Deduction for Wages – the In’s and Out’s

We all know that it can be frustrating when you have an employee who you may have given an advance to, provided equipment to or where uniforms have not been returned on departure and you want to get it back BUT you need to know before you act what you can and cannot do.


An employer is prohibited from making any deduction from an employee’s wages without the employee’s specific authority and, even then, when this authority is obtained, such deduction can only be made for the purpose of paying a third party, for the benefit of the employee in accordance with the Fair Work Act.


The Fair Work Act provides that an employer may deduct an amount payable to an employee if:

  • The deduction is authorised in writing by the employee and is principally for the employee’s benefit;
  • The deduction is authorised by the employee in accordance with an Award or Enterprise Agreement; or
  • The deduction is authorised by or under a law of the Commonwealth, a State or a Territory, or an order of a Court.


Some examples of deductions from an employee’s wages by an employer that could breach the Fair Work Act include:

  • Deductions to cover shortages from cash registers;
  • Cost of training courses provided to an employee where the employee is directed to attend by the employer;
  • Cost of a mobile telephone provided to the employee for work-related use;
  • Cost of tools and equipment supplied to an employee for work purposes;
  • Cost of damages to the employer’s assets (including motor vehicles);
  • Cost of breakages or accidents; and
  • Cost of an employee’s uniform

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