Deductions
The conditions under which deductions may be made from salary and wages are prescribed by the Employment Rights Act. A claim for breach of the legislation may be brought to an Employment Tribunal or the civil courts.
The civil court claim is for breach of contract. Ordinary contract law principles apply to non-payment for breach of contract. Failure to pay may constitute a fundamental breach of the employment contract, permitting the employee to resign and take unfair dismissal or wrongful dismissal proceeding. However, an employee should first have recourse to grievance or other procedures, before resigning.
The Employment Tribunal claim is on the basis that the worker has not been paid what is properly payable. It covers full or partial repayment. A three months’ period applies, as is standard with most employment rights legislation. An Employment Tribunal may make a declaration that monies have been unlawfully deducted. It may also order compensation for loss incurred by reason of the deduction.
A claim may raise issues as to whether monies are properly payable. This will usually depend on the contractual and other circumstances. Questions of interpretation of the employment contract may arise.
There may for example, be no entitlement to suspend an employee without pay even if there is a right to suspension. Even in the absence of a specific right, if the employee is not available, for example, due to imprisonment, there may be an entitlement not to pay as he is not ready willing and able to perform his employment contract obligations.
The legislation may not generally be used to make claims in respect of discretionary bonuses and schemes of this nature. The claim must relate to a specific quantifiable sum clearly due.
Lawful Deductions
Deductions may be lawfully made in respect of
- satisfaction of court order
- overpayment of wages or expenses
- payments to the public authority
- payments due to another under the terms of the employment contract
- strike/ industrial action
- deductions authorised by statute
- authorised by written consent
A deduction authorised by the employee must be in writing or evidenced in writing. It must be authorised in advance. The authority must specifically authorise deduction from wages/salary. The amount deducted must be no more than permitted to be deducted.
Retail Deductions
Employees in retail employment may not have be the subject of deductions due to deficits arising in relation to amounts received in connection with retail transactions for deficiencies of more than one tenth of the gross amount payable to the employee on that day.
Deficiencies are shortfalls in cash or stock arising in the course of retail transactions. Deductions must be made within 12 months of when the employer knew or first knew of the relevant cash shortage of stock deficiency where this applies under the contract.
The one 10th applies both to deductions and demands for payment. the employer may not be legal proceedings more than 12 months from the date on which the deficiency or shortage is established on might reasonably has been established
Holiday pay
The rate of holiday pay is generally the normal rate for the employee. Extra leave, over and above the statutory minimum, can be at whatever rate is agreed.
There is a right to holiday pay and a right to take holiday leave. The general rule is that payment cannot be made in place of annual leave.
Annual leave is defined with reference to the weekly rate as calculated under the legislation. Failure to pay holiday pay can be the subject of a payment deduction claim to the Employment Tribunal. It can also be the subject of a claim under the Working Time legislation. It may be also the subject of a claim in the civil court.
Statutory entitlement is to paid leave of 5.6 weeks per leave. The maximum is 28 days.
The legislation protects employees and certain independent contractors. It is applicable to workers in the same as much employment legislation. Agency workers are protected
Where a worker works part of the annual leave year, they receive a prorated entitlement. In the first year of employment it is limited to that accrued at that point in time. The relevant accrual rate of accrual is specified. It is broadly a monthly accrual on the first day of each month.
There are limited exceptions whereby payments can be made in lieu of holiday pay. The general rule is that this is not permitted.
A worker may recover compensation for annual leave accrued but not taken upon termination of employment.
Where a worker has a greater entitlement under his contract than the statutory minimum, he may take pay in lieu for the additional element over and above the statutory minimum.
An employer may not simply reduce the salary and deemed the reduction to be holiday pay.
Failure to pay holiday pay may be the subject of a complaint to the Employment Tribunal may be the subject of a breach of contract claim. The standard time limit for taking Employment Tribunal cases applies subject to the usual limited exceptions.
There may be a separate claim under the working time legislation.
Equal Pay Reporting
Where there is a breach of equal pay requirements, an equal pay audit may be ordered, and the results may be published.
Businesses with more than 250 employees are obliged to report the gender pay gap. They must analyse the gender pay profile and publicise certain details
In particular the following must be disclosed in respect of annual periods
- the mean gender pay gap
- the median gender pay gap
- mean gender bonus
- distribution of males and females within salary quartiles
Pay comprises the various elements including basic pay, sick pay, maternity pay, bonus pay, shift premiums, allowances and other paid leave
Calculations are based on the hourly rate per employee.
The information is to be published on a searchable website of the employer and remain in place with three-year period.
