23 August 2019
Employment - Permissible pay deductions
I act for an employer whose employee resigned and gave four weeks notice. The employee was previously paid personal leave in advance.
The award permits annual leave taken in advance to be deducted from the final pay but makes no similar provision for personal leave.
Can the employer deduct from the final pay an amount to cover personal leave taken in advance?
Thank you for the question.
In order for any deduction to be permitted under the Fair Work Act 2009, three elements must be satisfied:
If the deduction is authorised in writing, the issue of for whose benefit the authorisation was given is key. For example, was it ‘imposed’ on the employee because of an annual shutdown, or was it granted following a request by the employee to take a holiday where they did not have sufficient accrued leave?
Employers making impermissible deductions risk penalties of up to $63,000 for corporations and $12,600 for individuals.
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