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Employer withholding or deducting money from your pay

Can an employer withhold or deduct money from an employee’s pay?

Thursday, 24 October 2013


CS       Yes sponsored by Turner Freeman, David Taylor is in our studio this afternoon. David, welcome once again.

DT       Thanks for having me.

CS       Good to have you in here. He is open for business listeners, by all means. We’re talking about anything related to the workplace. Any kind of action that might be pending where you are or any kind of entitlement you’d like a clarification on. Maybe something your employer is doing that you’re not quite happy about or an employee could be doing that you’re not quite happy about. 13 18 73 the telephone number. 13 18 73 he won’t be here forever so jump on the open line right now, David will speak to you from Turner Freeman lawyers, our sponsors of the legal matters segment. An issue that often arises Dave is when an employer is permitted to withhold or deduct money from an employee’s pay. Now I remember years back, I was paid half again what I was owed that week. In other words, the first two weeks of the next pay cycle and they alerted me to it and I said….I joked about it and I said “don’t worry, just leave it there, I’ll look after it” and then I gave it back to them. Now are they entitled to take it from me if I’d of said well that’s your fault, I want to keep it?

DT       No, they’re not entitled to take it from you and the important thing about this is really about the bargaining power. They’re entitled to get the money back from you but they’re only entitled to get it back from you on terms that you will agree or if there is an order of the court and there’s a few other exceptions too but they’re broadly the two ways that the employer’s entitled to get it back so if an employer…and what generally might happen is the employer might make a smaller over-payment over an extended period of time so somehow in the system they’re paying $100 extra a week and nobody really notices that there’s that extra money and they say well, you owe us $3,000 and we want to take the whole thing from you next pay packet and somebody will say well that’s a bit rough, I haven’t got $3,000 to give you now. The employee’s in quite a strong bargaining position to say well, I think we should be looking at deducting it at $50 a week for the next period or whatever and the employer really needs to negotiate with the employee as to how they get it back.

CS       So it’s not that simple? It’s not a case of, yes, you can just take the money at will?

DT       No, it’s really not. The employee’s got no capacity just to do it.

CS       Right, ok. Ok, let’s go to our callers 13 18 73 the telephone number. Russell, go ahead, David is listening.

DT       Hi Russell.

C1       How you going David. Just a query, with annual leave, can an employer make you take annual leave?

DT       They can, providing it’s reasonable. Often, and this is a classic one, there will be a Christmas shutdown and as long as people have been provided with a reasonable amount of notice and the word and the act is reasonable, then that is permitted. So, it wouldn’t be reasonable to direct someone to take all their leave on a day’s notice but it is reasonable to have a Christmas shutdown.

C1       Yeah, I mean the example is Melbourne Cup day coming up is on Tuesday and the employer’s asked everybody to take annual leave on the Monday.

DT       And to have the holiday on the Tuesday?

C1       And the Tuesday yeah.

DT       It would really depend on how much notice they gave. If it was just the Friday, that might not be. Given it’s only a day, it may be reasonable. You’ve just got to look at the circumstances of everybody there.

C1       Yeah.

CS       You don’t want to take it off obviously?

C1       Well, I mean, you’re annual leave is for when you have holidays and things like that and if they do that all during the year when there’s a public holiday like ANZAC Day and Easter and things like that where there’s working days in between. If you do that, you finish up at the end of the year when you’ve got no annual leave left.

DT       I think that’s the really valid argument. People should be able to take a couple of weeks off with their family, their time you know during school holidays or at times where its convenient. And if everything is done at the employer’s convenience and not when the family’s around then it simply doesn’t work. And for a lot of people where you’ve got one parent doing shift work where they don’t have school holidays or they don’t have periods off, it becomes a really big issue.

C1       Yeah, yeah.

CS       Alright Russell, thank you very much for your call.

George, go ahead. David’s listening.

C2       Ah yes, G’day David.

DT       Hi George.

