Taking money out of an employee’s pay is called a deduction.

An employer can only deduct money if:

• the employee agrees in writing and it’s principally for their benefit
• it’s allowed by a law, a court order, or by the Fair Work Commission, or 
• it’s allowed under the employee’s award or registered agreement.

Examples include salary sacrifice arrangements or payments into an employee’s health fund.

Deductions have to be shown on the employee’s pay slip and time and wages records.

An employer can’t deduct money if:

• it benefits the employer directly or indirectly and is unreasonable in the circumstances, or
• the employee is under 18 years of age and their parent or guardian hasn’t agreed in writing.

Example: Deducting money for till shortages

Jenny works as a bar attendant in a tavern and is covered by the Hospitality Industry (General) Award 2010.
At the end of her shift her manager, Robert, counts the money for the day. He notices that the till is $20 short. Robert usually takes money out of the bar attendant’s wages to make up for the shortfall.

Even though the till is $20 short, Robert can’t deduct this money from Jenny’s wages. This is because the award does not allow it, the deduction would not benefit Jenny and it would be unreasonable in the circumstances.
This cost will need to be met by Robert as the employer.