In the recent case of Deksne v Ambitions Ltd (2024), the claimant brought a claim against her employer for unlawful deductions from wages, specifically with regard to an underpayment of her holiday pay. Deksne alleged that she was underpaid her holiday pay starting from August 2020 and final holiday payment in July 2021.
The Tribunal rejected the unlawful deduction claim prior to December 2020, arguing that the claim was out of the normal three month time limit, and as such subsequent alleged further deductions were more than three months apart and so could not be treated as a series of deductions – hence the Tribunal had no jurisdiction. Deksne appealed the decision.
Deksne’s argument was that the Tribunal had misapplied the law by contending that her holiday pay deduction prior to December 2020 was not part of series of deductions. It was argued that all holiday pay shortfalls should be considered as a chain or series of deductions, and so falling within the remit of the Tribunal.
The Employment Appeal Tribunal (EAT) ruled in favour of Deksne. They concluded that the holiday pay underpayments amounted to deductions and were in fact part of a series of deductions, as defined in Chief Constable of Police Service of Northern Ireland v Agnew. The Tribunal’s failure to consider this principle was an error. Employers cannot rely on gaps longer than three months between deductions, to stop a series of deductions from being formed. As such, the EAT concluded that the employer was guilty of making unlawful deductions from wages and ordered them to pay two years worth of underpayments.
This case highlights the complex and intricate nature of unlawful deductions claims which can arise if holiday pay miscalculations are made. Employers are advised to call the HR Helpline and seek specialist advice and guidance before making costly mistakes.
