Deducting wages in a ‘dine and dash’ scenario
Restaurant chain Wahaca recently made the headlines over claims they were willing to deduct money from a waiter’s salary after a group of customers ran out without paying their food bill. Whilst social media users expressed outrage at this sentiment, Wahaca were quick to clarify that this practice would only occur in extreme circumstances and that no action would be taken in this situation.
The media debate surrounding this incident may have caused many employers to question their existing practices. After all, there is nothing unlawful about deducting money from an employee’s salary for an act of misconduct, providing the individual has given their prior written consent. These ‘wastage clauses’ are particularly common in the service industry, with employers often including mention of these within their contracts of employment as a failsafe against incidents which result in a financial cost to the business.
Employees may naturally be unhappy with the prospect of money being taken from their wages and will often look to dispute this. It is therefore important that employers ensure any contractual provision is applied lawfully. For example, Wahaca confirmed they would only deduct money from an employee’s salary in the event of ‘gross negligence’. Therefore, before doing so the company would need to be able to evidence that the employee’s behaviour fell into this category.
Wastage clauses that are applied unlawfully will be open to claims of unauthorised deductions at an employment tribunal. Whilst the compensation for an unauthorised deduction claim is not as high as discrimination or unfair dismissal, losing a case of this nature may still result in significant reputational damage. This means employers should assess each scenario on a case by case basis and be able to present sufficient proof of misconduct.
It is also worth noting that deductions which relate to misconduct will be excluded from National Minimum Wage (NMW) obligations. This means it will be acceptable to deduct an employee’s salary below NMW limits when they are liable and this will not result in potential punitive action from HM Revenue and Customs. Having said this, employers are advised to consider how salary deductions will impact employees financially and the affect this will have on morale. Therefore, it may be wise to consider spreading particularly significant costs across several pay periods to reduce any unnecessary financial impact.
Ultimately, employers can rest easy in the knowledge that deducting money from employees in times of misconduct remains lawful, providing they have the appropriate contractual provisions in place. Having said this, it may still be wise to review any existing contracts to ensure they remain fit for purpose and consider amending certain wording where necessary to ensure greater protection in the future.