The law sets out that an unlawful deduction from wages will have occurred in any of the following instances: The deduction was not necessary or legally authorised The contract of employment makes no provisions for such a deduction The employee did not give written consent to the deduction before it … If the employer retaliates against an employee for filing a claim over unlawfully deducted wages, the employee can file a retaliation claim or lawsuit, as well. With the above in mind, there are illegal deduction of wages you have to be aware of. If there is already an existing agreement allowing Unlawful Deduction of Wages is when a worker or employee has been unpaid or underpaid wages. That counts as an exemption to the above three points. An unlawful deduction from wages under the Employment Rights Act 1996 (ERA 1996) is when an employer does not pay or underpays a member of staff. A finding against an employer could expose the employer to penalties and the employee’s attorney’s fees. instructions how to enable JavaScript in your web browser. Ensure that you have the employee’s written consent to make the appropriate deduction before attempting to do so. With the above in mind, there are illegal deduction of wages you have to be aware of. If you commit any of these, it could end in a costly employment tribunal. Statutory payments due to a public authority (such as HM Revenue and Customs) can also be deducted. This site uses cookies. But you…, The law around overtime holiday pay continues to evolve. 8th January 2015. If your employer owes you money, you may have suffered unlawful deduction of wages. A claim needs to be made within 3 months of the deduction or at the end of a series of deductions… Prior consent. Made. full functionality of this site it is necessary to enable JavaScript. However, we shan't be able to reply to your specific questions. The documents in plain English, the drafting service and the delightful customer service means I can get the job done properly, at a price that doesn't affect a small businesses bottom line. You have a contract of employment with your employer. To learn more about deductions from pay, read below: 1. Alternatively, you may bring a claim in the employment tribunal for “unlawful deductions from wages” which is often a speedier remedy, and you can still remain employed whilst making a claim. And performance…, If you’re an employer that offers staff expenses and benefits, it’s good business practice to let HM Revenue and Customs (HMRC) know. For anything that is for the employee’s benefit, the employer must first get the employee’s consent before providing the good or service and deducting the cost of the employee’s pay. If you make an unlawful deduction but, at the same time, increase another element of the worker's remuneration so that there is no overall reduction in pay, there will still be an unlawful deduction from wages. Salaries…, If you’re losing an important employee to a competitor or other circumstance, then you may be wondering if you can do anything to stop them…, The quality of their physical health and psychological wellbeing is key to a happy, high performing workforce. As above, you can agree with your staff member a deduction, but you’ll need to have this agreement sent to them in writing. Examples include: If so, then you should (before making the payment), require the employee to sign a form giving his or her written consent to the conditions of payment and return of the money. This might be in writing or you might have discussed it. There may be circumstances where you pay the employee money and want it back in if something does not happen. The Act came into operation on 1 July 2009. Bright HR Limited is authorised and regulated by the Financial Conduct Authority for the sale of non-investment insurance contracts. A worker's remedy for an unlawful deduction from his or her wages is to make a claim to an employment tribunal under section 23(1) of the ERA 1996. Where an employer makes a unilateral reduction in an employee’s wages by removing or reducing a payment to which the worker is contractually entitled, it appears that this will still amount to an unlawful deduction even if the employer increases another aspect of the employee’s wages so that there is no overall loss in pay. However, there are limits on what employers can deduct from pay. Unlawful Deductions - Employment Tribunal Jurisdiction and Remedies Key Points The basic time-limit for presenting a complaint to an Employment Tribunal concerning unauthorised deductions from wages is three months from the last date of payment of the wages from which the deduction … If your employer owes you money, you may have suffered unlawful deduction of wages. They can make a tribunal claim for a breach of contract if they feel you aren’t resolving the issue. If an employer makes an unlawful deduction from an employee’s paycheck to recover a wage overpayment, the aggrieved employee can file a wage claim with the DLSE or file a lawsuit. When salaries go out each month, there are sometimes occasions when you might have to make post-payday deductions. Your employer can take a maximum of 10% of your weekly or monthly gross pay (your pay before tax and National Insurance) if you work in retail. If you’re wondering how you can claim the money back, a common technique is to take monthly instalments out of the staff member’s wage—that would continue until they pay the full amount back. "I was really pleased with my recent experience of using Net Lawman. According to section 34 (1) of the Basic Conditions of Employment Act (BCEA), an employer is not allowed to make deductions from an employee’s … Strike is equivalent to not working for a period, and therefore wages can be reduced accordingly to time not at work. Free Practical Law trial If you have noticed a bug or a mistake on this page, or just want to give us feedback, we'd love to know. There are very few circumstances in which an employer is able to lawfully make pay deductions from your pay without your agreement. In Altman v. Steve's Music Store Inc., one of the oft-overlooked issues was the fact the employer alleged it had overpaid the plaintiff while she was receiving cancer treatment, and the employer sought to recover the salary payments it had agreed to continue while she underwent treatment. Net Lawman understood my needs and provided fast and efficient service without incurring the significant costs of a traditional law firm. Any claim to the employment tribunal for unlawful deduction of wages must be made by the employee within 3 months less one day, from the date the unlawful deduction was made or the date the wages fell due. The Employment Rights Act 1996 (ERA) protects employees and workers from having unauthorised deductions made from their wages. So, that includes the likes of tax, national insurance contributions, or if the employee is making repayments towards their student loan. The Respondent is to pay the Claimant a total injury to feelings award of The impact of this case is limited by the Deduction from Wages (Limitation) Regulations 2014, which now impose a two year backstop on almost all claims for unlawful deductions from wages. Tel: 0800 783 2806. 3. You can also state it in writing to them. An unlawful deduction of wages occurs when an employee has either been unpaid or has been underpaid their wages by their employer for some reason. Registered Office (UK): Bright HR Limited, The Peninsula, Victoria Place, Manchester, M4 4FB. Coming into force. If it’s clarified in the employment contract. For example, if an employee has in their contract they work for eight hours, but turn up an hour late, then it’s not appropriate to pay them for the full shift. If an employer, without contractual authority or individual or collective consent, reduces a worker’s wages then this would normally amount to a deduction. When the unlawful deductions law applies Make a claim to the Employment Tribunal to remedy the unlawful deduction from your wages If your employer has deducted money from your wages without your consent (and not due to a contractual or statutory obligation) then you may be able to resign (should you wish to do so) and claim for constructive unfair dismissal and breach of contract. If your The impact of this case is limited by the Deduction from Wages (Limitation) Regulations 2014, which now impose a two year backstop on almost all claims for unlawful deductions from wages. Unlawful deductions expose an employer to the imposition of civil penalties, which range up to $10,200 for an individual and up to $51,000 for a corporation. UNLAWFUL WAGE DEDUCTIONS This infosheet is designed to help you identify your rights and to take the most appropriate action under the unlawful deduction provisions of the Fair Work Act 2009 (‘the Act’). © 2000 - 2021 Net Lawman Limited. 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