Unlawful deductions from wages claims are in the news and can arise in a variety of ways including: a shortfall in holiday pay; or a failure to pay national minimum wage for all time spent “working” particularly where that time is spent on what was historically considered non-working time, such as sleeping time when “on call”.

The Employment Appeals Tribunal recently heard the case of Coletta v Bath Hill Court (Bournemouth) Property Management Ltd UKEAT/0200/17, which concerned the limitation period attached to a claim for unlawful deduction from wages paid to an employee before 1 July 2015.

The “regular” limitation period

The “limitation period” refers to the period of time within which a claim must be commenced, and such a period will differ depending on the type of claim. For example, in employment tribunal claims under the Employment Rights Act 1996, a claimant must generally commence tribunal proceedings within three months of their employer’s act. Failure to do so may result in the tribunal rejecting the claim.

For all monetary claims, the Limitation Act 1980 imposes a limitation period of six years, except where another piece of legislation (such as the Employment Rights Act) prescribes a different limitation period.

Unlawful deductions from wages

The majority of claims for unlawful deductions from wages will be issued after 1 July 2015. In this instance, the Deduction from Wages (Limitation) Regulations 2014 (the “Regulations”) states that a tribunal can only consider unlawful deductions from wages which were paid within two years prior to the date of the claim.

However, where the claim for unlawful deductions commenced before 1 July 2015, as it did in this case, the Regulations do not apply. Instead, the claimant must only commence a claim within three months (as prescribed by the Employment Rights Act) of his last unlawful deduction.

The claimant in this case, Mr Coletta, was awarded over £44,000 in the Employment Tribunal for six years of unlawful deductions under the National Minimum Wage Act 1998. The Employment Appeals Tribunal held that the three month limitation period to commence tribunal claims did not limit the period of time encompassed by the claimant’s claim to six years. This is because the three month period contained in the Employment Rights Act dealt only with the time limit within which a claimant must commence tribunal proceedings; it did not deal with how far back the claim can go.

In this case, the claimant did commence proceedings within three months of his last unlawful deduction. Therefore, it was held that he could recover all sums due to him over the entire 15 year period, without the imposition of the six year period contained in the Limitation Act and implied by the Employment Tribunal at first instance.

However, as mentioned above, it should be kept in mind that any claims for unlawful deductions from wages will now be brought within the provisions of the Regulations, and therefore, subject to the two year limitation period. This gives both relief and certainty to employers, demonstrating that new employment legislation does benefit them and not employees in some circumstances!