June 21, 2019

Is it legal for restaurant owners to make deductions from the salaries of employees when customers leave without paying?

It is lawful for employers to include clauses in their employment contracts to allow for deductions to be made from employees wages as long as it doesn’t breach other legislation such as the National Minimum Wage thresholds.  It is therefore common place for employment contracts to contain wording giving the employer the contractual right to make deductions from salary for money owed by the employee to the company.

Whilst these clauses are sufficient to allow employers to make a deduction from wages, the employer must also be able to demonstrate that an event justifying the deduction has occurred.  Therefore, in cases of ‘dining and dashing’ the employer would have to show that the employee had a contractual duty to be vigilant and had failed in that duty or been negligent resulting in losses suffered by the restaurant.

It would not follow just from the fact that diners had managed to leave without paying the bill that the employee was in breach of duty or negligent and therefore liable.

Furthermore, retail employees including waiting staff are given extra protection by section 18 of the Employment Rights Act 1996.  This provides that deductions made from retail employees for cash or stock shortages must not exceed 10% of the gross amount of the wages payable to the worker on a particular payday.  This does not mean that the entire amount cannot be deducted over a series of paydays, just that the entire amount cannot be deducted in one go.


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