Can the employer deduct wages or holiday pay if an employee fails to work their notice period?
If an employee resigns without giving the required amount of notice, an employer cannot make deductions or withhold their wages or holiday pay unless the employee has given their written consent.
A written employment agreement may include a clause giving the employer permission to deduct wages or holiday pay if an employee resigns without giving the required notice.
This clause may be enforceable if:
- the employee has been given adequate opportunity to consider and seek independent advice on the terms and conditions of the employment agreement; and
- the employee has signed the employment agreement.
Any subsequent deductions from wages or holiday pay in reliance on that clause must take into account:
- the loss suffered by the employer as a result of the employee failing to work their notice period; and
- the proportion of the notice period that the employee fails to work.
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Date Modified: Tuesday, 29 May 2012
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