Employment rules and regulations in Australia are numerous! Over time, we’ve heard business owners repeat myths and misunderstandings regarding their employer obligations, particularly regarding payments so today, we thought we’d cover some of the issues we’ve heard. Let’s hope they clear up any misconceptions for you, too!

  1. If an employee breaks something at work, a deduction can be made from their pay to cover the costs.

There are only a few scenarios where a deduction is considered lawful and this is never one of them. In a nutshell, deductions are only allowed where an employee agrees to it in writing and it’s considered principally for their BENEFIT. There are circumstances such as tax, or child support payments, where the benefit test doesn’t apply, however, in most circumstances, if it’s not for the employee’s benefit and it’s not in writing, you can’t make a deduction.

  1. It’s ok to make a deduction from the employee’s wages for an overpayment though, right…?

Unfortunately, no. Although this would seem straightforward, in reality, the employer and the employee need to agree, in writing, details regarding:

  • The reason for the overpayment;
  • The amount of money that was overpaid; and
  • How the repayment will reasonably be repaid and over what timeframe.

Should the employee not agree, the Fair Work Ombudsman suggests the employer seek legal advice.

  1. So it’s not ok to make a deduction if the till is short either?

That’s right. If the till is short at the end of a shift, that’s part of the costs of operating a business. Training and managing staff for great cash management skills can help reduce these issues, but deducting the loss is never ok.

  1. If an employee is inexperienced, we can engage them as an unpaid intern.

The ONLY time someone can be engaged as an unpaid intern is when they are working as part of a formal job training program, work placement or vocational placement, where an unpaid internship is approved. These are often in the form of university placements, not simply through hiring an inexperienced person, willing to work for free.

  1. An employee wants to be paid in stock…if they agree, that’s ok?

No, the Fair Work Ombudsman is very clear on this. Employees need to be paid with money. Payment-in-kind is unlawful.

  1. Unused personal/carer’s leave can be paid out at the end of each year.

Personal/carer’s leave is cumulative from year to year, and gets paid out when an employee needs it, not because of a date in the calendar year. It is possible for a long-term employee to have accumulated a significant number of personal/carer’s leave days over the years.


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