Deductions from wages, and the retail 10% cap: what it puts on your payslip

The published figures

What it puts on, or takes off, the payslip

Till shortage, cash variance or short banking

A named deduction on account of a cash shortage. Section 17(1) defines a cash shortage as a deficit arising in relation to amounts received in connection with retail transactions, which is what a drawer that does not match the till reading produces. Section 8(2)(b) wants the amount and the purpose on the payslip. This is the line section 18(1) caps at one tenth of gross, and section 17(4) says a deduction still counts as one on account of a shortage even where the amount was not designed to reflect the exact figure.

Gross pay

The top line, and the base the tenth is measured from. Section 27(4) defines the gross amount as the total of the wages before deductions of whatever nature, so tax, National Insurance, pension and student loan all come off after the tenth has been worked out. Section 27(1) makes that figure wider than basic pay: commission, holiday pay, a bonus paid with no contractual obligation and statutory payments such as statutory sick pay and statutory maternity pay are all wages here. Section 27(2) leaves out expenses payments, loan advances, pension payments and redundancy pay.

Fixed deductions, shown as one aggregate figure

Section 8(2)(b) normally wants each deduction and the purpose it is made for. Section 9(1) allows a fixed deduction to disappear into a single total on one condition, that the employer has given the worker a standing statement of fixed deductions at or before the time the payslip is given. Without that document the aggregate line does not comply, and a variable deduction may not be aggregated at all whatever the employer has issued.

Standing statement of fixed deductions

Not a payslip line but the document that makes the aggregate line lawful, and most people who have an aggregated deductions line have never seen one. Section 9(2) says it must be in writing and must give, for every deduction inside the total, the amount, the intervals at which it is made and the purpose it is made for. Gov.uk says the separate statement has to be sent out before the first payslip and updated every year, which is section 9(4) and 9(5) in plainer words.

Uniform, workwear or laundry charge

Not a deduction on account of a shortage, so section 18(1) does not cap it. Section 13 still applies, so it needs statutory authority, a written contract term the worker was given a copy of first, or prior written agreement. The minimum wage is where it bites instead. NMWM11220 says that where the employer requires the uniform, a deduction from pay, a payment to the employer and a payment to a third party all reduce minimum wage pay, and where the uniform is genuinely optional a payment does not but a deduction from pay still does.

Overpayment recovery

Section 14(1)(a) takes the reimbursement of an overpayment of wages outside section 13 altogether, made for any reason, and section 14(1)(b) does the same for an overpayment of expenses. That removes both the written authority rule and the retail tenth from this line in one move, which surprises people who assume every deduction is capped. The minimum wage rules are narrower than section 14: regulation 12(2)(c) of the National Minimum Wage Regulations 2015 covers an overpayment made accidentally, and NMWM11140 says recovering one does not reduce minimum wage pay.

Commission or bonus that simply came out lower

Sometimes there is no deduction line at all, and section 19 is the answer to that. It covers an agreement under which the amount of the wages is or may be determined by reference to the incidence of cash shortages or stock deficiencies. Where the gross figure on a pay day is lower for that reason, section 19(2) treats the difference as a deduction made on account of those shortages, and section 19(4) applies section 13 and the section 18(1) tenth to it. A bonus quietly cut for shrinkage is the same thing as a deduction with a label on it.

Hours worked

Section 8(2)(e) requires the total number of hours worked wherever the amount of pay varies by reference to time worked, either as one aggregate figure or as separate figures for different types of work or different rates of pay. It was inserted by the Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) Order 2018, S.I. 2018/147, in force on 6 April 2019. It belongs on this page because the tenth is a share of a gross figure, and on variable hours the hours line is the only way to check the gross figure is right.

What goes wrong

A till shortage taken in full from one pay packet

Section 18(1) caps the deduction at one tenth of the gross wages payable on that pay day however large the shortage is. Gov.uk's worked example is a £50 shortfall against £250 gross a week: £25 comes off that week and £25 the week after. Taking the whole £50 at once recovers more than the limit allows, and section 23(1)(c) is the specific complaint for a deduction exceeding the section 18(1) limit. The shortage itself does not go away. Only the speed of recovery is capped.

