The short answer is it depends, as so many things, on what it says in the contract.
In fact, it depends on the terms of the contract AND where the money came from. A few examples.
- If your employee has taken more paid holiday than they have accrued and you have a clause in their contract explaining that you can deduct money in these circumstances, you can deduct overpaid holiday from any outstanding money owed to them.
- If you have paid for your employee’s training and you have a clause allowing you to recoup some of the cost or you have a training fees agreement, you can deduct a proportion of the training fees you’ve paid if the employee leaves (within the agreed timeframe).
- If your employee doesn’t return an item of your property, you may not deduct the cost of that item from their final salary unless you have the contractual right to do so.
- If you find that an employee is entitled to a tax rebate once you process their final pay and they owe you money for something else, you cannot withhold that money in payment of the “debt”. Money in that instance does not belong to the Company and you cannot legitimately deduct it or withhold it from the employee.
In short, it’s all about the contract. Make sure you have clauses specifying the circumstances in which you would want to be able to deduct money in your contracts of employment. Then if you want to rely on such a clause, feel free!
If you’d like us to read through a contract for you and advise on your rights to make deductions, let us know!