Unlawful Deduction claims time limits

The protection from unlawful deductions regime is set out in section 13 – 27 of the Employments Rights Act 1996 (“ERA 1996”).

Under section 13 of the ERA 1996 states that, an “employer shall not make a deduction from wages of a worker employed by him unless:

1. The deduction is required or authorised to be made by virtue of a statutory provision or a relevant provision of the worker’s contract, or
2. The worker has previously signified in writing his agreement or consent to the making of the deduction.”

Pursuant to section 14 ERA 1996, the above provisions do not apply where the deduction of the worker’s wages are made by the employer in respect of “(a) an overpayment of wages, or (b) an overpayment in respect of expenses incurred by the worker in carrying out his employment.”Employers are also prohibited from receiving a payment from one of the workers of the employer, unless, under section 15 ERA 1996, a statutory or contractual provision applies, or the individual has confirmed their agreement or consent to the deduction in writing.

There has been uncertainty as to the date at which the three-month time limit to bring the claim for unlawful deductions begins to elapse. Recent case law has now confirmed that the time limit for bringing a claim for unlawful deductions is three months, starting with the date of the deduction and not the date of termination.

In the case of Wharton v Sheehan Haulage & Plant Hire [2024] EAT, initially the Employment Tribunal determined that the claimant had not contacted Acas within the specified time limit of the employment termination date. The Claimant had failed to instruct Acas and begin the early conciliation process within three months of the termination date. The Employment Tribunal therefore concluded that the Claimant had submitted their claim out of time.

However, the Employment Appeal Tribunal contradicted this position and determined that the three-month time limit begins at the date of the unlawful deduction. In the above case, the Claimant was paid nine days after the date of their employment terminating. This therefore added a further 9 days onto what the Employment Tribunal had deemed to be the time limit. The Claimant had in fact commenced the early conciliation process with Acas within 3 months of the date of the unlawful deduction.

The Claimant had subsequently submitted the claim form within one month of the date of the Acas early conciliation certificate and it was held that the Claimant had brought the claim within the relevant time limit