Unlawful Wage Reductions

From time to time, your employer may fail to pay money owed to you. You have certain legal rights to recover this money.

If your employer owes you money, there are two ways you can claim the money back:

  • A claim for an unlawful deduction of wages in an Employment Tribunal
  • A breach of contract claim in the Employment Tribunal or County Court

Unlawful deduction of wages

Employees or anyone who personally provides work or services to another under a contract, (provided the person is not a client or customer) have the right not to have unauthorised deductions taken from their wages.

The most common types of payments that are classed as “wages” are:

  • Salary
  • Commission and bonuses
  • Holiday pay
  • Statutory sick pay
  • Statutory maternity, paternity and adoption pay
  • Notice pay (provided the employee is required to work during the notice period or is treated as doing so)

Are there any circumstances when my employer can make deductions to my pay?

An employer can only make a deduction if:

  • It is authorised by statute (e.g. tax, national insurance, court orders for maintenance payments and fines)
  • It is authorised by the contract of employment (there is no requirement that the term has to be in writing but the employer should notify the employee in writing about the existence of the term before making a deduction)
  • The employee has previously agreed in writing to the deduction being made

What is the time limit for bringing a claim for unlawful deduction of wages?

Your claim must be submitted to the Employment Tribunal within 3 months less one day of the date that the wages were due to be paid.

Breach of contract

A breach of contract claim can be brought in the Employment Tribunal or the Civil Courts depending upon the employment status of the individual and the value of the claim.

You can bring a breach of contract claim in a Tribunal if you are an employee, your employment has terminated and you are owed money by your employer which you are entitled to under your contract of employment.

What is the time limit?

Tribunal claims must be started within 3 months less one day of the date your contract was terminated (e.g. if your contract terminated on 31 March your claim must be issued by 30 June ). The Tribunal can only deal with claims for less than £25,000.

If you are not an employee or you have missed the deadline for bringing a claim in the Tribunal, you can still bring a claim in the Civil Courts. Court proceedings must be started within 6 years of the date that the breach of contract occurred (the date that the money was due to be paid to you).

If your employer has failed to pay you or made deductions from your wages, please contact one of our specialists in the Employment Team.

For further information please contact a member of our employment law team, complete our online enquiry form or call our client care team who will be pleased to help you.