Mr Ridge was employed as a software engineer by HM Land Registry (“the Registry”). Mr Ridge became unwell and had significant periods of sickness absence, to the extent that he had exhausted his sick pay entitlement. Thereafter, he continued to be absent from time to time, which meant that there were months when he was entitled to be paid for some days but not others.
As a result the gross figure was not always the same, so the Registry made an overpayment, which they then claimed back. They did this without notifying the employee and by simply putting a minus in front of the amount deducted, on his payslip.
Mr Ridge issued tribunal proceedings arguing that the Registry had failed to comply with its obligation under Section 8 of the Employment Rights Act 1996 (ERA).
Law The ERA sets out an employee's rights in respect of itemised pay statements which states that, at or before the time any payment of wages or salary is made to them, they should be given a written itemised pay statement by their employer containing:
- The gross amount of the wages or salary
- The amounts of any variable, and any fixed, deductions from that gross amount and the purposes for which they are made
- The net amount of wages or salary payable
- Where parts of the net amount are paid in different ways, the amount and method of payment of each part-payment
Decision The Tribunal rejected Mr Ridge’s claim but the Employment Appeal Tribunal (EAT) overturned that decision on appeal. The EAT determined that adjustments on an employee’s payslip, to correct an overpayment, were deductions from salary and the employer had failed to identify the amount and purpose of the deductions, and that Mr Ridge was entitled to a declaration to this effect.
Comment Julie Sabba, an associate in our employment law team states:
“This case was not about whether or not the employer had the right to make the deductions following the overpayment but rather how it should itemise the deductions correctly.
“Employers should remember that deductions can only be made from an employee’s wages if it has the employee’s express consent or a contractual right to do so is contained within the employment contract.
“Once an employer is sure that it has the right to deduct monies owing to it, it must follow the guidance to ensure that they are itemised correctly, otherwise they may be at risk of punitive damages up to the amount that the employer has deducted, if they have not identified the deduction properly. This is despite the employer being entitled to make the deduction and the employee understanding the reason for the deduction.”
