Cannot make deduction from employee without consent


I own a small business and my employees are entitled to staff buying privileges as a condition of their employment.

One of my employees has resigned and is currently working out his notice period.

Can I deduct the amount owed on his staff account from his final pay? If not, how can I recover this money?


  • The Wages Protection Act prohibits employers from deducting money from an employee's pay without the employee's written consent. This means that you must get your employee's written consent to deduct the money owed, or pursue the matter as a debt.
  • Some employers include a clause in their employment agreements authorising them to deduct any money owed by an employee from that employee's final pay, but the Wages Protection Act allows an employee to withdraw from this arrangement by giving two weeks notice of withdrawal.
  • There are a number of ways that you can pursue repayment if you cannot get your employee's written agreement to deduct the money from his final pay. One is to apply to the Employment Relations Authority for a compliance order ordering your employee to repay the money owed. Another is to apply for summary judgment against your employee.
  • Traditionally, summary judgment applications were dealt with by the District Court. But, in a case decided a few year ago (Wright v Ocean Towing and Salvage Ltd (AC 75/99), the Employment Relations Authority held that it had jurisdiction to deal with summary judgment applications where the debt arises from an employment agreement.
  • Because the Employment Relations Act provides that the Employment Relations Authority have exclusive jurisdiction to hear and determine any proceedings founded on an employment agreement, it is likely that all summary judgment applications arising from employment agreement must be now filed with the Employment Relations Authority and not the District Court.

Wages Protection Act 1983

Section 5. Deductions with worker's consent

(1) An employer may, for any lawful purpose,

(a) With the written consent of a worker; or

(b) On the written request of a worker

make deductions from wages payable to that worker.

(2) A worker may vary or withdraw a consent given or request made by that worker for the making of deductions from that worker's wages, by giving the employer written notice to that effect; and in that case, that employer shall

(a) Within 2 weeks of receiving that notice, if practicable; and

(b) As soon as is practicable, in every other case,

cease making or vary, as the case requires, the deductions concerned.

Link to the complete Wages Protection Act.

More employment law

Employment Law
Ace Payroll does not give legal advice but these employment law articles may assist more..
Minimum Wage
To check the current minimum wage, visit the New Zealand government website more..
90 Day Trial Periods
New employees can be on a trial period of up to 90 days more..
Daylight Saving
Daylight saving dates and handling related employment issues more..
Redundancy must be genuine
An employee can only be made redundant if their position no longer exists more..
Dismissal procedural fairness
An explanation of the meaning and importance of procedural fairness when terminating employees more..
Employee or contractor
Use this checklist to clarify the difference between an employee and a contractor more..
Contractors minimum wage
Contractors are not entitled to the minimum wage more..
Employee interview honesty
An employee must be honest at a job interview or risk subsequent dismissal more..
Employee deductions
Cannot make deductions without employee consent more..
Retreiving overpaid wages
An employer can retrieve overpaid wages if done correctly more..
Employment relationships
Make it clear when and how an offer of employment will be made more..
Terminated before started
Resigned from old job, then told new job no longer available more..
Video surveillance
The use of video surveillance by employers is common and legal more..
Host responsibility
Think about the safety of employees affected by alcohol at work functions more..
Failure to meet targets
An employee can be justifiably dismissed for failing to meet targets more..
Change pay frequency
Pay frequency can be changed if properly managed more..
Abandonment of employment
Must inquire into circumstances of worker's absence more..
Changed working hours
Redundancy possible if employee does not agree more..
Drivers license
Truck driver loses license. Dismissal fair and reasonable more..
Internet usage
You would be wise to have a policy for personal internet usage more..
Absent employees
Some tips on dealing with absent employees more..
Payment for Jury Service
There is no obligation on an employer to pay for jury service more..
Recruitment health questions
Health questions employers are entitled to ask prospective employees more..
Holiday And Leave Contents
Holiday pay, public holidays, sick and bereavement leave information more..
Alphabetical Index
The Ace Payroll alphabetical index provides links to all documentation more..
Ace Payroll FAQ Contents
All the most common Ace Payroll questions grouped by categories in a short table of key words more..