If your employer has failed to pay you, or paid you less than you are entitled to, you may have an Employment Tribunal claim for unlawful deduction from wages.
What is an unlawful deduction from wages?
Under the Employment Rights Act 1996 employers have the right to make deductions from the wages of their workers. However, employers can only make deductions in certain circumstances.
It is unlawful for an employer to make a deduction from a worker’s wages unless:
· The deduction is required or authorised by statute;
· The deduction is required or authorised by a provision in the worker’s contract; or
· The worker has given their prior written consent to the deduction.
For example, an employer can deduct from wages the PAYE and National Insurance Contributions that they are obliged to make. An employer can also make a deduction if a worker is overpaid.
Workers in the retail sector have additional protection against unlawful deductions and special rules apply to any deductions made in relation to “cash shortages or stock deficiencies”.
What are “wages”?
The definition of wages is broad. It includes salary, bonus, commission, holiday pay, shift payments, long-service awards, statutory sick pay, statutory maternity pay, statutory paternity pay and statutory adoption pay. This is not an exhaustive list.
Bonus payments should generally be ascertainable, quantifiable and for a specific sum if they are to be claimed as an unlawful deduction from wages. Otherwise, the claim may have to be brought as breach of contract.
Any claim must be brought within three months less one day beginning with the date that the deduction is made, or the date on which the payment from which the deduction is made is tendered. It is also mandatory to go through the ACAS Early Conciliation scheme before you can submit a claim to the Tribunal.
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