Unlawful pay deductions

21 November 2018

Can an employment tribunal rule on the terms of a contract when dealing with an unauthorised deduction from wages claim?

Yes, the Court of Appeal has said in Agarwal v Cardiff University.

Dr Agarwal brought a claim for unauthorised deduction from wages against her employer. The tribunal said it could not hear her complaint because the parties did not agree about the pay terms in her contract. It would need to decide what her pay terms were before establishing if there had been any deduction. If the contract was unclear, the correct claim was for breach of contract in the county court (because employment tribunals cannot hear breach of contract claims brought during employment). The Employment Appeal Tribunal agreed.

The Court of Appeal disagreed and reversed the decision. It confirmed that the employment tribunal can resolve a contractual dispute between employer and employee in order to decide whether a deduction has been made. This includes any question about the meaning of the contract. The employment tribunal and EAT had mistakenly followed case law which was not relevant to unauthorised deduction claims.

This is a common-sense decision. Tribunals must be able to make decisions about contractual terms. Otherwise, dealing with unauthorised deduction claims would be almost impossible except in the most clear-cut cases.

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