unauthorised wage deduction
📖 What is unauthorised wage deduction? Meaning and definition
An unauthorised wage deduction refers to a situation where an employer reduces an employee's wages without proper justification. This can include situations where an employer simply fails to pay the agreed salary for a period, as seen in cases where a month's pay was deducted. It also covers instances where an employer does not pay for accrued but untaken holiday leave when employment ends, which is also considered an unauthorised deduction from wages.
When a complaint about an unauthorised deduction from wages is found to be 'well-founded' by an Employment Tribunal, it means the Tribunal agrees that the deduction was unlawful. The employer is then ordered to pay the claimant the sum that was wrongly withheld. This sum can be specified as a net amount (after tax and National Insurance) or a gross amount, with the responsibility for paying tax and National Insurance sometimes falling to the claimant.
These deductions can relate to regular wages for a specific period, such as a month or several weeks, or to other entitlements like holiday pay. The Tribunal's role is to determine if the deduction was indeed unauthorised and to order the employer to rectify the situation by paying the withheld amount. The process often involves a hearing where the Employment Judge makes a determination based on the evidence presented.
📋 Requirements
- The employer made a deduction from the claimant's wages.
- The deduction was made without proper authorisation or legal basis.
- The deduction can relate to regular pay or other entitlements like holiday pay.
📝 Procedure
- A complaint of unauthorised deductions from wages is presented to an Employment Tribunal.
- The Employment Tribunal reviews the complaint, potentially in the absence of a response from the respondent.
- The Employment Judge determines if the complaint is 'well-founded'.
- If well-founded, the Tribunal issues a judgment ordering the respondent to pay the deducted sum.
- The judgment specifies whether the payment is gross or net and who is responsible for tax and National Insurance.
💡 Examples
- An employer fails to pay an employee their full salary for the month of April, resulting in a complaint of unauthorised deduction.
- A company withholds an employee's wages for a period of several weeks without a valid reason, leading to a Tribunal claim.
- Upon an employee leaving their job, the employer does not pay them for the holidays they had earned but not taken, which is treated as an unauthorised deduction.
- An employer deducts a specific sum from an employee's pay at the end of May, and the employee successfully argues this was unauthorised.
❓ Frequently asked questions
What does 'well-founded' mean in an unauthorised deduction claim?
When an Employment Tribunal states a complaint is 'well-founded', it means the Tribunal has agreed with the claimant that an unauthorised deduction from wages did occur.
Can holiday pay be considered an unauthorised wage deduction?
Yes, if an employer fails to pay an employee for holidays they have accrued but not taken when their employment ends, this can be considered an unauthorised deduction from wages.
Will I receive the gross or net amount if my claim for unauthorised deduction is successful?
The Employment Tribunal's judgment will specify whether the employer must pay the gross sum deducted (before tax and National Insurance) or the net sum. The judgment will also clarify who is responsible for paying any applicable tax or National Insurance.
What if my employer doesn't respond to my claim?
If an employer fails to present a valid response on time, an Employment Judge may decide that a determination can still be made on the claim, or part of it, in accordance with the Rules of Procedure.
Are there other types of claims related to pay that aren't unauthorised deductions?
Yes, for example, a complaint about notice pay might be treated as a 'breach of contract' claim rather than an unauthorised deduction from wages, as seen in some Tribunal decisions.