Unlawful Wage Deductions UK: Tribunal Claims Guide

Overview

An unlawful deduction of wages happens when an employer takes money from a worker's pay, or fails to pay what is properly due, in circumstances where the law does not permit it. The protections come from Part II of the Employment Rights Act 1996, which covers anyone who qualifies as a 'worker', not just employees on a traditional contract.

That wider definition can include agency workers, casual staff and some freelancers, depending on the working arrangement. The term 'wages' is drawn broadly. It covers salary, hourly pay, overtime, bonuses, commission, holiday pay, statutory sick pay, statutory maternity pay and various other sums connected to the job.

Tips passed through payroll can also fall within scope in some situations. A deduction is only lawful if it is required by statute (such as PAYE tax and National Insurance), permitted by a term in the worker's contract that they have seen in advance, or agreed to in writing by the worker before the deduction is made.

A shortfall in pay, paying someone less than they are contractually owed, is also treated as a deduction for these purposes.

Key steps

1. Work out exactly what is missing. Go through your payslips, contract and any written agreement about pay, bonuses or commission. Compare what you were paid against what you believe you were owed for each pay period. Make a clear schedule showing dates, amounts and the reason you think each sum is due. This becomes the backbone of any later claim. 2. Raise it with your employer in writing first. Many deduction disputes come down to payroll errors, misunderstood contract terms or missing timesheets. A calm written query, by email or letter, often resolves the issue without needing a tribunal. Keep copies of everything. If the response is unsatisfactory or ignored, you have a clear paper trail showing you tried to sort it out internally. 3. Consider a formal grievance. If the informal route fails, use your employer's grievance procedure. This gives the business a proper chance to investigate and respond, and tribunals expect parties to try and resolve matters before litigating. A grievance outcome that rejects your position still helps you, because it confirms the dispute is genuine and cannot be settled in-house. 4. Contact Acas for early conciliation. Before you can issue a tribunal claim, you must notify Acas and go through early conciliation. This is free, and an Acas conciliator will try to broker a settlement between you and your employer. If no settlement is reached, Acas issues a certificate with a unique reference number, which you need to lodge the tribunal claim. 5. Submit your ET1 claim form within the time limit. The claim form is called an ET1 and is lodged online with the Employment Tribunal. The general rule is that you must bring the claim within three months less one day from the date of the deduction, or from the last in a series of linked deductions. Miss that window and you usually lose the right to claim, so diarise the deadline as soon as the dispute arises.