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Elementary deductions
It is unlawful to make an 'unauthorised deduction' from an employee's pay. Deductions are authorised if they are required by law (such as PAYE) or if they are agreed in writing with the employee, for example in the employment contract, or by special agreement.
It's important to be aware of this if you want to reduce payments for some reason. In a recent case, an employer implemented short-time working, and simply reduced the employees' pay accordingly. The employees protested, and it was held to be an unauthorised deduction because it was not dealt with in writing in the employment contract. It may seem 'obvious' to the employer that less work means less pay, but employees have a right to their contractual pay unless the contract says otherwise.
In another case, an employer gave the employees certain health benefits, including the payment of sick pay for an extended period. The employer took out a group permanent health insurance policy to cover this. The problem arose because the employer's staff booklet appeared to be more generous than the insurance company's policy - an employee was paid under the policy for two years, but then was held to be capable of doing some work, and the insurer stopped paying. The employer's handbook suggested that sick pay would continue as long as the employee could not do his original job. The employer had to carry on with the sick pay, even though it was not covered by insurance, because anything else would be an unauthorised deduction.
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The case is Jowitt v Pioneer Technology (UK) Ltd, and it is written up in Accountancy, April 2003 p120.
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