What are deductions from pay?
Deductions from pay are amounts an employer takes out of wages, generally only with written authorisation or where allowed by an award or law.
A deduction from pay is any amount an employer subtracts from an employee's wages before paying them. Under section 324 of the Fair Work Act 2009, an employer can only make a deduction if the employee authorises it in writing and it is principally for the employee's benefit, or if it is authorised by an award, enterprise agreement, court order, or other law.
Some deductions, such as PAYG tax and child support, are required by law. Others — like salary sacrifice or a voluntary purchase scheme — need the employee's written agreement. A deduction that mainly benefits the employer, or that an employee has not properly agreed to, is generally unlawful.
Key facts
- •Governed by section 324 of the Fair Work Act 2009
- •A deduction needs written authorisation that is principally for the employee's benefit, unless an award, agreement, or law allows it
- •PAYG tax and child support are deductions required by law
- •An employee can withdraw or vary a written authorisation in writing at any time
- •Deductions that mainly benefit the employer are generally unlawful, even if the employee agreed
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Payslip CheckerFrequently asked questions
Can my employer deduct money for a till shortage or breakage?
Generally no. A deduction that benefits the employer rather than the employee is usually not permitted under the Fair Work Act, even if your contract says otherwise. Contact the Fair Work Ombudsman if this happens.
Can I cancel a deduction I previously agreed to?
Yes. You can withdraw or change a written authorisation for a deduction at any time by notifying your employer in writing.
FairWork Mate is an independent commercial service. We are not affiliated with, endorsed by, or associated with the Fair Work Ombudsman, the Fair Work Commission, or any Australian Government agency. Content is general information and estimates only — not legal, financial, or tax advice. Always verify with the Fair Work Ombudsman (13 13 94) or a qualified professional.