Your questions answered: Can we make an employee pay our insurance excess?

By Portner Press on November 13th, 2019
  1. Industrial Instruments
  2. Fair Work Act

One of our employees reversed into main entrance glass doors while parking his car.

Our company had to pay $500 excess on the insurance claim.

We’d like to claim that back from the employee by offering him a payment plan to pay $500 by the end of the year.

This payment plan will be documented, clearly outlining the start and end of the plan and amount to be deducted every fortnight.

We don’t have any policy around this sort of a situation though.

What do we need to be aware of or do from a legal perspective as this arrangement will impact his pay?

There are limited situations in which an employer can make a deduction from the employee’s pay or require an employee to pay an amount of money.

Generally, an employer may only deduct money from an employee’s pay (i.e. take money out of the employee’s pay before it is paid to them) if one of the following applies:

  • the deduction is authorised in writing by the employee and is principally for the employee’s benefit; or
  • the deduction is authorised by the employee in accordance with an enterprise agreement; or
  • the deduction is authorised by or under a modern award or a FWC order; or
  • the deduction is authorised by or under a law of the Commonwealth, a State or a Territory, or an order of a court.

An employer must not require an employee to pay to the employer an amount of the employee’s money/wages if:

  • the requirement is unreasonable in the circumstances; and
  • the payment is directly or indirectly for the benefit of the employer or a party related to the employer.

You should be aware that in some situations deducting an employee’s pay or requiring them to pay an amount of money may constitute a breach of the Fair Work Act.

For more information please visit the Fair Work Ombudsman website on ‘Deducting pay & overpayments’:

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