Time limit for unlawful deductions claims runs from date of deduction and not the termination date

The Employment Appeal Tribunal has confirmed the correct date from which any claim for the unlawful deduction of wages should start where the employment has come to an end.

In the recent case of Wharton v Sheehan Haulage & Plant Hire, the Employment Tribunal initially dismissed the Claimant’s claims for unlawful deduction from wages, including deductions from notice pay and holiday pay, because the claim was filed out of time. The tribunal ruled that the time limit for filing began from the date of the Claimant’s employment termination, and since the Claimant did not start Acas early conciliation within three months of this date, the claim was deemed out of time.

However, the Employment Appeal Tribunal (EAT) overturned this decision, clarifying that in unlawful deductions from wages claims, the three-month time limit runs from the date of the actual deduction, not the termination date. The Claimant, who was paid weekly in arrears, had his last pay date nine days after termination, meaning that he started Acas early conciliation within the correct timeframe. Consequently, the EAT held that the tribunal was wrong in dismissing the claim as out of time.

A useful practical decision for employers and their payroll teams to know about when dealing with deductions from an employee’s final pay.

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