Deductions from your pay

Your employer is not allowed to make a deduction from your pay or wages unless:

• it's required or allowed by law, such as National Insurance, income tax or student loan repayments
• you and your employer agree the deduction in writing
• the contract of employment states that they can do this
• there is a statutory payment due to a public authority
• you've not worked due to taking part in industrial action (see our strike hub for more information)
• it's the result of a court order or employment tribunal decision.

The Employment Rights Act 1996 affords protection against unlawful deductions from wages to employees, agency workers (but not self-employed people) and apprentices. If your employer is attempting to deduct a previous overpayment, please see overpayment of wages.

Employers sometimes need to make an additional one-off payment, for example, when paying back pay following the late implementation of a pay rise, when paying a bonus or non-consolidated payment, or when rectifying an underpayment. These one-off amounts can, however, affect your universal credit, or some other benefit entitlements, for the following month. 

If you are expecting such a payment and are worried that it may cause you to lose your benefit entitlement, it may be possible to ask your employer to make the payment in a number of instalments; your benefits may still be affected, but the difference should be smaller and potentially more manageable. We have produced a template letter to help you to request this. 

If you are not sure whether you'd be better off receiving the payment as a lump sum or in instalments, contact us to be put in touch with our Welfare service, who can discuss your options with you.

See more about how earnings affect Universal credit.

If you can't sort things out directly with your employer (either informally or formally via a grievance), it is important to contact us for advice. We will explore the options with you.

With our support, one option could be to bring an employment tribunal claim for unlawful deduction from your wages. To do this in England, Scotland and Wales, ACAS has to be notified and they will offer you the opportunity to use Early Conciliation. In Northern Ireland, you'll need to notify the Labour Relations Agency and follow a similar process. Note that for RCN representation, you must have been in the correct category of membership at the time of the underpayment.

A claim to an employment tribunal can be made within three months (less one day) of the underpayment. If there is more than one deduction from your wage over a period of time, you could potentially claim back pay for the earlier deductions. However, there may be a two-year cap on the back pay you could claim, depending on the country in which you work. Be sure to gather as much evidence as you can about the underpayments that have been made to assist the tribunal with its decision. 

If you miss the three-month time limit and cannot make a claim to an employment tribunal, you can pursue your claim through the county court via a breach of contract claim. The limitation period is six years from the date of the breach. In Scotland, this should be done through the sheriff’s court within five years of the unlawful deduction.

Timing is very important. Make sure you are within the time limits for making a claim to the employment tribunal. Our employment tribunal guide has more information.

Grievance

Contracts

Employment tribunals and the courts

Self-employment

Citizens Advice - Problems getting paid

Welfare service

Pay deductions - nidrect