Pay Deductions – know what can and can’t be deducted

Employees deserve to be paid for the hard work they do, and while they may choose to utilise transport or accommodation provided by employers, they cannot serve as payment in lieu of wages. If the employer proposes to deduct money for those services from an employee’s pay, then Fair Work’s rules must be followed.

Pay slips

Deductions must be shown on an employee’s pay slip, and the employer needs to keep a record of the deduction made.

Pay slips are to be given to the employee within one working day of payday, whether paid in cash or electronically into the employee’s bank account.

A pay slip can be provided in hard copy or electronically.

Details of what should be included on a pay slip can be found on Fair Work’s Pay Slips and record keeping page

Authorised Deductions

An employer can only deduct money if:

• The employee has authorised the deduction in writing (which must specify the amount), and the deduction is principally for the employee’s benefit; or
• The deduction is authorised by:
  • the employee in accordance with a registered agreement
  • under an award or order of the Fair Work Commission, or
  • under a law or a court order.

Go to the Deducting Pay page to find out all the rules about deductions from pay.

Superannuation and tax

Your employee will need to pay taxes, and you must pay the Superannuation Guarantee for eligible employees, which includes overseas workers. More information can be found on the Fair Work Ombudsman’s Tax & superannuation page, which provides valuable tools and links for employers.

Cash Payments

Cash payments paid to employees are lawful, but you still need to:

• deduct the correct amount of tax from their pay
• pay superannuation contributions on their behalf.
• give employees a pay slip
• pay your employees the correct award rates
• have the appropriate workers compensation insurance to cover your workers.

Cashback Schemes

The use of illegal ‘cashback’ schemes in the workplace is strictly prohibited. These schemes involve asking employees to return part or all of their earned pay, making it appear as though the employee has been paid the correct amount, when in fact the employer has deducted pay without following the correct procedures which is illegal.

It is important to stay informed and comply with all relevant laws and regulations to ensure a fair and compliant workplace for all employees.

Further information and resources

Workforce Australia

The Harvest Trail ‘Paying harvest workers’ page

https://www.workforceaustralia.gov.au/businesses/help/hire/harvest/paying-workers

Fair Work Ombudsman

Horticulture Showcase is a virtual hub of workplace information and resources for the horticulture industry

https://horticulture.fairwork.gov.au/