What can the employer deduct from my salary?

The question of whether an employer can itself deduct any amounts from an employee’s wages has always been controversial. Recently, however, the Supreme Court has weighed in on the issue. The legal conclusion is that an employer may unilaterally deduct its claims from wages, but the law imposes a number of restrictions.

What is an employer allowed to touch?

First of all, any deductions (whether or not the employee has agreed to them) must not exceed half of the employee’s wages. Even if deductions are made, you should always be paid at least half of your net pay.

The main deductions that will always be made from your wages are deductions for personal income tax and social security and health insurance contributions, as well as pension contributions. These deductions, which are applied as a priority, make your gross wages your net wages. All other deductions apply to this net wage.

The second category of deductions mentioned in the law are various claims by the employer, such as a wage advance, an unpaid advance on travel reimbursements or other unpaid operating advances. These claims may be deducted by the employer even without the employer’s consent. However, it should not extend this scope further, even in cases where it legitimately thinks it can claim damages and the like against the employee.

Among the common deductions that apply to many employees, we can also mention various benefits such as multisport cards or meal vouchers. Here, the benefit is usually not provided free of charge, but with some symbolic participation of the employee (e.g. CZK 20 for a meal voucher worth CZK 120 or CZK 100 per month for a multisport card with unlimited monthly entries). Despite the fact that these are benefits that are advantageous for the employee, they must agree to them in advance.

When can you defend yourself?

When it comes to unilateral deductions, other restrictions apply. In particular, an employer should not deduct claims that are uncertain – most often these will be claims that the employee has legitimately disputed. For example, if your employer pays you a higher than usual bonus and you have a legitimate belief that it is a deserved bonus, you may be able to defend yourself if your employer deducts the overpayment from your next wage on the basis that the higher amount was paid in error last time.

Payrolldeductionsare sometimes voluntary and sometimes involuntary deductions fromwages. HR professionals encounter them relatively frequently in practice. At the same time, however, it is not a simple issue and not only the general public is sometimes confused about it. In our related article, we look at further details of payroll deductions.

An agreement needs to be made

Moreover, the Labour Code stipulates that a claim for damages can only be deducted from an employee’s wages on the basis of an agreement. Therefore, if your colleagues have not kept their mobile phones safe from loss, their employer can only deduct the damages from their wages if they agree to this in writing.

Since 2014, new legislation has been in force under which all agreements on deductions from wages are concluded in accordance with the new Civil Code, which is also used for employment relationships. The agreement does not necessarily have to be in writing, but we cannot but recommend that it is. This will avoid a number of potential complications.

If the deductions are not made to satisfy the right of the employer directly, the prior consent of the debtor’s employer is required to conclude the agreement. This means that the employer cannot be forced into such an agreement and use its administration to conveniently pay off the debt. There is, however, a technical debate as to what ‘prior approval’ means, since there is apparently no reason to invalidate an agreement if the employer only approves it when it is presented to him as a fait accompli.

Where the employer (i.e. the paymaster) has to pay under several withholding agreements at the same time, it can claim the costs of paying the second and subsequent agreement from the debtor.

In practice, however, it is recommended that employers enter into payroll deduction agreements wherever possible in all cases where employees have something deducted from their wages. This is the only way to ensure that their actions are not subsequently challenged. However, as summarised above, unilateral deductions are possible in many cases even without such an agreement. For example, deduction of an unaccounted advance previously made to an employee for travel allowances during a business trip.

Unjustified deduction from wages

If your employer withholds part of your wages unlawfully, you can of course defend yourself against this. You can bring the case to the attention of the relevant labour inspectorate, which can impose a fine if it finds that the employer has committed one of the administrative offences in the field of employee remuneration. You can also pursue the amounts owed through the courts. In extreme cases, non-payment of part of your wages may also be grounds for immediate termination of your employment. You can quit your job “on the hour” and claim compensation for the period of your notice.