Deductions From Your Wages: When It's Legal and When It Isn't

‍‌​‌‌​​​‌​‌‌‌‌‌​​​​‌​‌‌​​​‌‌​​‍Your boss can't just help themselves to your wages because something's gone wrong on site. The law says they can only take money in very specific situations, and most "we'll dock your pay" threats in construction don't actually stack up.

3.22.1 The basic rule: they need a legal reason

Section 13 of the Employment Rights Act 1996 says your employer must not make deductions from your wages unless one of three things is true:

• It's required by law -- for example tax, NI, student loan, court orders.
• It's in your contract, and you've been given that clause in writing before the deduction.
• You've agreed in writing in advance to that specific type of deduction.

If it doesn't tick one of those boxes, it's very likely an unlawful deduction.

Excepted deductions (Section 14)

Section 14 lists deductions where section 13 doesn't apply -- meaning they can be made without a contract clause or written agreement:

• Overpayments of wages or expenses.
• Statutory deductions required by law (tax, NI, student loans).
• Court orders or attachment of earnings.
• Deductions the worker has agreed to in writing (separate from the contract).
• Payments to third parties the worker has consented to (e.g. union subs, pension contributions).

The core idea is the same -- your boss can't just make it up as they go along.

National Minimum Wage floor

On top of that, deductions must not take your pay below the National Minimum Wage for the hours you're being paid for, where the deduction is for your employer's own benefit (not things like tax). This catches a lot of construction employers out.

What counts as "wages"?

ERA s.27 defines wages broadly -- it includes:

• Basic pay, overtime, bonuses, commission.
• Holiday pay, statutory sick pay, statutory maternity pay.
• Any other sum payable under your contract.

So if they're withholding your bonus or overtime as a punishment, that's potentially an unlawful deduction too -- not just basic pay.

3.22.2 Common construction scenarios

1) Damaged tools, vans, plant, materials

You drop a laser level or clip a bit of plant and they say "we'll take that out of your wages."

Legally:

They can only deduct if:

• There's a clear clause in your contract allowing this and
• You had that clause in writing before the damage, or
• You've agreed in writing to pay for it.

Even then, deduction must not push you below National Minimum Wage for that pay reference period, where it's treated as an expense of doing the job.

They can still discipline you if you were reckless -- that's separate -- but just docking pay "because we say so" is usually unlawful.

2) Training cost clawback

You do a course and then leave; they take the course fee from your final pay.

Law and Acas guidance say:

They can only reclaim training costs from wages if:

• It's clearly set out in your contract or a signed training agreement before you start the course, and
• It sets out the amount, when it applies, and that they can deduct from wages.

For statutory/mandatory training (like basic H&S required by law), it's often not reasonable to claw back costs at all.

Any deduction still can't drop you below the minimum wage for the hours in that pay period if it's treated as a work expense.

If they spring it on you after you've done the course, with no prior agreement, that's very likely an unlawful deduction.

3) Overpayments

If payroll overpays you, they can normally recover the overpayment -- it's one of the excepted deductions under section 14.

But:

• They should tell you what went wrong and agree a reasonable repayment plan, not just wipe out a month's wages.
• If they hammer you so hard it undercuts minimum wage, HMRC may take an interest.

4) PPE, tools, uniform, digs

Deductions for things like:

• PPE or uniform that you have to wear for the job.
• Chargebacks for your own "starter pack" of tools.
• Transport or accommodation handled by the employer.

These can easily cause minimum wage breaches if they come out of your pay and benefit the employer. HMRC guidance and case law show this is a common way employers end up non-compliant on NMW.

You can agree to some of this in writing, but they still can't use it to underpay you below the legal minimum for your hours.

3.22.3 CIS subcontractors -- different rules

This guide is mainly about employees, because ERA s.13 protection only applies to workers and employees, not genuinely self-employed CIS subcontractors.

If you're CIS self-employed and a main contractor deducts from your payment beyond what's in your subcontract:

• You don't have an employment tribunal claim for unlawful deduction.
• Your remedy is a contract claim -- either through adjudication (under the Construction Act) or the courts.
• CIS tax deductions (20% or 30%) are a separate, lawful HMRC requirement -- that's not your employer docking your pay, that's the tax system.

