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Deductions from an employee’s salary

What deductions can an employer legally make from an employee’s salary? Deductions from an employees salary

Money can only be taken off an employee’s salary if he agrees to it, or if the employer is legally obliged to do so. This is normally in the form of a collective agreement, a written agreement with the employee, legislation or a court (Section 34 of the Basic Conditions of Employment Act 75 of 1997) (BCEA).

Deductions that an employer may legally make include:

  • Tax from an employee’s salary to pay the South African Revenue Services (SARS);
  • A contribution to the Unemployment Insurance Fund (UIF);
  • Union subscriptions in line with a stop order signed by the employee, which is paid over to the union;
  • Medical aid and retirement fund contributions, if it is in the employer’s employment contract. The employer pays these amounts to the fund;
  • Deductions in terms of a written agreement with the employee to pay back a debt. For example to pay back a study loan;
  • Deductions in terms of a garnishee order; or
  • If the employee was overpaid in error.

Other deductions from an employee’s salary may only be made if the following requirements are met:

  • The employee causes the employer to suffer damage or loss. For example, Peter causes an accident with the company car because of his negligence.
  • The employee agrees in writing that the employer may deduct money for the loss or damage the employer suffer.
  • The employer must specify a certain and exact amount in the written agreement.
  • The loss or damage must happen during the employee’s employment and be due to his fault.
  • The employer must follow a fair procedure (e.g. a hearing) to determine the employee’s guilt and give him a chance to say why the employer should not make the deductions.
  • The total amount the employer deducts may not be more than the amount of the actual loss or damage the employer suffers. The employer may also only deduct a maximum of 25% of the employee’s remuneration at a time.

For example, if employee is dependent on his private car to perform his job, such as sales, and the car has broken down, the employer can assist the employee financially to fix his car, in the form of a loan. However, it is best to get the employee to sign an Acknowledgment of Debt.