Is it permissible to withhold the equipment value from an employee’s last salary if they fail to return corporate property such as computers, uniforms, or cell phones?
Yes, in a nutshell, but there are a few factors to consider.
The power to take money from your paycheck, whether it’s a final or other salary payment, is determined by your employment contract.
>See also: Employee vacation entitlement
Any deductions can only be made if the ability to deduct is included in a relevant part of the contract, which is normally under the salary section or a special clause on “deduction from wages.” If you don’t have one of these stipulations, you can still deduct payment, but you’ll need a written agreement signed by the employee before making any deductions.
Even if you don’t have a signed contract, you can still make a deduction if the employee has been given written notice of the clause or has received prior written notice. If the employer has already left the company, this is more difficult to achieve, so double-check that your contract contains the relevant clauses.
During their induction, many companies require employees to sign for company property. The papers record the employee’s agreement for the company to reclaim the value of their property if it is not returned. This should be enough to signify acceptance of the deduction. Check to see if the term provides for a recovery from the final salary. If it does, the conclusion can be drawn.
>See also: An employee wishes to convert his or her SSP to annual leave.
When it comes to the amount to be subtracted, it’s also a good idea to think about the reasonableness test. If an employee leaves after two years and the uniform is beyond its sell-by date, it may be unreasonable to demand payment for a completely new outfit. Similarly, it would be unreasonable to take the whole cost of new equipment from someone whose old technology has declined in value throughout their job. When in doubt, use your common sense.
To avoid any problems, it is frequently better to write to the employee ahead of time, outlining what needs to be returned and what the price would be if the property is not returned unless an alternative is agreed upon, state that the objective is to collect these amounts from final salary by the agreements.
In short, if you’re going to deduct something, double-check your contracts, agree on the conditions, notify the employee in writing with your computations, and be reasonable in your deductions.
Karen Watkins is the founder of Rowan Consulting, a small business HR firm.
More about small business human resources
What should a business owner include in an employment contract?