C2       Mine’s a bit of an unusual one in that my wife manages for a national company a retail store and there’s some staff members who just refuse to tow the line. Now the company puts demands on the managers these days in that they have to get key figures, they have to do this, they have to perform and everything else and make sure but when you have staff who refuse to do any extra, refuse to work when you want them to. It being performance managed, had customer complaints against them, big loss of sales in their department and this sort of thing and yet, the company doesn’t want to take any action against the employees because they’re scared of the action…that they’ll…and it’s actually causing stress and

DT       Discomfort for her as the manager.

C2       Well, actually to my wife, she’s not sleeping, she’s got medical problems now. She’s never been to a doctor for 20 years.

DT       I think the answer really for her and it’s certainly not an easy situation is that she needs to involve the Human Resources element of the company and work with them.

C2       She’s done that.

DT       The danger is…

C2       They’re not game enough to do anything against a woman because of they’re scared that she’ll take action against them.

DT       Then what your wife needs to do is make sure that she’s recording things in writing and sending them on to HR and saying, you know I’m concerned about this. This is what’s happened today, I’d really like to meet with her and put in place some sort of plan with her to improve the performance so that if she doesn’t improve that steps can be taken.

C2       All that’s been done and there’s been something like eight letters of complaints from customers about these people and yet they won’t do anything about it.

DT       Well, one of the great things about employment law is that you can’t do anything about a bad boss. If the boss doesn’t want to manage their business well, at the end of the day, the employer’s got no power to change it.

CS       It’s an interesting one. Robert, go ahead.

C3       Yeah, thanks Chris. David, I know the unfair dismissal laws have changed over the years but my understanding and please tell me if this is correct is that if you want to dismiss a staff member basically because of incompetence, you would need to have, in writing, warned them about that and told them in writing that one of the consequence may be dismissal at least twice over any particular period of time before you can finally sack them. What’s your understanding of the current rules before, without being dragged into court?

DT       There’s sort of two sides to this. The first is, the rules are different if you’re a small business. So if you’ve got less than 15 employees, there’s a different set of rules.

C3       We are a small business.

DT       Ok, then there is a small business checklist as part of the Fair Work Act and if that’s followed, then the Act provides that the dismissal that arises out of it is not an unfair dismissal.

C3       Excellent. That’s on their website?

DT       It is. And that involves a process of giving people warnings and the like but once it’s followed, it’s a jurisdictional objection so you can take it right at the start and say, well no, we follow the small business process and as a result, the dismissal wasn’t an unfair dismissal.

C3       Excellent. Thank you very much for that.

CS       Alright, Rob, thank you. Robert from Bathurst. One here from Mitch:

My mother works for Council and she can only accumulate a certain amount of annual leave before she is made to take some of it. Now we know that bosses don’t like you to accumulate because it then becomes a liability on their balance sheet after every financial year. But can they force you to go and take annual leave?

DT       They can. It’s the same question as the one about can you be forced to take the day before Melbourne Cup day. If it’s reasonable in the circumstances, an employer can direct you to take annual leave and that doesn’t need to be because they want to shut down at a point in time and don’t want people there. It could also be because they say your leave balance is excessive and there’s two good reasons for that. One is the one that you identified and the second is, it’s good for people to have time off. They work better.

CS       It is productive. You create a productive workforce. We will take a break, back with David Taylor from Turner Freeman, our legal matters segment this afternoon. Turner Freeman, our sponsors on the programme. 12 to 2.

Wayne, go right ahead. David Taylor from Turner Freeman listening.

C4       David, thanks for this. Look, I work for a real estate agent in the Smithfield area about eight months ago and, during my employment, they issued a yield form, it was for a suit. However, it was given to us after our employment contract was signed. I was told…on my employment, I was told I was getting a form, however, on my final termination payment they deducted an amount of $400 out of that money for the suit.

DT       Ohhh, that’s rich.

