SIA approved contractors and pay deductions

If your employee agrees, you may make deductions from their pay to cover the cost of optional benefits.   

If you do, you must always make sure to: 

• explain the deductions clearly to your staff  
• keep written evidence that your staff agreed to the deductions 
• never pay less than National Minimum Wage 

Insurance 

You may offer your staff optional insurance benefits, such as: 

• health, medical, or life insurance 
• cover for loss of earnings or unplanned absence 
• cover for HMRC compliance checks or legal defence 

You can make deductions from your employees’ pay to cover the costs of these optional insurance benefits. If you do, you must: 

• clearly explain what the insurance covers 
• give staff a genuine choice to opt in or out 

You must pay for your business insurance yourself. You can never pass these costs to your staff. You must also cover subcontractors if they do not have their own insurance. Make sure that you have enough insurance to meet your legal and contractual obligations. 

Other benefits 

You may also make deductions from staff pay to cover the costs of things like gym membership or private healthcare.  

If you do, you must: 

• include the deduction in the employment contract or terms and conditions 
• show the deduction clearly on the payslip 

You must manage your payroll system clearly and effectively and be able to demonstrate how it works. 

Checking that you have paid the minimum wage 

When calculating whether you have paid the National Minimum Wage, you must deduct certain costs first, such as:  

• uniforms 
• travel between sites (if it’s for your benefit) 
• job-related items for which staff pay and are not reimbursed  
• tax 
• National Insurance payments