Consent signed after the event

Section 13(1)(b) says the worker must have previously signified agreement in writing, and section 13(6) spells out that a consent does not authorise a deduction on account of any conduct of the worker, or any other event, occurring before the consent was signified. Section 13(5) says the same about a contract varied after the event. A form put in front of somebody on the day the shortage was found does not reach backwards to the till that came up short last month.

Deductions bundled into one figure with no standing statement

A payslip reading "Deductions: £45" with nothing behind it fails section 8(2)(b), which wants the amounts and the purposes. Section 9 is the only route to an aggregate, it covers fixed deductions alone, and it depends on a standing statement given at or before the time the payslip was given that has not passed its twelve month life under section 9(5). Section 11 is how the question reaches a tribunal, section 12(3) provides for a declaration, and section 12(4) can carry a payment of up to the unnotified deductions of the previous thirteen weeks.

A shortage recovered more than twelve months after it was found

Section 18(2) says the employer is not treated as making the deduction in accordance with section 13 unless the deduction, or the first of a series relating to that shortage, was made before the end of the relevant period. Section 18(3) defines that period as twelve months beginning with the date the employer established the existence of the shortage or deficiency, or the earlier date when it ought reasonably to have done so. That second limb does the work: a stock count left in a drawer for a year does not restart the clock, because the period runs from when the employer should have known.

A lawful deduction that still takes pay under the minimum wage

Part II and the minimum wage are separate regimes and both apply to the same payslip. Regulation 12(1) of the National Minimum Wage Regulations 2015 treats a deduction for the employer's own use and benefit as a reduction in minimum wage pay, and NMWM11020 says it makes no difference whether the employer profits from it, whether it came off gross or net, or whether the worker agreed to it. Regulation 12(2)(a) is the exception that matters in a shop: a deduction in respect of the worker's conduct, or any other event, where the worker is contractually liable does not reduce minimum wage pay, and NMWM11060 gives a till shortfall caused by the worker's negligence as its first example. A required uniform has no equivalent exception, which is why it is the charge that puts an employer under the rate.

A demand for payment with no notification of total liability first

Where the employer asks for the money rather than deducting it, section 20(1) says it is not treated as receiving the payment in accordance with section 15 unless it has previously notified the worker in writing of the total liability for that shortage and then required payment by a demand made under section 20. Section 20(2) says the demand must be in writing and must be made on one of the worker's pay days, and section 20(3)(a) says the first one cannot come earlier than the first pay day after the notification. A request made verbally at the end of a shift satisfies none of that.

The tenth checked against the wrong number

Section 18(1) measures one tenth of the gross amount of the wages payable on the pay day, and section 27(4) defines that as the total before deductions of whatever nature. Checking a deduction against net pay gives the wrong answer, and so does checking it against basic pay alone. Section 27(1) puts commission, holiday pay, a non-contractual bonus and statutory sick or maternity pay inside the figure the tenth comes from, while section 27(2) keeps an expenses payment, an advance of wages and a redundancy payment out of it.

