Deductions from wages

Your employer can only take money from your wages if the deduction is required by law, allowed by your contract, or something you agreed to in writing before it was made. Tax, National Insurance and student loan repayments are lawful because the law requires them. Pension contributions, union subscriptions and salary sacrifice schemes are lawful because you agreed to them. Anything else, such as docking pay for a mistake or a uniform you did not return, is usually unlawful unless you signed up to it in advance.

The three lawful routes

Under Part II of the Employment Rights Act 1996, a deduction is only lawful if:

1. It is required or authorised by law. Income tax under PAYE, National Insurance, student and postgraduate loan repayments, court-ordered attachment of earnings and child maintenance deductions all fall here.
2. It is allowed by a term of your contract that you were told about in writing before the deduction was made.
3. You gave your written agreement to it before it was made.

The second and third routes have to be in place before the deduction. Your employer cannot make a deduction and then ask you to sign something saying you agree. Nor can it rely on a contract clause added after the event.

Most public sector pay deductions are routine and come under the first two routes: tax and National Insurance, pension contributions to the NHS Pension Scheme, Teachers’ Pension Scheme, LGPS or Civil Service scheme, and anything you have opted into, such as union subscriptions or a cycle to work scheme.

Exceptions where you cannot claim

Some deductions are allowed even without your prior agreement:

• recovering an overpayment of wages or expenses
• deductions for time you were on strike or taking other industrial action
• deductions following a disciplinary process where a statutory provision allows them
• payments to a public authority required by law, such as a direction from HMRC
• deductions you have agreed to be paid to a third party, such as a union or charity

The overpayment exception is the one that catches people out. If your employer paid you too much, it can usually take the money back from later pay without asking first. Our guide to salary overpayments covers how recovery should work, and the industrial action guide covers strike deductions.

Common deductions that are unlawful without agreement

Employers sometimes make deductions that the law does not allow, often by mistake:

• docking pay for a till shortage, breakage or damaged equipment with no prior written agreement
• charging for uniforms, DBS checks or training without a signed agreement
• holding back pay because you did not give enough notice when you resigned
• taking back a payment that was not actually an overpayment, such as an allowance you were entitled to
• cutting pay because of a change to your contract you did not accept

Even a lawful deduction cannot take your pay below the National Minimum Wage for the hours you worked, if it is for something connected to the job such as uniform or tools. For workers aged 21 and over, the National Living Wage is £12.71 an hour from 1 April 2026.

Salary sacrifice is different

Salary sacrifice is not a deduction. It changes your contract so you give up part of your salary in exchange for a benefit, such as a lease car, cycle to work scheme or extra pension. Because your contractual pay is lower, the sacrificed amount is not taken from wages you are owed. You must agree to it before it starts, and it should be documented. Our guide to salary sacrifice explains the tax side.

What to do if money has been taken

Check your payslip first. Every deduction has to appear on it, with what it is for. If a deduction is not shown, that is a breach in itself. See your right to a payslip.

Then:

1. Ask payroll or your manager in writing what the deduction is and the legal basis for it.
2. If you think it is wrong, raise a formal grievance and ask for the money back.
3. Keep copies of your contract, payslips and anything you signed.

If that does not resolve it, you can bring an unlawful deduction claim in the employment tribunal. You have to contact ACAS for early conciliation first. The time limit for these claims is now six months for most cases, counted from the date of the deduction or the last in a series of deductions. A tribunal can order your employer to repay the money.

Unpaid holiday pay is usually claimed as an unlawful deduction too. So are unpaid shift enhancements and overtime, if your contract says you are entitled to them.

In the public sector

Large public employers rarely make deliberate unlawful deductions, but payroll errors are common, especially around changes of band, backdated pay awards and staff who work across several posts. If several colleagues have the same problem, your union rep can raise it collectively, which is often quicker than individual grievances.

For a fast check on whether your net pay looks right, use the take-home pay calculator with your gross salary and pension scheme.