There are a number of potential hurdles that could face an employer trying to enforce a contractual clause that allows them to fine employees and deduct those fines from wages. The first is that the clause may be considered a penalty clause. The general rule against penalty clauses means that such a clause would be unenforceable if the detriment is out of all proportion to any legitimate interest of the innocent party in the enforcement of the primary obligation, particularly if it doesn’t bear any relation to the loss suffered by the employer as a result of the breach.

Secondly, it is possible that the enforcement of a clause which involves fining employees for misconduct could be considered as a breach of trust and confidence between the employer and employee. Alternatively, the enforcement of such a clause could be considered discriminatory depending on how the application of such clause may affect those with protected characteristics.

It is unlikely that there is scope for an unlawful deductions from wages argument by an employee if the clause is an express term of the contract of employment since it clearly entitles the employer to make such deductions. However, if the clause were deemed to be a penalty clause, it would be unenforceable and such deductions would then become unlawful. Alternatively, if such a clause were enforceable, any deductions made from wages, in respect of which the worker is contractually liable, that would bring the pay below national minimum wage will not result in a breach of the National Minimum Wage Regulations.