Salary deductions: what you need to know

Here’s what you need to know about what employers are allowed to do

MONEY can be deducted from your salary only with your permission or if your employer is legally required to do so. The Basic Conditions of Employment Act is clear about deductions, mainly to protect employees from exorbitant or unnecessary ones. Here are some types of deductions and the circumstances under which each is allowed by law.

LEGAL DEDUCTIONS

These include deductions to be paid to the Unemployment Insurance Fund (UIF), income tax and union fees. Other legal deductions are medical-aid and retirement-fund payments, provided they’re included in the employee’s service contract. The employer pays these amounts from the employee’s salary directly to the relevant funds.

PERSONAL AND STUDENT LOANS

Employers may extend personal or student loans, but repayments may only be deducted from an employee’s salary with their permission. It’s crucial that the amounts and repayment terms are clearly stipulated and both parties must agree to it. The employee must officially acknowledge the loan in writing and give written permission for the repayments to be deducted from their salary.

DAMAGES AND LOSS

The cost of damages or loss due to an employee’s actions can’t just be deducted willy-nilly. It can only happen when the damages or loss happened in the course of employment and it must be proved to be their fault. Examples include damage to an employer’s property – such as vehicles, machinery or tools – which the employee caused either intentionally or through negligence. These deductions must also be in accordance with the following:

The employer must specify the amount in a written agreement with the employee.

The employee must grant written consent that the amount may be deducted.

The total amount deducted may not be more than the real cost of the loss or damages to the employer. The total deductions may not exceed 25% of the employee’s remuneration.

The employer must engage in a fair procedure (such as a hearing) to establish the employee’s debt. The employee must also be given the chance to offer an argument why the deductions may not be made. Fair procedure The Labour Relations Act stipulates the following requirements for a fair procedure:

The employer must notify the employee of the allegations in a format and language the employee can reasonably understand.

The employee must be given the opportunity to tell their side of the story. The employee must be afforded a reasonable time in which to prepare their answer (48 hours) and must be afforded the opportunity to retain assistance from their union or a co-worker.

The cost of loss or damages may not be deducted if the employee didn’t consent to it or disputes it. Employers may also not impose fines on employees for alleged misconduct.

GARNISHEE ORDER

The court can issue a garnishee order, also known as an emoluments attachment order (EAO), if an employee is unable to service their debt to their creditors. This only happens once the creditor has already sued the employee for payment and the person still hasn’t paid their debt. Before issuing an EAO, the court must consider the employee’s financial statements and rule on the monthly amount the debtor can afford to pay back. The employee must give written consent for the money to be deducted from their salary. The employer then makes the deduction and pays it to the court-appointed person, such as a lawyer.

Legislation requires that the employer begin these deductions immediately. It continues until the debt has been fully paid. If the employer neglects or refuses to make these deductions, the creditor can approach the court for an EAO against the employer with regards to the outstanding debt.

OVERPAYMENTS

This is when an employer paid money or benefits to an employee in error. These overpayments may be deducted from the employee’s salary, but the monthly deductions may not exceed 25% of the employee’s remuneration.