AM Writes: One of my employees has failed to follow proper procedures and has damaged an expensive piece of company equipment. Can I make the employee pay for the damage?
As the technological needs of businesses increases, the amount invested in to company equipment has rocketed and, when something goes wrong, this can leave employers facing a hefty bill. Where the equipment has been damaged by the actions of any employee employers may believe they can simply take the cost of repair from the individual, however, this recoupment is not as straightforward as it may seem.
Deductions can only be made from employees’ wages when there is a legal right to deduct, for example the right to deduct for tax and National Insurance, a contractual right to deduct or the employee has consented to the deduction in advance. It is important to examine the employee’s contract of employment to see whether there is a clause relating to damage of company property as it is unlikely the employee will consent to paying for an expensive repair. If there is no contractual right to deduct, and no consent has been given, the cost of repair cannot be deducted from their next wage packet regardless of whether the damage was intentional or accidental. Any attempt at recovering costs will be an unlawful deduction of wages, for which the employee can make a claim at tribunal.
Where there is a contractual right to make deductions from wages, it will be possible to recover the costs of damage from the employee’s salary. The deductions clause still needs to be reasonable however and any penalty clauses, those which state an amount to be deducted regardless of the actual costs of repair, will be unenforceable. It will never be possible to deduct more than the cost of the damage regardless of what is agreed in the contract.
Although there is a clause allowing the deductions to take place, employers still have to ensure they are acting reasonably in carrying out the deductions. What is reasonable will be viewed on a case by case basis and the first step is to ensure a full investigation has taken place to prove that the employee in question damaged the property by not following the correct procedures. Once certain, the employer should discuss making wage deductions with the employee. This is important as the individual circumstances of the employee need to be ascertained to calculate a reasonable amount to be deducted from each pay packet. Simply taking the whole costs of damage in one go, or refusing to tailor any repayment scheme to that employee, is likely to be an unreasonable deduction.