Overview

Published: 17 May 2013

Part II of the Employment Rights Act 1996 governs unauthorised deductions from wages and has evolved (as a result of case law) to include complete non-payment of wages or salary.

Key points

  • Unlawful deductions from wages provisions cover 'workers', including employees and apprentices. Also included are people working under a contract and providing work or services personally to someone who is not a customer or client of the worker's profession or business. The provisions do not cover the genuinely self-employed.
  • Lawful deductions include income tax and NICs, any deductionsauthorised by the worker's contract and those deductionsagreed in writing by the worker before the deductions are made.
  • Workers in the retail sector have additional protection against unlawful deductions and special rules apply to any deductions made in relation to 'cash shortages or stock deficiencies'.
  • Complaints regarding unlawful deductions from wages must normally be made to an employment tribunal within three months of the deduction.
  • Overpayments resulting from a 'mistake of fact', such as a computing error, can potentially be recovered, although any repayment by the employee from his or her wages must comply with the provisions that govern unlawful deductions.
  • Overpayments resulting from a 'mistake of law', such as misinterpreting legislation, are irrecoverable.


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