Where an employer makes a deduction from an employee's wage, should this be itemised specifically on the pay slip? We report on the recent case of Ridge v Her Majesty's Land Registry.
Itemising Pay slips
In the recent case of Ridge v Her Majesty's Land Registry the Employment Appeal Tribunal has held that a reduction of an employee's wages to recover an overpayment made in a previous pay period constitutes a 'deduction' under the Employment Rights Act 1996 and therefore should be itemised on the pay slip.
The Employment Appeal Tribunal overturned the previous decision of the Employment Tribunal, holding that where an employer reduces an employee's wages to recover an overpayment made in a previous period, it is making a 'deduction' from the employee's salary and it must therefore, clearly identify the amount and purpose of the deduction in the employee's pay slip.
What was the claimant's remedy? The Employment Appeal Tribunal concluded that the claimant was entitled to a declaration that his pay slips did not comply with the Employment Rights Act 1996. This decision supports the original purpose of the statute – to enable an employee to clearly see in outline how his wages and salary are calculated.
A best course of practice for employers is to clearly itemise the amount and purpose of any deduction made on employees' pay slips so as not to fall foul of the Employment Rights Act 1996. We also recommend that employers have clearly drafted deductions clauses in their contracts of employment as without such clauses, deductions may only be made in limited circumstances.
Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.