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Docking Your Workers’ Wages A Big No-no – Employer Advisors

Docking your workers’ wages a big no-no – Employer Advisors

Deducting money from your employees’ wages to punish them for mistakes, or to performance manage them is unlawful, and could result in you paying hefty fines, according to Employer Advisors.

Recently, a young waitress who works in a Melbourne-based restaurant claimed on the Hospo Voice Facebook page that her boss told staff they would have money deducted from their wages if they made a mistake, like putting through the wrong meal.

Ruby Louise Lethbridge said she was told that she would be forced to pay 50 percent of the wasted meal if a mistake was made, but she wasn’t sure if this was a normal practice in the industry.

Ruby Louise Lethbridge.

Miles Heffernan from Employer Advisors said many employers don’t understand the circumstances in which they are allowed to make deductions from their workers’ wages.

“It used to happen all the time in the past, the boss would simply take any losses out of a worker’s pay packet at the end of the night if there had been a stuff up, but now the rules have changed, and modern awards are very clear about this sort of thing,” he said.

The Restaurant Industry Award 2010 states:

“An employer must not deduct any sum from the wages or income of an employee in respect of breakages or cashiering underings except in the case of wilful misconduct”

Mr Heffernan said the meaning of wilful misconduct is very clear.

“The action has to be deliberate for it to be considered wilful misconduct, which means if your staff member slips and drops a glass of wine, or accidently under-charges for a meal at the cash register, you cannot punish them by taking money from their wages.”

Wage deductions can come in different forms, including an employer forcing a worker to live in on-site accommodation, and then charging them expensive compulsory rent, but most often wage docking is used as a punishment, or performance management tool.

One of the worst cases involved a restaurant in Subiaco in Perth.

The operators would deduct $100 each time a staff member was more than 5 minutes late, but that was just the start.

A cook had $112 taken from her pay after the boss said the pork crackling on a pork belly wasn’t crisp enough.

Other penalties at the restaurant included:

  • $30 if a slice of tomato was placed on the wrong layer of a club sandwich
  • $18.90 if a hair was found in a breakfast dish
  • $12 for overcooking a waffle
  • $12 for burning an omelette
  • $12 for serving cold pizza
  • $10 for failing to prepare parsley for the following day

In this case, the restaurant operators were fined $7,650 and were forced to pay $5,000 compensation to each staff member.

Unlawful deductions can cost a business penalties of up to $10,200 for an individual and $51,000 for a corporation.

But there are times when wage deductions are allowed.

The Fair Work Act says wage deductions can be legal, if the deduction is authorised in writing by the employee, and the deduction is principally for the benefit of the employee, for example a salary sacrifice arrangement.

The written authorisation from the employee must specify the amount of the deduction and may be withdrawn or varied in writing, by the employee at any time.

“Generally speaking, deductions from wages are unlawful if they are not authorised by the worker, and they are not for the benefit of the worker,” Mr Heffernan said.

Threatening to steal money from your workers’ wages can have a damaging reputation on your business.

The restaurant where it’s understood that Ruby Louise Lethbridge works has already had negative comments posted on its Facebook Review page as members of the public heard about the threat from her boss.

Tim de Beauvoir wrote:  “Restaurants that dock workers wages for minor mistakes are appalling.  No stars.”

A review posted on the Crave Restaurant Facebook page.

“As a business, there is no excuse not to know your workplace obligations, and docking your workers’ wages because of a mistake is simply not on – and if you are going to engage in that sort of behaviour, not only do you risk having to pay penalties and compensation, you could also have your business plastered all over social media – and not in a good way,” Mr Heffernan warned.

“If you are in any doubt about what you are allowed, or not allowed to do, seek expert advice before making any threats of unlawful conduct.”

If you would like to read more about the latest case involving a threat of unlawful deduction of wages, please click here.

If you are unsure about what are lawful deductions from your employees’ wages, please call our friendly team at Employer Advisors on 1300 853 837 for expert and confidential advice.

For the latest news and information about employment and industrial matters, please follow our main Industrial Relations Claims page on Facebook.

 

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