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 was made (ERA 1996 s.23(2)).
  • Wages can be linked if it is repeated deductions, although following the introduction of The Deduction of Wages (Limitations) Regulations 2014, from 15th July 2015, only deductions in the 2  years prior to the date of bringing the claim can be recovered in the Employment Tribunal.
  • Complaints under the Employment Rights Act 1996 are not concerned with rights to money (e.g. whether the employee did or did not owe money to the employer). They are simply concerned with whether the employer did or did not make an unauthorised deduction from an employee's wages.
  • An employee may have two separate remedies if his employer makes an unauthorised deduction from wages:
    • make a complaint that money has been deducted from wages contrary to Employment Rights Act 1996 Part II. Employment Tribunals have exclusive jurisdiction in respect of such complaints (ERA 1996 s.205(2)).
    • make a breach of contract claim (independently of any Employment Rights Act rights) for refund of so much of the deduction as is not owing to the employer.  Since 1994 such a complaint can be made either to the High Court or County Court, or to an Employment Tribunal, provided it is a breach of contract claim and "arises or is outstanding on the termination of the employee’s employment". There is a cash award limit of £25,000 in contract claim cases.
  • An employer who has deducted money from an employee's remuneration contrary to Employment Rights Act 1996 can be ordered by an Employment Tribunal to pay that money to the employee (ERA 1996 s.24). Section 25 states that the employer can offset any overpayments against any unlawful deductions – i.e. place the worker in the position as if no unlawful deduction had been made.
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