Unlawful Deduction of Wages

Unlawful Deduction of Wages Claims – What are they?
It is illegal for an employer to deduct any of their employees’ wages unless the deduction has first been agreed in writing with those employees. For example, when you begin a contract of employment, you will generally sign to agree that your employer can deduct costs such as national insurance, PAYE, student loan payments and pension contributions. If, however, they take money off your wages without your written agreement, this is considered to be unlawful.

The legal basis of this is the Employment Rights Act 1996 Part II. Even if you owe money to the employer, they are still not allowed to take it from your wages without your consent.

What are “wages”?
As well as your basic salary, ‘wages’ can also include bonus payments, fees, commission or holiday pay. Employers are still allowed to recover money if there has been a prior overpayment of wages or expenses, but these are exceptions to the general rule that they are not allowed to make deductions from their employees’ wages.

What should I do first?
If you feel that your employer has engaged in an unlawful deduction of wages, then the first thing you should do is to raise the issue with them. You should tell them when the incident took place and explain that you did not agree to the deduction in writing before it happened. If you are unsuccessful in reclaiming your money, you might then be able to progress your case to an Employment Tribunal.

Unlawful deduction of wages -common examplesSo, what are some situations where an unlawful deduction of wages might occur? One could be that an employee accidentally damages some company property and, instead of the employer notifying them that they are responsible for paying for the damage, they simply take it out of their wages instead. Another case that sometimes arises is when employees leave employment and fail to return equipment, such as laptops. If the employer then took the money for it out of the employee’s final wages without them first agreeing to it, this would be unlawful even though the employee technically owed them the money. Also, if an employer failed to pay an employee, this could also count as an unlawful deduction of wages in some circumstances.

If, however, you were late for work and your employer paid you less as a result, this would be unlikely to be unlawful as most employment contracts include a contractual start time. If you are late for this, or have unauthorised time off work, your employer is not obliged to pay you for it, so this is something you should think about before deciding to bring an unlawful deduction of wages claim against them.
If you think that you do have a valid unlawful deduction of wages claim against your employer, you should seek legal advice as you might have to attend an Employment Tribunal where you will need to argue your case and prove that your wage deduction was unlawful. This is something your employment tribunal lawyers will be able to assist you with.

Employment tribunal time limitsIf you decide to make an Employment Tribunal claim, you need to do so within three months of the final unlawful deduction of wages.

Contact us about your Unlawful Deduction of Wages Claim
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