ARTICLE · 01 SEPTEMBER 2011

The employer giveth... but may not get it back

DLA Piper Australia

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A discussion of impediments upon the capacity of employers to deduct employee's wages to recover monies owing.

AustraliaEmployment and HR

The Fair Work Act 2009 (Cth) (the Act) has placed impediments upon the capacity of employers to make deductions from an employee's wages or recover monies owing from employees.

A common clause in standard employment contracts often states that 'The employee agrees that the employer may deduct from the employee's final pay monies which is owed to the employer'.

On this basis the employer simply could deduct the amount that was owed to it from the final pay, however the law has swept this aside.

Division 2 of Part 2-9 of the Act has placed a number of hurdles on the capacity of an employer to recover monies owed through agreed deduction arrangements or through a debt recovery action in a court.

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