What to check on your next payslip

• Section 18(1) caps the total of every shortage deduction made on one pay day at one tenth of the gross wages payable that day, and section 27(4) defines gross as the total before deductions of whatever nature. Two shortages recovered in the same month share one tenth between them rather than taking a tenth each, and the tenth is read off the top line of the payslip. On £1,800 gross a month that is £180, whatever else comes off afterwards.
• Section 8(2)(b) requires the amount of each variable deduction and the purpose for which it is made. The purpose is what tells a reader whether section 18(1) applies at all. A line marked "sundry" could be a shortage, a uniform or a season ticket loan, and only the first of those three carries the cap.
• Section 9(2) says a standing statement of fixed deductions is in writing and gives, for every deduction inside the aggregate, the amount, the intervals at which it is made and the purpose it is made for. That document is the only thing that makes a bundled fixed deductions line lawful, and section 9(5) retires it twelve months after it was given unless the employer re-issues it in consolidated form under section 9(4).
• Section 13(2)(a) says a written contract term authorises a deduction only where the employer gave the worker a copy of it on an occasion before the deduction was made, and section 13(2)(b) accepts written notification of the term's existence and effect instead. A clause sitting in a document nobody sent is not a relevant provision, and section 13(1) makes a deduction with neither a relevant provision nor prior written consent unauthorised whatever the contract says.
• Section 18(3) runs the twelve months from the date the employer established the shortage, or the earlier date it ought reasonably to have done so, and section 20(3)(b) applies the same period to a written demand. The second limb is the one that does the work. An employer that ran no stock count for eighteen months cannot argue the period started on the day it finally looked, and section 20(5) bars legal proceedings for the money after it unless a demand was made inside it.
• Section 22(2) removes the section 18(1) cap from the final instalment of wages, which section 22(1) defines as the pay for the last period worked before the contract ended, or a later payment in lieu of notice. Gov.uk puts it in one line: if you leave your job, they can take the full amount owed from your final pay. The tenth is a limit on how fast money can be recovered during the job, never on the total.
• Regulation 12(2)(a) of the National Minimum Wage Regulations 2015 excludes a deduction in respect of the worker's conduct, or any other event, where the worker is contractually liable, while regulation 13 treats a deduction as respects the worker's expenditure in connection with the employment as a reduction. The two regimes reach opposite answers on the same payslip. A contractual till shortfall deduction can be lawful under Part II and leave minimum wage pay untouched, while a required uniform charge can be lawful under Part II and still take the employer under the rate.

The 15 occupations this reaches, and how

Each line is specific to that trade. Where a scheme depends on how you are engaged rather than on the work itself, the line says so.

Bar Staff

Section 17(1) carries a second limb that bar work meets more often than the first. A stock deficiency means a stock deficiency arising in the course of retail transactions, so a wet stock count that comes up short on spirits or kegs sits inside sections 17 to 22 just as a till variance does. It matters that the two limbs are not capped separately: section 18(1) holds the aggregate of everything taken on a pay day to one tenth, so a cash gap and a stock gap in the same month share that tenth between them.

Barber

Everything here turns on a prior question, and it is not the section 17 definition. Part II protects a worker, so a barber on the shop's payroll gets the general rule in section 13 and the ceiling in section 18 on top of it. A barber renting a chair and trading on their own account has no employer making deductions from wages at all, and what the shop keeps out of each cut is rent or a share under a commercial agreement rather than anything Part II governs.

Barista

A counter shift ends with a cash up, and the cash up is where section 17(1) does its work: a cash shortage means a deficit arising in relation to amounts received in connection with retail transactions, which is precisely what a drawer that will not match the reading is. The definition does not ask how the gap appeared, and section 17(4) adds that a deduction counts as one made on account of a shortage whether or not the amount was designed to reflect the exact figure.

Beautician

Treatment work and a product shelf put you in both halves of section 17(1) at once, a cash shortage on the takings and a stock deficiency on the retail lines, and section 18(1) caps them together. The condition most often missed in this trade is timing rather than amount. Section 13(6) says written consent does not authorise a deduction on account of any conduct or event that happened before the consent was signified, so a form produced after a stock count authorises nothing the count found.

Chef

Where you stand depends on which side of the pass the money changes hands. A brigade kitchen sends plates out to a server who deals with the customer, so nothing you do is the carrying out of a retail transaction directly with a member of the public and sections 17 to 22 do not reach your pay. Serving from a takeaway hatch, a deli counter or a market unit does meet limb (a), and the ceiling applies from that shift onwards. Section 13 governs anything taken off you either way.

Courier

The thing couriers are most often charged for is the thing these sections do not cover. A parcel lost, damaged or left with the wrong person is not a deficit in amounts received, and it is not the kind of stock deficiency section 17(1) describes either, since that one has to arise in the course of retail transactions, so section 18(1) has nothing to bite on and the charge is tested against section 13 on its own. A round that collects payment or duty on delivery is a different case, and shortfalls in that money are capped.

