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Retention of salary due to zero notice given

Discussion in 'Employment & HR' started by Talay, Dec 26, 2016.

  1. Talay

    Talay UKBF Big Shot Free Member

    Posts: 3,561 Likes: 757
    We have a clause in the contract of employment which is also listed on the letter of engagement which sets out the company's right to withhold salary equal to any shortfall in the minimum notice period given by the exiting employee. We have never had this tested but have previously taken advice.

    We are not looking to use this as a punitive measure but rather to offset some of the costs in replacing the exiting employee and for covering their notice period.

    Post interview and offer, the employee was on one month's notice at their previous employer. In the interim, the employee was looking for more hours so we decided to let them attend another branch on Saturdays. This went well.

    However, after one day working full time in the main office, they said "see you tomorrow" and never came back. They did not respond to phone calls, emails or text messages save one "personal reasons - won't be coming back" response.

    Cut and dry we thought. No notice given, only 4 days worked, minimum notice required is one week so technically, they owe us one day's pay, which of course we would not chase. However, they are now emailing demanding payment. We have not responded as the pay date is 31/12/16.

    The sums involved are not huge, around £300 or so but after costs to find the candidate, waiting for them to complete notice and now having to pay others to cover the hours they were supposed to do, I find myself drawn to the view that no, we will not bend over and let this slide. Principle, not financial.

    However, I see the potential downfall. Though we issued the letter of engagement we did not get a signature confirming receipt. We have remedied this going forward. The contract of employment was being completed and had not been issued, hence the retention clause outlined in the letter of engagement.

    I believe we have a defensible position should any any action be taken against us and whilst I am not unduly worried about any time taken to defend any action, I do concern myself with the fact that if costs were £10k then the risk / reward would mean that we would need to simply pay.

    Though potentially not material to this case, I actually think we have been led on here. I am not certain the ex employee actually left their prior employment and that they may have simply been using us to get weekend work. The tone of the emails received last week has been heavy on the "I have copies of the timesheets" etc.

    Thoughts ?
     
    Posted: Dec 26, 2016 By: Talay Member since: Mar 12, 2012
    #1
  2. billmccallum1957

    billmccallum1957 UKBF Enthusiast Full Member

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    Posted: Dec 26, 2016 By: billmccallum1957 Member since: Feb 11, 2016
    #2
  3. Newchodge

    Newchodge UKBF Big Shot Free Member

    Posts: 5,142 Likes: 1,317
    Can you prove they received the letter of engagement?

    For £70 and the risk of legal action or even an investigation for not paying minimum wage, I would be incliined to pay up.
     
    Posted: Dec 26, 2016 By: Newchodge Member since: Nov 8, 2012
    #3
  4. Talay

    Talay UKBF Big Shot Free Member

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    Posted: Dec 26, 2016 By: Talay Member since: Mar 12, 2012
    #4
  5. Talay

    Talay UKBF Big Shot Free Member

    Posts: 3,561 Likes: 757
    The sum is around £300 not £70 and the hourly rate involved was £9.00 per hour, well above the minimum wage. I haven't checked the full hours on the timesheets yet but even if they worked 8 hours a day it would only be 4*9*8=£288.

    I fully accept that the pragmatic argument would be to just pay and forget but then the person goes to another company and does the same. They tell their friends and so the likelihood of this type of nonsense carries on and becomes more widespread.

    If a claim was made, I'd happily defend it and I don't see any need to instruct solicitors, which itself would make settlement a foregone conclusion on a cost basis and if by some fluke I lost, then I'd just write out a cheque.

    We issued the letter of engagement and it is in the contract (not issued) so I believe we are covered but my feeling is that as we don't have a signed receipt, then they could claim to have never received it and if my gut feeling is correct, then any tribunal would be biased towards the employee. That is the only reason I question the decision to be made.
     
    Posted: Dec 26, 2016 By: Talay Member since: Mar 12, 2012
    #5
  6. Newchodge

    Newchodge UKBF Big Shot Free Member

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    If you don't pay them anything then you have not paid them the minimum wage. It doesn't matter what rate you offered, it is the payment that counts.

    if your contract term stands up in court then you may be OK, however it will be for you to prove that the employee read it and agreed to it. The fact it is in your contract doesn't count, as the employee had not received the contract. If not, then you are only allowed to recover the amount it cost you to deal with their absence for 5 days. And the proper way to do this is to pay them their wages and sue them for your costs.

    You could try emailing them demanding the 1 day they 'owe' you and see if that shuts them up.

    This would go to the small claims court - the only cost you could be charged would be the issue fee (£25 if filed online, £35 if filed on paper), if you lost.
     
    Posted: Dec 26, 2016 By: Newchodge Member since: Nov 8, 2012
    #6
  7. Talay

    Talay UKBF Big Shot Free Member

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    I don't know why you bring the NMW into this ? It isn't a consideration IMHO. You cannot combine NMW and retention, they are not the same argument.
     
    Posted: Dec 26, 2016 By: Talay Member since: Mar 12, 2012
    #7
  8. Newchodge

    Newchodge UKBF Big Shot Free Member

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    If you don't pay anything the employee can report you for failure to pay national minimum wage. they worked, say 28 hours over a 4 day period. Assuming they are over 25 they must be law receive £201.60. They have received nothing, you have failed to pay the minimum wage.

