Withholding Money from an Employee

Withholding Money from an Employee

Most employers are not fully aware of the circumstances entitling them to make deductions from an employee’s wage. This is very much the case where an employer seeks to recover money they believe is owed to them i.e. money lent to them or for damage to a work vehicle.

The Fair Work Act 2009 (Cth) (the “Act”) contains specific provisions regarding circumstances of when an employer may make deductions from an employee’s payment. A written authorisation from an employee must specify the amount of the deduction. This authorisation may be withdrawn at any time. Although it is common practice for contracts of employment to contain provisions which expressly allow an employer to make deductions, such terms may not comply with section 324 of the Act.


In the decision of Andreas Bader v Cyclone City Cleaners Pty Ltd, the Court held, in reliance of section 326 of the Act, that an employer was not permitted to unilaterally withhold award wages owing to an employee against a debt the employer alleges he owed to it for damage the employee was alleged to have caused to the employer’s motor vehicle.

Michael O'Shaughnessy

Michael is a specialist in all things HR. With vast HR experience in the USA and Australia, Michael brings a wealth of knowledge and advice to HR Central. When he's not blogging for HR Central you can find him out for dinner in one of Melbourne's newest restaurants.

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