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Classic employment traps - unlawful deduction of wages

08 June 2006

It may startle you to learn that somewhere around half of all tribunal cases relate to unlawful deduction of wages. One of our employment lawyers advises employers on how to avoid falling into this classic trap.

Employees have a statutory right not to have money deducted from their wages without their written permission. In this context ‘wages’ can include commission, bonuses etc as well as actual pay.

There are various reasons why a leaver might owe money to his employer. Often it is because he has taken more holiday than he was entitled to, or the company paid fees for a training course that have to be refunded since he is leaving. Maybe he simply borrowed a lump sum from his employer to buy a car.

As these typical examples show, there is usually no question that the money is, indeed, owed. The mistake employers make is to deduct the money from the final salary. In the absence of written permission, the employer must pay the full amount to the employee and take whatever steps are necessary to chase the (civil) debt as a separate issue. It is worth noting too that a general power in the employer’s terms and conditions is not always reliable.

Unless the employee has given written permission to deduct monies, he will have a lawful claim. If he goes to a tribunal and succeeds (and he invariably will) the employer will have to repay him. In addition, the employer may then be prevented from chasing the debt in the county court. A mistake is potentially time-wasting, costly and exceedingly embarrassing.

As always, if you need commercial and pragmatic legal advice, we’re here to help so please get in touch.

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Jenny Hawrot LLB (Hons)
Senior associate, solicitor
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Jenny Hawrot
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