Retail employment deductions from wages clause

Special statutory provisions apply to deductions from the wages of retail workers where those deductions are made because of cash shortages or stock deficiencies. Use our clause to ensure you comply with the legislation.

Retail employment defined

Where deductions are made from a retail worker’s wages, you must not only comply with the general provisions on making lawful deductions from wages set out in the Employment Rights Act 1996 but also, where the wage deduction is made because of cash shortages or stock deficiencies, you must comply with special provisions that grant additional protection for workers in “retail employment”. Retail employment involves the worker (whether or not on a regular basis) doing either of the following: (1) carrying out retail transactions directly with members of the public or with fellow workers or other individuals in their personal capacities; or (2) collecting amounts payable in connection with retail transactions carried out by other persons directly with members of the public or with fellow workers or other individuals in their personal capacities. A retail transaction is one for the sale or supply of goods or the supply of services (including financial services).

Cash shortages or stock deficiencies

Workers in retail employment have the additional protection when deductions are made from their wages in respect of cash shortages or stock deficiencies, regardless of whether the amount of the deduction is designed to reflect the exact amount of the shortage or deficiency, including where the deduction is made on account of: (1) any dishonesty or other conduct by the worker which resulted in the shortage or deficiency; or (2) any other event in respect of which they (whether solely or jointly with other workers) have any contractual liability and which so resulted. The provisions say that, when a deduction from wages is made in these circumstances, the amount (or aggregate amount) of it must not exceed 10% of the gross wages payable to the retail worker on a particular pay day. This doesn’t stop you deducting the full amount of the shortage or deficiency over several pay days, provided each deduction is no more than 10% of gross wages. However, the 10% limit doesn’t apply to deductions from the retail worker’s final instalment of wages (or, if paid after the worker’s last pay packet, from pay in lieu of notice) on the termination of their employment. Importantly, you must make the deduction within twelve months of when you established the existence of the shortage or deficiency, or (if earlier) the date when you ought reasonably to have done so (but where there’s a series of deductions resulting from a shortage or deficiency, only the first deduction in the series needs to have been made within the twelve-month period).

clause wording

Our Retail Employment Deductions from Wages Clause sets out that if there are any cash shortages or deficiencies in the till receipts or stocks for which the retail worker is solely or jointly responsible, you’ll be entitled to make wage deductions up to the 10% limit set out above and it outlines how this limit applies and confirms that it doesn’t apply to the final payment of wages on employment termination. Our clause not only ensures you abide by the additional protection for retail workers but also it ensures you’ve got a relevant provision in the employee’s employment contract authorising the deduction under the general wage deduction provisions.