The Employment Act, 2006 Section 2 defines wages as remuneration or earnings, however, designated or calculated, capable of being expressed in terms of money and fixed by mutual agreement or by national laws or regulations, which are payable under an oral or written contract of service for work done or to be done or for services rendered or to be rendered excluding any contributions made or to be made by the employer in respect of his/her employees.
It is unlawful for an employer to make a deduction from an employee’s wages unless such deduction is done in conformity with the labour laws and regulations.
When can an employer lawfully deduct wages?
An employer can lawfully deduct from an employee’s wages where; a) the deduction is required or authorized by law; b) there is a provision in the worker’s contract; or c) the worker has given their prior written consent to the deduction.
Deductions permitted by law
Section 46 (1) of the Employment Act (2006) provides that the following deductions from remuneration due to an employee are permitted: (a) an amount in respect to any tax, rate, subscription or contribution imposed by law, (b) where the employee has previously given his or her written consent to a deduction being made, the deduction being in respect of any amount representing a contribution to any provident or pension fund or scheme established or maintained by the employer or some other person,(c) deduction by way of reasonable rent or other reasonable charge for accommodation provided by the employer for the employee, or the employee’s family, where the employee has agreed to the deduction, and
(d) union dues. This means that the employer is only permitted to deduct PAYE and related taxes, NSSF contributions and any other contributions imposed by law including union dues where the employee belongs/subscribes to a particular labour union. Any other deductions have to be authorized by the employee by way of consent.
However, attachment of wages(garnishment) by court order is permitted as long as the attachment does not exceed two-thirds of all the remuneration due in respect of that pay period.
There are consequences for un-permitted deductions under section 47 of the Employment Act,2006; an employer who acts in contravention of the provisions is liable to repay any remuneration wrongfully withheld or wrongfully deducted from the employee.
An employee can make a request for repayment to a labour officer not later than six years after the alleged deduction. The worker can seek a declaration from the labour officer that there was deduction and the labour officer seeks for payment or repayment of the unlawfully deducted amount and in some circumstances, unlawful deduction of wages compensation for further financial loss.
The law applies to all employees employed by an employer under a contract of service.