C4       I’ve gone back, yeah tell me about it. I’ve gone back a couple of times and not only have I now given back the suit but I’ve been told by the Director’s wife that she will not be paying me the $400. I’ve gone back and asked for a receipt so I can actually claim the suit back. She said to me she can’t give me a receipt. What am I supposed to do with this?

DT       Have you got the suit now?

C4       No, the suit was handed back to her on the assumption she was going to give me the $400.

DT       Did the suit have their name on it anywhere or was it just a dark suit?

C4       No, it was just a dark, navy blue suit.

DT       I think probably what you should do is ring up the Fair Work Ombudsman and talk to them.

CS       Yeah, in other words, reading between the lines, David’s sort of suggesting you might have a pretty good case there.

C4       Oh look, to be honest, I probably got more on my super, that’s the last reason she told me she wasn’t going to pay me because I went to the ATO for my super. I’m the fourth agent to leave this office in Smithfield.

DT       Yeah

CS       Well, listen, don’t give me any more identifiable traits, but can I just say, Wayne, you’re on steady ground but get to the Fair Work Ombudsman and give us a call, next time David’s in the studio, call us back and let us know how you’re going.

C4       Alright, no problem. Is there some particular department I should talk to?

DT       No, that’s what they do. Their function is to deal with enquiries like yours.

CS       Good on you Wayne. Good luck with all of that. It sounds like he’s dealing with a fairly dodgy firm.

Ray, hi. Ray? No, we’ll get Ray back on the line. James, hi.

C5       Hello.

CS       Hi.  Go ahead.

C5       Just to enquire with David in regards to the maximum you can claim for unlawful or unfair dismissal. I was instructed by a previous employer to conduct an illegal activity and when I declined, it obviously turned into a dispute and ultimately, in the end, I was terminated.

DT       Yep, how long ago did this happen?

C5       2009

DT       I’ll answer your question but the big problem for you in making a claim at this stage is, any claim for unlawful or unfair dismissal needs to be started within 21 days of the dismissal.

C5       It was.  It was lodged within two weeks.

DT       Ok. In an unfair dismissal the maximum you can recover, well the best outcome you can recover is reinstatement and continue your service. If you don’t get reinstated, the greatest amount they can award you is 26 weeks pay. If there are adverse action claims and they’re claims where if you’re sacked because you tried to assert a workplace right and you may be in that sort of territory, then there’s no cap on the amount you can recover but the awards have been not dissimilar to what they are in unfair dismissal claims.

C5       Ok, I’m just enquiring, because unfortunately due to that being, my skills of expertise and where I have been trained and qualified, I have since not been able to obtain employment with the history of them due to the industry being so tight and so close knitted when I attempt to apply for other roles, I’m immediately discarded due to my history.

DT       It can be really tough in those circumstances and it can be hard to find out how you get your life back on track when six months pay doesn’t count for much when you’ve been out of work for 18 months.

CS       No, exactly. Good on you James, thank you for your question and good luck with pursuing that one.

Richard, hi.

C6       Hi, how are you?

CS       Good. We’ve only got 45 seconds but go ahead.

C6       Ok, I took a previous employer to the Industrial Relations Commission of NSW. The settlement was made but there were other matters pertaining to workers comp. They were settled but now the employer is refusing to agree to the settlement. Do I have an option to go to court or take them somewhere else?

DT       Settlements are generally contractual relationships or they’re relationships that can be enforced in the equitable division of the Supreme Court so there are certainly avenues to enforce an agreement so as to get what you…so as to enforce the bargain that you reached with your employer.

CS       So he’s got to go to a lawyer to go back to the same jurisdiction of court.

DT       Well it probably wouldn’t be the same jurisdiction. It may be the local court, it may be a different court depending on the amount but he needs to go and see a lawyer to enforce the settlement.

CS       Thank you again for coming in and answering all of those questions David, much appreciated.

DT       Thank you for having me.

CS       Alright, David Taylor, legal matters brought to you by Turner Freeman.


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