who missed training may be unreasonable, depending on the circumstances. Automatically deducting course fees from an employee’s wages could also violate the FW Act.
Employers should investigate why an employee missed training to ascertain if there is a valid reason or inadequate verification. If no valid reason exists, employers may consider disciplinary measures or negotiate repayment terms with the employee.
Q: Can we rely on a clause in an employment contract to make deductions from an employee's pay?
A: Under the FW Act, an employer can deduct sums owed from an employee's salary if authorised in their employment contract, provided it principally benefits the employee, and deductions must be authorised in writing by an employee.
Recent amendments to the FW Act mean employers may no longer be able to simply rely on a clause in an employment contract to make deductions. Fair Work Regulations require authorisation to specify the amount for single deductions and the nature of deductions for multiple or ongoing sums. This mandates additional documentation to ensure compliance and avoid breaching the Act's requirement to fully pay employees.
Other Resources
- Deductions from an employee’s pay for state system employers
- Training: IR Masterclass – build on your knowledge across a range of industrial relations areas
- Training: Employment Law for HR Professionals
Q: Can I deduct outstanding wages from annual leave accruals?
A: An employer can deduct from an employee's wages for annual leave accruals in certain cases allowed by the relevant industrial instrument. Many modern awards include clauses allowing for advance annual leave, specifying that if employment ends before the leave accrues fully, the employer can deduct the corresponding amount from the termination payment. This requires a written agreement signed by both the employer and employee, addressing specific criteria.
Q: Can we deduct from an employee’s wages if they have not given the required notice under the contract?
In certain circumstances, an employer may deduct from an employee’s wage if the employee has not provided the required notice under the contract or under the relevant industrial instrument.
Most modern awards provide that an employer can deduct up to one week of wages from an employee’s pay if:
- The employee is aged over 18 years;
- The employee hasn’t given the right amount of notice under the award; and
- The deduction is reasonable.
These deductions may only be made from wages owed under the award, not from other entitlements such as accrued unused leave or over award payments.
Please note, this information is general in nature and should not be considered legal advice.
If you have any questions about performance management and misconduct, contact our Employee Relations Advice Centre on 9365 7660 or email [email protected].
Or, if you require legal advice and would like to speak to one of our employment lawyers, email [email protected].
