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You can deduct money from an employee's salary, but only in these 12 instances

by , 04 January 2016
Alex's car has just broken down. It's the 3rd time this month and he isn't making it to all his appointments, and now it's affecting your company's sales. He got a quote for R20 000 to fix it, but doesn't have the money to pay for it... What do you do?

Give him a company loan, right? After all, you'll just deduct the payments from his commission at the end the month...

But wait!

You need to know when, how and how much you can legally deduct from his salary or you could find yourself fighting a losing battle against the Department of Labour. You can only take money off an employee's salary if he agrees to it, or if you're legally obliged to.

Let's look at salary deductions in detail...

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7 Deductions you legally have to take from an employee's salary

This is normally in the form of a collective agreement, a written agreement with the employee, legislation or a court order (Section 34 of the Basic Conditions of Employment Act 75 of 1997) (BCEA).

For example, deductions you may make include:
  1. Tax from an employee's salary to pay the South African Revenue Services (SARS);
  2. A contribution to the Unemployment Insurance Fund  (UIF);
  3. Union subscriptions in line with a stop order signed by the employee. Which you pay over to the union;
  4. Medical aid and retirement fund contributions, if it's in your employment contract. You'll pay these amounts to the fund;
  5. Deductions in terms of a written agreement with the employee to pay back a debt. For example to pay back a study loan;
  6. Deductions in terms of a garnishee order; or
  7. If you've overpaid an employee in error.


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5 Other instances where you can deduct money from an employee's salary

If none of the above apply, you can only make deductions from his salary if the following requirements are met:
  1. The employee causes you to suffer damage or loss. For example, John causes an accident with your company car because of his negligence.
  2. The employee agrees in writing that you may deduct money for the loss or damage you suffer.
  3. You must specify a certain and exact amount in the written agreement.
  4. The loss or damage must happen during his employment and be due to his fault.
  5. You must follow a fair procedure (e.g. a hearing) to determine his guilt and give him a chance to say why you shouldn't make the deductions.
The total amount you deduct may not be more than the amount of the actual loss or damage you suffer. You may also only deduct a maximum of 25% of his remuneration at a time.

So going back to our example, if you're going to help Alex financially so he can fix his car, it's best to get him to sign an Acknowledgment of Debt.


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