Delivery Driver

The round decides it. Taking cash or a card payment at the door is the collection of amounts payable in connection with a retail transaction somebody else carried out, which is limb (b) of section 17(2), so a float that comes back light is a cash shortage and the ceiling applies to what can be recovered from one pay packet. Dropping pre-paid parcels involves no amount payable at the door, so the retail sections have nothing to attach to and any charge stands or falls on section 13 by itself.

Dog Groomer

Nothing is sold over a counter and the section reaches the work anyway, because section 17(3) makes the supply of services a retail transaction in its own right and section 17(2)(a) asks only that the worker carries it out directly with a member of the public. A grooming round billed to owners is therefore retail employment, and money taken at the van or the salon door that will not reconcile at close of play is a cash shortage within section 17(1), because what has gone missing is part of what was received for the grooming itself.

Hairdresser

Section 17(3) counts the supply of services as a retail transaction, so a chair is retail employment on a day when nothing at all comes off a shelf. The detail worth knowing is how the ceiling aggregates. Section 18(1) caps the deduction or deductions made on a pay day, which means an employer recovering two separate shortages in the same month has to fit both inside one tenth rather than taking a tenth for each, and a third has to wait for the pay day after. The prior question is the one a chair-renting barber faces too: Part II protects a worker, so a stylist on the salon's payroll gets section 13 and the section 18 ceiling, while a stylist renting a chair on their own account has no employer deducting from wages and what the salon keeps is rent under a commercial agreement.

Hotel Receptionist

The front desk meets both limbs of section 17(2) at different moments of the same shift. Taking a card payment for a room is carrying out a retail transaction directly with a member of the public. Settling a bill at checkout gathers in money owed for things other people sold elsewhere in the building, which is the second limb and needs nobody to have sold you anything. A guest account that goes unpaid and is written off against you is a deficit in amounts received, and section 18(1) governs how fast it can be taken back.

Kitchen Porter

Washing up and prep involve no transaction with anybody, so on an ordinary shift sections 17 to 22 do not reach you and no ceiling limits what comes off. That is not the end of it, twice over. Section 13 still means nothing is lawfully taken without a statutory requirement, a written contract term you were handed a copy of first, or your agreement in writing beforehand. And the definition applies whether or not on a regular basis, so covering the counter for one lunchtime brings that work inside it.

Restaurant Manager

The part of these sections that reaches a floor manager is the demand route rather than the deduction route. Where the employer asks you to hand money over instead of taking it off your pay, section 20(1) says it is not treated as receiving that payment lawfully unless it has first notified you in writing of your total liability for the shortage and then made a written demand, and section 20(2) requires that demand to be made on one of your pay days. Section 21(1) then holds what you can be required to pay to the same tenth, less anything already deducted from the same packet.

Retail Assistant

You are the worker section 17(2)(a) was drafted around, since carrying out retail transactions directly with members of the public is the first limb of the definition and it is the whole job. What almost nobody behind a till knows is the arithmetic behind the cap. The one tenth in section 18(1) is a tenth of the gross amount of the wages payable on that pay day, and section 27(4) defines that as the total before deductions of whatever nature, so it is measured off the figure at the top of your payslip rather than the amount that lands in your account.

Retail Manager

Two separate limbs put you inside the definition and the second is the one people miss. Limb (a) catches you on any day you serve a customer yourself. Limb (b) catches you on a day you serve nobody, because collecting amounts payable in connection with transactions that other people carried out is itself retail employment, and that is exactly what cashing up and banking the day's takings is. Applying a shortage recovery to your own team does not put you outside the same ceiling when the company runs one against you.

Waiter

Section 17(3) settles the question and it is wider than the word retail suggests: a retail transaction is the sale or supply of goods or the supply of services. Putting food and drink in front of a customer is both, done directly with a member of the public, so table service falls inside limb (a) of section 17(2) whether or not the card machine ever reaches your hand. A walkout charged back to you is then a deficit in amounts received in connection with those transactions, and it is held to a tenth of that pay day's gross.

Questions

Sources