All workers (including employees) have a right not to have unlawful deductions made from their wages (UDW).
What are “wages”?
In order to claim that their wages have been unlawfully deducted, a worker must establish that the type of payment they were expecting to receive amounted to “wages”.
‘Wages’ is given a wide definition, covering ‘any sums payable to the individual by his employer in connection with employment’. Wages include:-
*Entitlement to SSP, SMP, etc, is governed by Social Security legislation, rather than employment law. The EAT has decided that where an employer disputes that a worker is entitled to such payments, claims should not be made in the ET. The appropriate enforcement method is a complaint to HMRC, who have powers to order an employer to make statutory payments. Only where there is no dispute that the worker is entitled to payment, simply that it hasn’t been paid, is an ET appropriate.
Certain payments made in the course of employment or upon termination of employment are not classed as wages, such as:-
What deductions is an employer permitted to make?
Employers cannot make any deduction from the wages of employees unless the deduction is:-
Certain deductions are excluded from the scope of the Employment Rights Act. If deductions are made in the following circumstances the employee will have no remedy:-
Is there a maximum that can be deducted?
Where deductions are permitted, there are no general rules about how much can be deducted, expect in retail employment.
Those working in retail employment are given additional protection regarding the maximum amount of any deductions on account of cash or stock deficiencies. These cannot amount to more than 10% of weekly/monthly gross pay. This assumes the deductions are allowed at all under the general rules above. The 10% limit does not apply to the final wage packet of an employee who is leaving, when the whole amount can be deducted. When making deductions, the employer does not have to prove that the employee is responsible for the shortfall or even a theft. Nor do they have to take steps to recover the money by other means, such as an insurance claim.
Making a claim
The worker must make a claim for UDW to an employment tribunal within 3 months of the date of the deduction was made, or the payment of wages was due.
If there has been several deduction which form a “series” of deductions, the time limit starts from the last unauthorised deduction made, but the whole of the series of deductions before that date can be included in the claim. However the Employment Appeal Tribunal has decided that where more than three months has passed between deductions this will break the series of deductions and stop a claim at that point.
[Bear Scotland v Fulton and others (2014) UKEAT 0047/13 at paragraphs 80-81]
On 8 January 2015 new regulations apply to claims for unauthorised deductions from wages. Where a claim for wages or holiday pay is presented to a tribunal after 1 July 2015 the tribunal can only consider deductions of wages that were made up to two years before the claim. Claims for other payments such as statutory maternity pay, adoption pay, time off for trade union duties and pay during medical suspension can still be made.