Can I make an employee reimburse me for a banking shortfall?
Typically hospitality businesses will have a well-documented procedure for cashing up. However, from time to time we are contacted by an employer who wants to know how they can deal with an employee that they consider has been careless in following the procedures, resulting in regular discrepancies in the cash up. Can the employer recover the lost amount equivalent to the ‘lost’ cash?
The Wages Protection Act 1983 sets out the way wages must be paid and prevents unlawful deductions from wages. An employer can make a deduction from pay only in certain circumstances. For example, if:
- the deduction is specifically required by law, for example, PAYE tax, student loan repayment, child support
- the deduction is for a lawful purpose, is reasonable and the employee has agreed to or asked for the deduction in writing. ‘Agreed in writing’ includes a general deductions clause in the employment agreement, but an employer must consult with the employee before they make a specific deduction under a general deductions clause. The employee can vary or withdraw their written consent to a deduction by giving notice in writing at any time. The employer must then vary or stop the deductions within two weeks of receiving the notice or as soon as practicable
- the deduction is to recover an overpayment in limited circumstances
- a court directs that a deduction be made.
If an employer takes money from an employee’s pay without written consent (the employer can’t pressure the employee to agree), the employee could bring an action in the Employment Relations Authority to get the money back.
Therefore, in our opinion, it would not be lawful to enforce a ‘repayment’ for a banking shortfall. The matter should, however, be addressed with the employee to establish if the “cashing up” errors were the result of the procedures not being understood by the employee. It is also a good idea to review whether the training was adequate. If the discrepancies continue after this, it may be suitable to instigate a formal disciplinary process if it was felt that the failure to follow company process was deliberate.
To discuss further please contact the Restaurant Association Helpline on 0800 737 827 or email info@restaurantnz.co.nz.
