Deductions from Pay for Cash/Till ShortagesPosted in : Seamus Says - Employment Law Discussion on 5 February 2021
My question relates to the role of cashiers, whether it is lawful for an employer to have a policy that requires an employee to refund the employer regarding any discrepancies in cash, assuming that it's a cash shortage.
For example, if the cashiers till is short at the end of the day, when it's balancing, can the employer have a policy that the employee pay back the difference? Reading the rest of this question is quite long. The core question is, is there anything in law to say that an employer cannot have such a policy? I know there are laws in relation to retail and such like, Seamus, but maybe dealing with this part first. What's the situation with an employer deducting monies because there's a till shortage or, I don't know, we were chatting before we came on live, somebody drives off a filling station, that kind of thing.
Seamus: Yeah, and this is a question that, from an advisory point of view, that does come along from time to time. The basic legal position on is that an employer is not allowed to make any deduction from an employee's pay or wages unless the contract of employment says that they can, or that there is something in writing that it's been agreed in writing that those deductions can be made. And so the straightforward, out of the box position is that the answer is no, unless there's some kind of agreement in place that the employer can make the deductions. And there are circumstances that arise that employers could find very frustrating but there are human errors and mistakes that happen as well when it comes to dealing with cash and there's always an element whereby the employer has to have a little bit of leeway and give in relation to a cash shortages.
There's other circumstances that are just silly mistakes and maybe go beyond the pale of explanation and concerns would arise in relation to maybe is an employee taking money and things like that. But the employer needs to be very careful about making deduction from wages and I think part of the question did relate to this idea that, you know, if you have maybe young employees in retail earning minimum wage, you certainly cannot make any deductions that would bring their salary below the minimum wage. So it can create problems.
There are specific exemptions for people in retail and hospitality and the employer is not allowed to take more than 10% of an employee's gross wage in any pay period. And if that isn't enough to cover the damage, then they have to take it on subsequent paydays, but again it would be down to if there being a strict agreement permitting the employer to make those deductions. And it does seem very unfair that, you know, an employee would come to work, would do work and it would be paid for work, and they would be penalised for some silly mistakes that can happen. But I accept the fact that it could be hugely frustrating for an employer specifically whenever there are stupid mistakes made or whether there's larger concerns. I think where there are larger concerns, there's a disciplinary process to go through in relation to that. But you do need to be careful just from a minimum wage position as well that you're not making substantial deductions, even if there isn't agreement in place to do so.
Scott: Okay and then just to clarify, Seamus. That agreement has to be in place before any deductions are made so you're not allowed to . . . if I'm right now, like, do this for years, but from memory, you have to have the agreement in place before the loss happened?
Scott: Am I wrong? If there's 50 quid going out the till, you can't then come up with an agreement to pay back the 50 quid over 5 weeks. You have to have the agreement before the money's gone missing. Is that correct?
Seamus: Yes, and you'll sometimes come across it in things like the staff handbook or in the policies and procedures, but it's something that the employee should be clearly aware of in advance of commencing the position. Usually, if you're working in a job or role that is dealing with cash, that is vastly reduced nowadays, but there still is a number of positions out there where there's cash involved or where there's a loss to your business. You know, a classic one if you're a very bad waiter and you're dropping more than your fair share of plates and delf and things like that, is the employer entitled to recover some of those costs from your salary? Very difficult and particularly whenever you look back in relation to the rules now in and around deductions for uniforms and things like that as well, it can be very difficult to justify those matters. But certainly, yes, it should be a matter that's agreed in advance of the loss happening.
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