What are the limitations in respect of the deductions on my salary?

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A client poses a question to their attorney: My employment contract makes provision for deductions from my salary and now my employer wants to deduct money. What are the limitations in respect of deductions that can be made?

As a general point of departure, deductions can only be done once the employee has given written consent to such deductions. However, the employer is also entitled to deduct money when there is a legal obligation to do so, for example, in terms of a collective agreement, legislation, a court order or arbitration award. Deductions of employee’s salaries are regulated by section 34 of the Basic Conditions of Employment Act, 75 of 1997 (“BCEA”).

A typical scenario would be that the employment contract will contain a clause which provides that “the employer has the right to deduct from your remuneration any amounts due by you to the employer”. This amount can include, inter alia, any expenses the company has incurred on behalf of the employee; unauthorised expenses; expenses relating to the employee’s negligence, etc.

The deductions which employers can legally make includes tax deductions, contributions to the Unemployment Insurance Fund (UIF), union membership fees, medical aid, pension or provident fund contributions, any agreements with the employee to pay back debts, deductions in terms of garnishee orders, etc.

Employers acquire written consent for any other form of deductions. If the employment contract does not make provision for a deduction clause, the employer is then required to draft an additional agreement or make an amendment to the employment contract to make provision for such deduction. However, the employee needs to freely and voluntarily sign the said agreement or amendment.

What is significant to note in this regard is that before this deduction may be made, the employer has to comply with the following requirements: the loss or damages caused by the employee must have happened during the course of their employment; the employer must follow a fair procedure and the employee must be given a reasonable opportunity to show why the deduction should not be made; and the total amount of the deduction should not exceed the actual amount of the loss or damages. Therefore, in respect of this last point, it is important that the employer provides actual proof of the loss or damages in order to quantify the amount.

Furthermore, in a scenario where your employment contract contains a clause similar to the aforementioned example, employers tend to feel that these types of clauses give them unrestricted discretion to deduct monies. However, it must be borne in mind that section 34(2)(d) of the BCEA further restricts the amount which the employer may deduct to 25% (one-quarter) of the employee’s salary. Therefore, the employer is not allowed to subtract the full amount of damages/loss suffered from one deduction.

In conclusion, when signing an employment agreement, take note of whether there is a deduction clause contained in the employment agreement. Employers may want to make deductions during the employment, or alternatively once the employment relationship has ended. If your employment contract contains such a clause, it is important to be aware that these deductions can only happen in specific instances, if they are not governed by statutory law, a court order or any other written agreement.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. (E&OE)

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