SALARY DEDUCTIONS: CAN EMPLOYERS RESORT TO “SELF- HELP”?

Abstract

In the context of an employment relationship, an employee may cause the employer to incur loss or damages. In such an event, an employer would be entitled, with the employee’s consent, to recover the loss or damage caused by the employee by deducting the corresponding amount from the employee’s remuneration. It is also common for employers to enter into loan agreements with employees, in terms of which employees are required to repay a loan in instalments by way of deductions from their remuneration. These situations do not, in practice, tend to be controversial.
The controversy, however, tends to lie in respect of instances where an employer pays an employee additional money to which the employee is not contractually entitled. This may occur as a result of an administrative payroll error. In other instances, the employee may receive additional remuneration in respect of hours or days not worked. The latter instance may also be attributed to an administrative error resulting in erroneous overpayment, depending on the circumstances. The employer, upon realising such an administrative error, may want to recover the additional remuneration paid to the employee.
However, an employer may be faced with an employee who contends that they are not to blame for the administrative error, or that they are entitled to the remuneration, and that, as a result, the employer may not proceed to deduct amounts from future remuneration without their consent. This impasse raises questions regarding the employer’s ability to resort to “self-help” by proceeding to effect deductions from the employee’s remuneration without the employee’s consent. It further raises questions regarding whether the employer may rely on the common-law doctrine of set-off in effecting deductions. This article considers whether the employer is empowered to effect deductions from the employee’s remuneration without the employee’s consent and, if so, whether the employer is required to follow a process in making the deductions.