Deductions from pay

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EmployerEmployee / worker

wa_image_small.jpg This information is only relevant to employers and employees in the WA state industrial relations system – sole traders, unincorporated partnerships, unincorporated trusts and some incorporated or not for profit organisations.  Find out more on the Guide to who is in the WA state system page.

If you operate or are employed by a Pty Ltd business – you can find information on this topic on the Fair Work Ombudsman website.

Learn about the changes to state employment laws that commenced on 20 June 2022.

An employer may only make a deduction from an employee’s pay if:

  • the employer is required by a court or a state or federal law to make the deduction (e.g. tax that must be withheld from the employee's pay);
  • the employee has authorised the deduction in writing (as part of a written employment contract or otherwise) and the deduction is paid on behalf of the employee; or
  • the employer is authorised by the WA award to make the deduction and the deduction is paid on behalf of the employee.

It is unlawful to deduct money from an employee's pay if the deduction is not authorised.

A term of a WA award, registered agreement or employment contract providing for a deduction from an employee’s pay will be of no effect if it is for the benefit of the employer or a party related to the employer and is unreasonable in the circumstances. For example, a provision in an employment contract that enables an employer to deduct a grossly inflated amount of rent (beyond market value) from an employee’s pay for employer-provided accommodation could constitute an unreasonable deduction.

Deductions or requirements to pay an amount of money to the employer or another person in relation to an employee under the age of 18 are not permitted unless the deduction or payment is agreed to in writing by the employee’s parent or guardian.

Deductions requested by the employee 

Deductions from an employee’s pay can be made if an employee gives written authority for such deductions to be made and monies paid to another party on their behalf. Some common examples include social or sports club membership, private health fund premiums, and voluntary employee superannuation contributions. An employee can withdraw their authorisation at any time by giving written notice. An employer is not obliged to make deductions requested by an employee.

Employee not to be compelled to accept anything other than money for pay

An employer cannot directly or indirectly compel an employee to accept goods, accommodation or other services of any kind instead of money as any part of the employee’s pay. Visit the Prohibition on accepting goods, accommodation or services as payment page for more information.

Prohibition of cash back arrangements

It is also prohibited for employers to unreasonable require employees to spend their money in a particular way, or pay back their wages to the employer or another person (sometimes known as ‘cash backs’).

Visit the Prohibition on cash back arrangements page for more information.

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