If you're not sure whether you're genuinely self-employed or actually a worker/employee (which is common in construction), see guide 3.1 on bogus self-employment and guide 3.4 on PAYE vs CIS. If you're misclassified as self-employed when you're really a worker, you may have ERA rights after all.

3.22.4 Final pay -- they can't just sit on it

When you leave or get sacked, employers sometimes hold back final pay as leverage -- "we'll sort your pay once you return the van keys" or "we're not paying until we've checked for damage."

The rules:

• Final pay (including accrued holiday pay) must be made on your normal pay date -- they can't just indefinitely hold it.
• Any deductions from final pay are subject to the same rules as above -- they need a legal reason, a contract clause, or your written agreement.
• Withholding final pay entirely because of a dispute is almost always an unlawful deduction.

If they're sitting on your final pay, put your request in writing, cite ERA s.13, and start the Acas clock running if they don't respond.

3.22.5 Lawful vs unlawful deductions -- in practice

Lawful (assuming proper clauses/agreements and NMW respected)

• Tax, NI, student loan, court orders.
• Clearly agreed training clawback, signed before the training.
• Refund of a genuine overpayment, done reasonably.
• Contractually agreed deductions (e.g. accommodation or optional benefits) set out in writing.

Likely unlawful

• "We've decided to fine you £200 for damaging a drill" with no contract clause or written consent.
• Taking money for training you never agreed in writing to repay.
• Deducting kit/PPE costs that effectively drag you under minimum wage.
• Taking money off your final pay as a punishment with no prior written agreement.
• Withholding bonuses or overtime you've earned as informal punishment.

Agency workers get similar protection -- the agency shouldn't make unlawful deductions either, even if the client is moaning. (See guide 3.5.)

3.22.6 What to do if it happens to you

If you spot a deduction you didn't agree to:

Ask for an explanation in writing

"Can you show me where in my contract I agreed to this deduction?"

Keep copies of payslips and any messages.

Check the law

• Section 13 and 14 of the Employment Rights Act (right not to suffer unauthorised deductions and excepted deductions).
• Check whether it's pushed you below National Minimum Wage for your hours.

Raise it informally first

Sometimes payroll or the manager will back down once they realise you know your rights.

If they refuse

• Call Acas on 0300 123 1100 -- free, confidential advice and they'll explain next steps.
• Citizens Advice can help you work out if it's unlawful and draft letters.
• If needed, start Acas Early Conciliation -- this is mandatory before you can file a tribunal claim. The EC process also pauses the time limit (adds up to 6 weeks).
• Then file a claim to the Employment Tribunal.

Time limit

• 3 months less 1 day from the deduction (or the last deduction in a series) to start Acas Early Conciliation.
• For a series of deductions (e.g. the same unlawful deduction every month), time runs from the last deduction in the series, not the first. This matters because payroll issues often repeat over several months.
• Miss this deadline and you lose the right to claim, even if the deduction was clearly unlawful.

If you're in a union, get your Unite/GMB rep involved early -- they deal with this sort of thing all the time.

What to do next

Before your next job or renewal:

• Actually read your contract and any "training agreement" or "deductions" clauses, so you know what you've really signed up to rather than finding out on your payslip.
• Keep every payslip -- if you ever need to prove an unlawful deduction, payslips are your evidence.
• If you're CIS, check whether you're genuinely self-employed or might be a worker -- that changes your rights completely (see guide 3.1).
• If something's already been taken, don't wait -- the 3-month tribunal deadline runs fast.

Sources

• Employment Rights Act 1996, s.13-27 -- legislation.gov.uk/ukpga/1996/18/part/II -- protection from unlawful deductions from wages, excepted deductions, and definition of wages.
• National Minimum Wage Act 1998 -- legislation.gov.uk/ukpga/1998/39/contents -- the legal minimum wage floor that deductions cannot breach.
• National Minimum Wage Regulations 2015 -- legislation.gov.uk/uksi/2015/621/contents/made -- detailed rules on what counts as pay and what deductions/payments can reduce NMW.
• Acas guidance on deductions from wages -- acas.org.uk -- practical guidance on lawful and unlawful deductions.
• HMRC guidance on National Minimum Wage -- calculating minimum wage pay, including the impact of deductions and expenses.

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