Sometimes it’s okay to reduce your employee’s wage, but the circumstances have to be right. There are several legal deductions your staff will already face—the likes of tax and National Insurance payments.

But other reductions are more complicated. In this guide, you’ll find out how to reduce pay in a legally compliant fashion.

Can a company reduce employee pay without notice?

So what are acceptable reductions? Well, changes to an employee’s pay can happen due to union membership or contributions to a pension scheme. You’ll have to agree these with your employee in advance of any payslips.

Have these details documented in written form on your employment contract. This can help you avoid employee grievances when a payslip arrives.

Another reduction might come about due to an employee overpayment. In this instance, you’ll have to discuss with your employee how they can return the overpayment in a way that doesn’t leave them in hardship. This would result in deductions in their future payslip(s).

In other instances, some employees can vote for a pay cut. Why would anyone do such a thing? It could be to save their jobs if the business is struggling, for example.

Other reductions could include an employee involved in industrial action (such as a strike). An employee may also have a court order against them. Due to this, there could be an attachment of earnings. A common example here is if they’ve failed to pay their council tax.

Other possibilities

Reductions may also come about due to employee offences. Here’s an example—if you work in retail, you may have noticed there are till discrepancies. First of all, you need to be sure the employee is responsible for the missing goods. Accusing them out of the blue could upset them, especially if they’re not responsible.

If you have proof they’re responsible for the missing items, you can deduct the amount at 10% of the employee’s wage per payslip. You’ll need to confirm this in writing with the employee.

Can the employee fill the income gap with other employment?

Having suffered deductions, some employees may want to add to their income with further work in a second job. Depending on the type of contract you have, they’ll have to ask you for consent if this is the case,

You will want to review this for health and safety reasons. You have a duty to keep track of all the hours your employee works so they don’t burn themselves out. But, unless they’re in a senior role and more susceptible to additional stress, you may wish to allow them to take on more work.

Need more help?

Looking for more help with legal reductions without notice? Call us today on 0800 028 2420.