All employers have employees who handle cash. Any such person may find shortfalls at the end of the day. Other deficits, of all sorts may also arise, in many different ways. The employer may wish to discourage, or even penalise such mistakes, or simply to recover a sum he considers due to himself, by threatening to deduct such deficits from salaries. Can he do it?

To employees this can seem unfair and harsh. The deficit may arise accidentally, or through any one of many ways where they are not at fault. Even if the employee is at fault, if he or she has not been dishonest, is it right to deduct money in this way?

The rights and wrongs may be difficult to disentangle, but the law is simple.

The Employment Rights Act 1996, sought to clarify the law, and a case has now made the situation definite. An employer may deduct such sums if, and only if, the employee agrees to this in writing. The usual way to achieve this is by including an appropriate clause in the employment contract (though this may not always be possible)

These provisions have their origins in the Truck Acts of the nineteenth century which set out to protect employees from being paid by their employers with, for example, tokens, which would only be accepted within the company shop.

Deductions made without such agreements, whether fairly or not, may be recovered through the courts by the employee. For the employer it is therefore important to provide a proper contract of employment, with the appropriate clause included, and the employee should be careful to read his employment contract before signing it.

Thanks to Ruth Ibegbuna