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Unauthorised deductions


The Payment of Wages Act, 1991 provides that deductions from an employee's wages may only be made if required or authorised by legislation. Deductions may be made where they are expressly provided for in the contract of employment, or where they are specified in the employee's handbook or where the employee gives prior written consent to the deductions. However, an employer is legally entitled to make some deductions without consent, for example if he/she has accidentally overpaid an employee. 

Some of the deductions which may be outlined in the contract of employment are:

  • PAYE
  • PRSI
  • VHI
  • sports and social contributions
  • pension contributions.
Recent developments

The Payment of Wages (Amendment) Bill

On Wednesday 19 September 2022 the Payment of Wages (Amendment) Bill was published. This Bill provides customers with clear information on where their tips and service charges go and prohibits the use of tips to ‘make up’ contractual rates of pay. This new legislation will place tips and gratuities outside the scope of a person’s contractual wages and will prevent the potential abuse of tipping by employers. It is an important piece of legislation that will offer transparency and clarification for both customers and employees. It aims to ensure that employees have a right to a fair share of the tips and gratuities that are provided on a voluntary basis by satisfied customers.

This legislation will oblige employers to display their policy on the distribution of both cash and card tips clearly for customers to see. In addition, employers will be required to distribute fairly, equitably and in a transparent manner, tips that are received in electronic form – such as through debit, credit cards or smart phones. These provisions will be inspected through the Workplace Relations Commission (WRC). This Bill aims is to define and distinguish between wages, tips/gratuities and service charges in a clear and transparent manner and to prohibit the use of tips and gratuities as a contribution towards the payment of contracted wages.