Employment Act 1955 · Updated to 1 Aug 2023 · Part IV · Deductions from Wages
24. Lawful deductions
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An employer may deduct from wages only as the Act allows. Some deductions, such as trade union dues, need the employee's written request. Others, such as provident fund payments, also need the director general's prior written permission. Total deductions in any one month cannot exceed fifty per centum of that month's wages, with some exceptions.
Summary · Drafted with AI, checked against the official text on 30 Sep 2026.
No deductions shall be made by an employer from the wages of an employee otherwise than in accordance with this Act.
employer
“employer” means any person who has entered into a contract of service to employ any other person as an employee and includes the agent, manager or factor of such first mentioned person, and the word “employ”, with its grammatical variations and cognate expressions, shall be construed accordingly;
It shall be lawful for an employer to make the following deductions:
deductions to the extent of any overpayment of wages made during the immediately preceding three months from the month in which deductions are to be made, by the employer to the employee by the employer’s mistake;
deductions for the indemnity due to the employer by the employee under subsection 13(1);
deductions for the recovery of advances of wages made under section 22 provided no interest is charged on the advances; and
deductions authorized by any other written law.
The following deductions shall only be made at the request in writing of the employee:
employee
“employee” means any person or class of persons— (a) included in any category in the First Schedule to the extent specified therein; or (b) in respect of whom the Minister makes an order under subsection (3) or section 2a;
deductions in respect of the payments to a registered trade union or co-operative thrift and loan society of any sum of money due to the trade union or society by the employee on account of entrance fees, subscriptions, instalments and interest on loans, or other dues; and
deductions in respect of payments for any shares of the employer’s business offered for sale by the employer and purchased by the employee.
The following deductions shall not be made except at the request in writing of the employee and with the prior permission in writing of the Director General:
Director General
“Director General” means the Director General of Labour appointed under subsection 3(1);
deductions in respect of payments into any superannuation scheme, provident fund, employer’s welfare scheme or insurance scheme established for the benefit of the employee;
deductions in respect of repayments of advances of wages made to an employee under section 22 where interest is levied on the advances and deductions in respect of the payments of the interest so levied;
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deductions in respect of payments to a third party on behalf of the employee;
deductions in respect of payments for the purchase by the employee of any goods of the employer’s business offered for sale by the employer; and
deductions in respect of the rental for accommodation and the cost of services, food and meals provided by the employer to the employee at the employee’s request or under the terms of the employee’s contract of service.
The Director General shall not permit any deduction for payments under paragraph (4)(e) unless he is satisfied that the provision of the accommodation, services, food or meals is for the benefit of the employee.
Where an employee obtains foodstuff, provisions or other goods on credit from a shop the business of which is carried on by a co-operative society registered under the Co-operative Societies
Act 1993 [Act 502], it shall be lawful for his employer, at the request in writing of the employee and with the agreement of the manager of the co-operative shop, to make deductions from the wages of the employee of an amount not exceeding the amount of the credit and to pay the amount so deducted to the manager in satisfaction of the employee’s debt.
wages
“wages” means basic wages and all other payments in cash payable to an employee for work done in respect of his contract of service but does not include— (a) the value of any house accommodation or the supply of any food, fuel, light or water or medical attendance, or of any approved amenity or approved service; (b) any contribution paid by the employer on his own account to any pension fund, provident fund, superannuation scheme, retrenchment, termination, lay-off or retirement scheme, thrift scheme or any other fund or scheme established for the benefit or welfare of the employee; (c) any travelling allowance or the value of any traveling concession; (d) any sum payable to the employee to defray special expenses entailed on him by the nature of his employment; (e) any gratuity payable on discharge or retirement; or (f) any annual bonus or any part of any annual bonus;
Notwithstanding subsections (2), (3), (4) and (6) the Director
General, on an application by an employer or a specified class or classes of employers, may permit any deduction for a specified purpose from the wages of an employee or a specified class or classes of employees subject to such conditions as he may deem fit to impose.
The total of any amounts deducted under this section from the wages of an employee in respect of any one month shall not exceed fifty per centum of the wages earned by that employee in that month.
The limitation in subsection (8) shall not apply to—
deductions from the indemnity payable by an employer to an employee under subsection 13(1);
deductions from the final payment of the wages of an employee for any amount due to the employer and remaining unpaid by the employee on the termination of the employee’s contract of service; and
deductions for the repayment of a housing loan which, subject to the prior permission in writing of the Director
General, may exceed the fifty per centum limit by an additional amount of not more than twenty-five per centum of the wages earned.