Unlawful Deductions from Wages
Claims

Unlawful Deductions from Wages

Under sections 13 and 14 of the Employment Rights Act 1996, employers cannot make deductions from workers’ wages unless they are required or authorised by law, authorised by a relevant contractual provision, agreed to in writing in advance by the worker, or fall within a statutory exception. Permitted deductions include the following:-

• Deductions authorised by a provision of the worker’s contract which has been communicated to them in writing before the deduction.
• Deductions to which the worker has agreed in writing before the event giving rise to the deduction.
• Deductions required or authorised by statute (e.g. income tax and National Insurance contributions), including deductions under an attachment of earnings order.
• To recover previous overpayments of wages or employment expenses.
• Where the worker has participated in strike action or other industrial action and the deduction is made on account of that action.
• In consequence of disciplinary proceedings held under statutory powers.
• To discharge a court order or tribunal judgment requiring the worker to pay the employer, where the worker has provided prior written consent to the deduction.
• In retail employment, deductions to recover cash shortages or stock deficiencies, provided the deduction is otherwise authorised. The first deduction must be made within 12 months of the employer discovering, or reasonably being expected to discover, the shortage or deficiency. Deductions must not exceed 10% of the worker’s gross wages on any payday, except where the deduction is made from their final wages.
• To pay specified amounts to third parties under arrangements to which the worker has agreed in writing beforehand.

Tribunal proceedings in relation to an unlawful deduction from wages claim must be brought within 6 months less one day of the date of the deduction, where that date falls on or after 1 October 2026. Where the deduction occurred before 1 October 2026, the previous time limit of 3 months less one day continues to apply. Where there is a series of deductions, time runs from the date of the last deduction in the series, and the 6-month time limit applies if that last deduction occurred on or after 1 October 2026.

Claimants must (unless exempt) notify Acas and obtain an early conciliation certificate before commencing Employment Tribunal proceedings. Provided Acas is notified before the applicable time limit expires, the time limit is paused during early conciliation, which can last up to 12 weeks, and the claimant will have at least one month from receiving the certificate to present the claim.