Wages: Warning against unauthorised deductions

There has been a steady rise in cases at the Employment Tribunal since July 2017 when the Supreme Court abolished the requirement to pay a fee to issue a claim. The most common employment tribunal claims are for unfair dismissal, unauthorised deduction of wages and equal pay.

The Employment Rights Act 1996 (ERA) protects individuals from having unauthorised deductions made from their wages. It is unlawful for an employer to make a deduction wages except in three situations, where:

•       the deduction is required or authorised by statute; or

•       it is authorised by the worker's contract; or

•       the worker has given their prior written consent to the deduction.

There are also two recognised exceptions:

•       Overpayment of wages or expenses

Deductions made in order to reimburse the employer in respect of an overpayment of wages or an overpayment in relation to expenses incurred by the worker in carrying out their employment and;

•       Strike

Deduction made by the employer on account of the worker’s having taken part in that strike or other action.

In the latest high profile case, Riyad Mahrez, the Manchester City Premier League football player, has been ordered to pay his children’s nanny £3,600 in unpaid wages after she took Mr Mahrez and his wife to an employment tribunal. He also has to pay £150 in damages over non-payment of expenses.

Wahaca, the restaurant chain, has found itself in the spotlight after a diner in the Kentish Town branch tweeted that she had overheard that a member of staff would be forced to pay out of his wages for a diner that had left without paying. Wahaca denied that this was their policy, stressing that a server would only be liable if there was negligence. Under the ERA, deductions for instances where a customer has left without paying could only be made if there was a current written agreement with the employee.

Employers should take heed of these high profile cases and consistently review their policies to both manage reputation and ensure that staff have no grounds to bring claims.

Posted on 4 July, 2019 by Ortolan

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