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Employer deductions from wages must be clearly itemised

Checking the fine print on a wage slip is always a good idea. Ambiguous acronyms that are only truly understood by the payroll department often abound and if one does not know what these mean, in particular as relates to deductions from said pay packet, then how can one be certain that these deductions are correct and lawful?

This was the very concern held by the Claimant in the recent Employment Appeals Tribunal (“EAT”) case of Ridge v Her Majesty’s Land Registry. Mr Ridge had become unwell and had considerable periods of absence from work. When Mr Ridge exhausted his entitlement to full sick pay but continued to be sporadically absent, this affected his payslips in one of two ways; if his absence was processed before month’s end the figures for his gross pay were lower. If his absence was not processed in time he would be overpaid for that month with his employer deducting the overage the following month.

Mr Ridge complained about the content of his wage slips as he felt that clear explanations should be contained on these so as to enable him to keep track of what he was or was not being paid and why. When he queried this with his employer the deductions were explained to him, however no alteration was made to the format of the wage slips to the displeasure of Mr Ridge.

Under section 8 of the Employment Rights Act 1996 (“ERA”) an employee has the right to be given a written itemised pay statement by their employer. Section 8(2)(b) states that this should further contain detail as to the purpose of any deductions being made by the employer.

Mr Ridge therefore brought proceedings at an Employment Tribunal (“ET”) complaining that his employer had failed to comply with this section of the ERA. The ET rejected his claim, finding that the variations on the wage slip were mere ‘adjustments’ not deductions and so a detailed explanation on the slips themselves was not warranted.

The EAT overturned this decision holding that where an employer reduces an employee’s wage to account for a previous overpayment that this amounted to a deduction and so the employer must identify the amount and purpose of that deduction in accordance with section 8 of the ERA. The EAT concluded that Mr Ridge was entitled to a declaration that his payslips did not comply with section 8 of the ERA.

Conclusion

While the result of this case is not the usual cautionary tale for employers in terms of a large compensatory pay out, the employer Land Registry will have had to dip into the public purse in first defending this action and then most likely again by amending its payroll policies. Arguably this could have been avoided in the first place on a strict interpretation of section 8 of the ERA and an order to the payroll department to make it clear on Mr Ridge’s payslip as to what the reasoning for the relevant deduction was.

As always if I can provide you with any further assistance on queries relating to employee wage slips or any other issue, please do not hesitate to contact me for a free consultation on 0113 350 4030 orsamira.cakali@scesolicitors.co.uk.


Please note that the information in this blog is to provide information of general interest in a summary manner and should not be construed as individual legal advice. Readers should consult with SCE Solicitors or other professional counsel before acting on the information contained here. 

Samira Cakali

Samira Cakali is a pragmatic and approachable solicitor advocate with extensive contentious and non-contentious experience in the fields of employment law as well as civil litigation, within a range of commercial businesses from SME’s to multinationals as well as senior executives.

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