Reference · Jurisdiction
When a Great Britain employer can deduct money from pay
GOV.UK lists permitted grounds for wage deductions. Retail shortfalls have a 10% gross pay cap per pay period, with a separate rule for final pay.
Sources checked
- 01Check the authority
Look for an allowed basis, such as a legal requirement, contract term or written agreement. Source 1
- 02Check minimum wage
Apply the minimum wage calculation rules for the deduction. Source 2
- 03Check retail shortfalls
A 10% gross pay cap per pay period applies to covered retail shortfalls. Source 1
- 04Check final pay
GOV.UK lists a separate final-pay exception for the retail shortfall cap. Source 1
A deduction’s purpose affects the checks that apply.
Check why the deduction is being made
GOV.UK lists deductions that are required or allowed by law, that the contract permits, or that the worker agreed to in writing. It also lists certain other grounds including earlier overpayments and court-ordered debt payments. The permitted basis is the first check. Source 1
The minimum wage calculation is another check
GOV.UK says deductions cannot normally take pay below the National Minimum Wage, with listed exceptions. HMRC says a worker’s cost of clothing required for the job reduces pay for the minimum wage calculation, including where the item is bought from a third party. Source 1 Source 2
A retail shortfall can be collected over more than one pay period
For covered retail cash or stock shortfalls, GOV.UK lists a cap of 10% of gross pay each pay period. On gross weekly pay of GBP 250, the cap is GBP 25 for that period. The cap does not create permission for a deduction that lacks a permitted basis. Source 1
Final pay has a separate retail rule
GOV.UK says an employer can take the full amount owed from final pay when the worker leaves. The ordinary 10% rule applies per pay period during the job. The guidance also points workers to Acas if they cannot resolve a pay shortfall with their employer. Source 1