Could payments to an employer be claimed back?

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Markazi Jamiat Ahle-E-Hadith V Mr Muhammed Asif Ehsan

A claim for ‘unlawful deductions from wages’ under S.13 of the Employment Rights Act 1996 is one of the most common found in the Employment Tribunal. However, will a repayment of part of salary also be a "deduction"? The Employment Appeal Tribunal did not consider it did in the case of Markazi Jamiat Ahle-E-Hadith V Mr Muhammed Asif Ehsan highlighting that an associated “Cinderella” provision for pay protection claims may need to be used more in the future. 

The employee had been subject to PAYE deductions

The claimant had been employed as a Minister at a mosque. His annual salary had been agreed at £20,000 in order that he could qualify for a visa. He had received monthly payments in his bank account reflecting this which had been subject to PAYE deductions. However, he had been required to take cash from his bank account and to make payments to the employer each month in recognition of the fact the £20,000 salary had only been agreed on paper in order for him to obtain a visa. 

The decision of unlawful deductions was overturned

A Tribunal’s decision that the payments he was forced to make were unlawful deductions was overturned. There had been no occasions identified when the employer had paid him less than what was “properly payable” under the contract. The claim should have been brought under S15 as a “Right not to have to make payments to employer”. In addition, it would also need to be considered whether monies could be reclaimed under a contract that may be regarded as made for an illegal purpose.

Key takeaway point

The EAT’s description of S15 being something of a “Cinderella” provision that “should get out more often” is important as is the potential for the artificial pay arrangements to fall within the doctrine of illegality. The limitations on S13 claims will need to be taken into account by claimants when preparing their case in relation to wage disputes as will the question of whether the pay arrangements genuinely reflected what had been agreed.  

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