Debt deductions

If your employee has a debt with us, we may ask you to make deductions from their wages so they can repay it.

Information

You have a legal obligation to make debt deductions from the employee's wages if we ask you to.

Any deductions you make to us are in addition to any that Inland Revenue may have requested, eg, child support.

  • When deductions are made

    If your employee has a debt with us, and we've been unable to contact them to arrange repayments, we may ask you to make deductions from their wages.

    Or your employee may ask you to make deductions from their wages and send it to us.

    Your employee could be either:

    • permanent
    • temporary
    • contracted
    • casual
    • seasonal.
  • How it works

    We'll:

    • contact you to:
      • confirm the employee works for you
      • request that deductions are made from their wages
    • send you and your employee the request by email or post.

    We'll let you know:

    • how much to deduct
    • how long to make the deductions for
    • the bank account details and reference number to pay the deductions into.

    We can't tell you what the debt's for.

    Information

    You don't need to get permission from your employee to make the deduction.

    Frequency of deductions

    You can make the deductions in line with your pay cycle.

    If you make monthly deductions, we need to receive the first payment by the 20th of the following month from the date of the written request.

    If your employee doesn't have a regular pay cycle, eg they're a seasonal worker, you can make the deductions based on when they're paid.

  • Change deduction amount

    If your employee wants to change the deduction amount, they need to contact the Collections Unit either by:

    If we agree we'll contact you to discuss this and send you another written request with the new deduction amount.

  • Stop deductions

    There may be a number of reasons why deductions are stopped. These can include:

    • you close your business for a period of time, eg over Christmas
    • the person no longer works for you
    • the staff member goes on unpaid leave.

    If you need to stop the deductions, you need to let us know straight away. Contact the Collections Unit either by:

    We ask you to stop deductions

    If we want you to stop deductions, we'll either:

    • call you
    • send the request by email or post.

    We'll let you know when to stop the deductions.

  • If you don't make deductions

    If you don't make deductions after we've requested them, the amount of deductions that you haven't paid becomes a debt owed by your business and it may be recovered by Court action.