Deducting pay and entitlements

For free and confidential legal advice about this topic, please contact us  here. 

There are only limited circumstances where your employer can make deductions from your pay, and there are certain steps your employer must follow if you are under 18 years old. This is the case even if your employment contract permits your employer to make deductions. If your employer has made a deduction from your pay or is withholding your entitlements, we recommend that you contact us here. 

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Can my employer withhold my wages or entitlements?

Your employer can only make a deduction from your pay if: 

  1. You agree to the deduction in writing and the deduction is principally for your benefit, or 
  2. The deduction is authorised by you in accordance with an enterprise agreement, 
  3. The deduction is authorised by a modern award, a Fair Work Commission order, or by an order of a court.

If you agree to the deduction, your agreement must specify the amount that will be deducted and any changes in the amount deducted must be authorised by you in writing.

You can withdraw your authorisation at any time in writing. 

Can my employer require me to make payments?

Your employer cannot directly or indirectly request you to spend or pay your wages if the requirement is unreasonable and if the payment will directly or indirectly benefit the employer or anyone related to them.

If you are applying for a new job, there are also rules about when a potential employer can request you to pay money to them. Your new employer cannot require you to pay them if: 

  • the requirement is in connection with employment or potential employment with the new employer; and 
  • the requirement to pay money is unreasonable; and  
  • the payment is directly or indirectly for the benefit of your new employer, or a party related to your new employer.  

Can my employer make deductions if I’m under 18 years old?

Your award, enterprise agreement or contract may have a clause that permits a deduction or payment to be made, however, if you are under 18, these terms will have no effect unless the deduction or payment is agreed to in writing by your parent or guardian.

Can my employer deduct from my final pay if I have not given notice?

Some modern awards permit your employer to withhold a certain amount of your pay if you haven’t given the required amount of notice. For more information about notice and how much notice you need to provide, you can visit our ending employment page. 

Some awards say that an employer can deduct wages if: 

  1. the employee is over 18 years old; 
  2. the employee has not given the notice as per the period stated in their award; and 
  3. the deduction isn’t unreasonable. 

In these circumstances, generally the employer can only deduct an amount that is no more than one week’s wages.  

Employers can only make deductions from wages owed under the award. They cannot deduct from other entitlements owed to you, such as annual leave or other payments under the award. 

To check if you are covered by a modern award, you can visit the Fair Work Ombudsman page here. 

Do I need to pay back money if my employer has overpaid me?

If you have been overpaid by mistake, for example, due to an accounting error you will generally need to pay back the overpayment. If you can’t pay the amount back straight away, you could ask your employer if you can pay the overpayment back in instalments. It’s a good idea to record any agreement that you reach with your employer in writing, for example, in an email.

What can I do if my employer withholds or deducts my pay?

There are limited circumstances where an employer can deduct your pay, even if your employment contract says otherwise. We recommend that you contact us for free and confidential advice to check if the deduction or payment is permitted.  

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