What can be deducted from termination wages?

At Akyra, our HR professionals are often asked: What can legally be deducted from an employee’s final wages upon termination? The short answer is – not much, and certainly not without the right legal process.

As the recent case of Bateup v Mornington Shire Council [2025] QIRC 61 demonstrates, employers must take care to ensure any deductions from termination pay are lawful and properly authorised. Let’s unpack what happened and what it means for employers.

Case summary: Bateup v Mornington Shire Council

Mr Bateup commenced employment with Mornington Shire Council (MSC) on 1 September 2023 as Manager of Infrastructure Delivery. His Letter of Appointment included terms around relocation expense reimbursement and the possibility of deductions from final pay if debts were owed to the Council.

After receiving a $3,788.74 reimbursement for relocation costs, Mr Bateup resigned during his probation period. MSC then withheld this amount from his final pay.

However, the Queensland Industrial Relations Commission (QIRC) ruled this deduction unlawful, ordering MSC to repay the withheld amount in full, including unpaid wages and annual leave entitlements.

What the law says about deductions

Under the Industrial Relations Act 2016 (Qld), employers must pay employees at the agreed rate without deduction – unless:

• The deduction is authorised by the Act, or
• The employee provides clear and specific consent.

The QIRC found that Mr Bateup’s signature on the general Letter of Appointment did not constitute written consent for the specific deduction of relocation expenses. The takeaway? General employment acceptance does not equate to specific authorisation for a deduction.

How this applies under the Fair Work Act

The Fair Work Act 2009 (Cth) (FW Act) outlines similar rules for deductions:

Employers can only deduct from an employee’s pay if:

1. The employee agrees in writing, and the deduction is primarily for their benefit, or
2. The deduction is authorised by law, a modern award, enterprise agreement, or court order.

Any written authorisation must clearly specify:

• The amount
• The purpose
• The recipient
• The date of deduction

Importantly, employees can withdraw consent at any time in writing.

Practical implications for employers

• This ruling has several implications, especially for SMEs managing termination processes:

  1. Obtain Specific, Written Consent

  A blanket clause in an employment contract is not enough. Written consent must be clear, specific, and separate for each deduction.

  2. Document Everything

  All deduction agreements should include the amount, reason, timing, and recipient. This transparency protects both employer and employee.

  3. Use Separate Agreements

  If deductions relate to relocation expenses, training, or other specific costs, draft separate agreements outlining terms in line with the FW Act.

  4. Respect the Scope of Final Pay

  Only deduct from the wages or salary component of termination pay — not from accrued annual leave or long service leave — unless the deduction agreement explicitly covers this.

  5. Comply with State and Federal Legislation

  Be aware of both state-specific laws (like Queensland’s Industrial Relations Act) and federal legislation (FW Act) to avoid legal disputes.

What deductions are permissible?

Provided written consent is obtained, the following deductions may be permitted:

• Loans or Advances – e.g., relocation loans
• Overpayments – in line with legal processes
• Union Fees – if authorised by the employee
• Accommodation and Utilities – if employer-provided
• Training or Course Fees – if the training benefits the employee
• Relocation Expenses – but only with specific written consent

Employer checking: ensuring compliance

To avoid costly legal errors, employers should:

• Use clear and specific authorisations
• Include a repayment plan if the amount exceeds final pay
• Allow for withdrawal of consent in writing
• Clearly state who receives the deduction
• Ensure deductions are lawful and documented

Key takeaways 

The Bateup case serves as a timely reminder: even well-intentioned deductions must follow strict rules. While it may seem reasonable to recover costs such as relocation expenses, failing to follow the proper process can lead to legal penalties and reputational risk.

As your HR partner, Akyra is here to guide you through these complexities, ensuring your practices are compliant and your business protected.

Need help managing termination pay or reviewing employment contracts?
Contact Akyra today for tailored HR support that puts your compliance first.