Can You Deduct the Cost of Employee Damage from Their Wages? WRC Courier Case Offers a Warning for Employers
An employee accidentally damages a customer's property while carrying out their job.
Can the employer simply deduct the repair cost from the employee's next payslip?
A recent Workplace Relations Commission decision provides a useful reminder that employers need to be extremely careful before making deductions from wages.
Courier Cashel Mulgrew succeeded in a Payment of Wages Act claim after €305 was deducted from his wages following accidental damage to a customer's garage door.
For employers, the important lesson is that responsibility for damage and the legal right to deduct money from wages are two separate questions.
WRC Case Reference
Adjudication Reference: ADJ-00062491
Complaint Reference: CA-00075643-001
Complainant: Cashel Mulgrew
Respondent: Napier Courtiers (in Receivership) Fastway/Nügo
Legislation: Payment of Wages Act 1991
Decision Date: 20 August 2026
The full decision can be found through the Workplace Relations Commission database using reference ADJ-00062491.
What happened?
Mr Mulgrew worked as a delivery driver from April 2024 until September 2025.
During a delivery to a private property in Mayo, he attempted to open a garage door which subsequently came off its roller.
The property owner complained to the employer.
Mr Mulgrew subsequently received a call from a manager informing him that money would be deducted from his wages towards the cost of the repair.
A deduction of €305 was then made from his second-last pay packet.
Mr Mulgrew's evidence was that the deduction represented approximately half the repair cost, but he had not agreed to the deduction and his contract did not provide for it.
Damage caused by an employee does not create an automatic right to deduct wages
This is probably the most useful lesson for employers.
An employer may believe that an employee is responsible for damaging company property, customer property, equipment, stock or another asset.
That does not necessarily mean the employer can simply reduce the employee's next wage payment.
“The employee caused the loss” and “we are legally entitled to deduct the loss from wages” are not the same thing.
What does the Payment of Wages Act require?
Section 5 of the Payment of Wages Act 1991 regulates deductions made from an employee's wages.
At a basic level, a deduction must generally be:
- Required or authorised by legislation;
- Required or authorised by the employee's contract; or
- Made with the employee's prior written consent.
There are additional protections where the deduction relates to an employee's act or omission, such as alleged damage caused during work.
Employers should check the legal basis for the deduction before payroll is instructed to make it.
Deductions for damage have additional requirements
Where an employer proposes to deduct money because of an employee's act or omission, the Payment of Wages Act imposes further conditions.
Employers should consider whether:
- The contract authorises the deduction;
- The employee was informed of that contractual term in advance;
- The proposed amount is fair and reasonable;
- The employee has received written particulars of the act or omission and proposed deduction;
- Those particulars were provided at least one week before the deduction;
- The deduction does not exceed the employer's actual loss or cost of the damage; and
- The deduction is made within the statutory timeframe.
The existence of a general deduction clause should therefore not be treated as permission to deduct whatever amount an employer considers appropriate.
The amount must also be fair and reasonable
Even where a contractual right to deduct exists, the analysis does not necessarily stop there.
For deductions relating to an employee's act or omission, the legislation requires the amount to be fair and reasonable having regard to all the circumstances, including the employee's wages.
Employers should therefore consider matters such as:
- Was the conduct deliberate or accidental?
- Was there negligence?
- What was the actual financial loss?
- Did workplace systems or equipment contribute?
- What does the employee earn?
- Is the proposed deduction proportionate?
A contractual deduction clause should be applied reasonably and proportionately, not automatically.
Accidental damage still requires a proper process
In this case, the employee maintained that the garage-door incident was entirely accidental.
That does not necessarily mean an employer could never seek recovery where an employee causes accidental loss.
But before taking money directly from wages, the employer should first establish the statutory basis for doing so.
It may also be sensible to investigate:
- What actually happened;
- Whether workplace procedures were followed;
- Whether the employee was at fault;
- What the true repair cost was;
- Whether the employer itself incurred that cost; and
- Whether another route exists for dealing with the loss.
Payroll should generally be the end of the decision-making process, not the beginning of it.
Establish the actual loss before deciding what to recover
Another practical point concerns evidence of the amount being deducted.
Mr Mulgrew said that he understood the €305 deduction to represent half of the expected repair bill.
Where an employer seeks compensation for damage through a wage deduction, the legislation provides that the deduction should not exceed the amount of the loss or cost of the damage.
Before deducting money, establish the loss with invoices, receipts or other reliable evidence.
Advance notice matters
For deductions arising from an employee's act or omission, the legislation includes an important notice requirement.
The employee must be furnished with written particulars of the relevant act or omission and the amount of the proposed deduction at least one week before the deduction is made.
This gives the employee an opportunity to understand what is being deducted and why.
Telling an employee shortly before payroll that money is being taken is not the same as following the statutory deduction process.
Review deduction clauses in employment contracts
Employers who operate vehicles, machinery, stock, tools or expensive equipment should pay particular attention to contractual deduction provisions.
Contracts may need to deal with matters such as:
- Loss of or damage to company property;
- Damage to third-party property;
- Missing stock;
- Company equipment;
- Overpayments;
- Loans or advances;
- Training costs where appropriate; and
- Other agreed deductions.
However, simply adding a broad sentence allowing deductions does not remove the employer's obligation to comply with the Payment of Wages Act.
The contract creates the potential authority. The statutory procedure determines whether that authority can safely be exercised.
The employer did not attend the WRC hearing
The respondent company was in receivership by the time the case came before the WRC.
The Joint Receivers informed the Commission that they would not attend the hearing.
The Adjudication Officer therefore considered the complainant's evidence, which was uncontested.
If an employer does not participate in a WRC hearing, it loses the opportunity to put forward its evidence and explanation.
That is a useful lesson regardless of the size of the claim.
The WRC ordered repayment of the €305
The Adjudication Officer accepted the employee's evidence that there was nothing in his contract authorising the deduction and that he had not consented to it.
The complaint under the Payment of Wages Act was therefore found to be well founded.
€305
Ordered to be paid to the employee in respect of unpaid wages.
The financial amount is modest compared with many WRC awards, but the underlying principle can apply to employers across virtually every sector.
Before making a deduction, what should employers check?
Ask the following before payroll is changed:
- What exactly is the deduction for?
- Is it authorised by legislation, contract or written consent?
- Was the relevant contractual term in place beforehand?
- Has the employee been given the required information?
- Does the one-week notice requirement apply?
- Have we established the actual amount of the loss?
- Is the amount fair and reasonable?
- Does the deduction exceed the actual loss?
- Has the employee been given an opportunity to raise any dispute?
- Have HR and payroll documented the basis for the deduction?
The wider lesson for employers
Employers can face genuine losses because of mistakes made by employees.
The Payment of Wages Act does not necessarily prevent an employer from recovering an appropriate loss through a wage deduction.
It does, however, regulate when and how that can happen.
Don't deduct first and check the contract later.
Before recovering damage, shortages or other losses through payroll, employers should confirm the contractual authority, statutory requirements, evidence of loss, notice requirements and proportionality of the proposed deduction.
WRC Decision: ADJ-00062491, Cashel Mulgrew v Napier Courtiers (in Receivership) Fastway/Nügo, decision dated 20 August 2026.
This article is for general information purposes only and does not constitute legal advice. Specific legal advice should be obtained in relation to individual circumstances.