    Your only defence is that you were entitled to withhold it because the employee had agreed that you could deduct if they failed to give proper notice. But you cannot prove they agreed. Or, perhaps you can. Either way, you may face a minimum wage investigation.

    An employee can have multiple causes of action, not just one, arising from the same situation. You have also failed to pay holiday pay, for instance.
     
    Posted: Dec 26, 2016 By: Newchodge Member since: Nov 8, 2012
    #8
  9. The Accountancy Lab

    The Accountancy Lab UKBF Enthusiast Free Member

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    The risk of paying out much more, combined with the risk of being investigated makes this a very simple decision for most business people.

    When you make business decisions based on a personal vendetta, it's you that is likely to be the loser.
     
    Posted: Dec 26, 2016 By: The Accountancy Lab Member since: Aug 7, 2016
    #9
  10. Clinton

    Clinton UKBF Ace Full Member

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    Funny how the act of standing up for what's right, and refusing to lie down and be ripped off, is seen as pursuing a "personal vendetta".
     
    Posted: Dec 26, 2016 By: Clinton Member since: Jan 17, 2010
    #10
  11. The Accountancy Lab

    The Accountancy Lab UKBF Enthusiast Free Member

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    If you are willing to throw good money after bad, then more fool you.
     
    Posted: Dec 26, 2016 By: The Accountancy Lab Member since: Aug 7, 2016
    #11
  12. Jack Dynamite

    Jack Dynamite UKBF Newcomer Free Member

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    Depends if you are are actually throwing good money after bad, or simply enforcing a legally binding contract. Trouble is it's all bar-room lawyers commenting here as we don't have the actual contract in front us.
     
    Posted: Dec 26, 2016 By: Jack Dynamite Member since: Dec 22, 2016
    #12
  13. The Accountancy Lab

    The Accountancy Lab UKBF Enthusiast Free Member

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    The two are not mutually exclusive.
     
    Posted: Dec 26, 2016 By: The Accountancy Lab Member since: Aug 7, 2016
    #13
  14. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

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    I have probably got the wrong end of the stick. to me she is entitled to 4 days pay and equivalent holiday pay which I guess is nothing after 4 days
    The months notice she should have given she has not responded to so nothing should be paid, but I think this also should include holiday pay
    The only problem I can see is you did not call he in for a disciplinary after she had not turned up and when you new she had not turned up you could have sacked her
     
    Posted: Dec 26, 2016 By: Chris Ashdown Member since: Dec 7, 2003
    #14
  15. Newchodge

    Newchodge UKBF Big Shot Free Member

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    Holiday pay works out at 12.07%. So 4 days @ 7.5 hours = 30 hours. 12.07% of 30 is 3.62 hours.

    The employee was only on 1 week notice.
     
    Posted: Dec 26, 2016 By: Newchodge Member since: Nov 8, 2012
    #15
  16. Talay

    Talay UKBF Big Shot Free Member

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    I still see your interpretation as missing some of the facts.

    We have not paid anything yet and are not obliged to do so until 31/12/16 so we are not currently in breach of any legislation (whether we would be or not).

    The written contract was not issued so let's also dispense with that portion of the argument. I have already stated that they were employed on £9 per hour so let's set aside all worries about NMW.

    Even if we entertained the notion that they should have holiday pay for 4 days work, just add that to the £288 gross pay. For argument, let's add 0.5 days and make the total £324.

    So we are contractually required to pay £324 but we are also contractually able to withhold 9*8*5=£360 equating to the one week's notice that was not given.

    The only items remaining is whether the letter of engagement, which sets out the retention clause, would hold up if there is no copy. However, the lack of a signed copy does not make it non binding just as the lack of a written contract does not infer that there isn't a binding contract in place.

    The legal argument would be solely on whether there was notification of the retention clause and as this would nullify any claim against us, my looking into the future envisages a potential scenario where the employee claims they never received such a document.

    That the employee is in breach of contract is not in dispute but the costs to pursue a claim for breach would be out of proportion, hence the use of the retention clause.

    My gut feeling is that the exercise in discussing this issue is productive but that the pitfall of the employee employing an "ambulance chaser" solicitor on a no win no fee basis means we could walk into a £5k costs award should we lose.

    There is also the potential of having to disclose any tribunal claims to future insurers to consider.

    I wonder whether the safest course of action might not be to pay the salary accrued and then (if so desired) make a small claims court claim for breach of contract due to lack of notice ?
     
    Posted: Dec 27, 2016 By: Talay Member since: Mar 12, 2012
    #16
  17. Newchodge

    Newchodge UKBF Big Shot Free Member

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    If you know all the answers, why ask the question?
     
    Posted: Dec 27, 2016 By: Newchodge Member since: Nov 8, 2012
    #17
  18. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

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    You are not allowed to take pay for the unworked notice period, you could take civil action to recover any loss to the company but not the wages she would have been paid
    So she gets paid for the hours she worked which is her right and if you are generous her holiday pay but no deductions for not working her notice
     
    Posted: Dec 27, 2016 By: Chris Ashdown Member since: Dec 7, 2003
    #18
  19. Newchodge

    Newchodge UKBF Big Shot Free Member

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    Chris That is generally true, unless it falls under 'you do something and your contract says you are liable for it. In this case it is arguable, although not definitely legal, that leaving without notice is covered, the letter of engagement being part of the contract.

    There is no option to be generous about holiday pay. It is a legal obligation.
     
    Posted: Dec 27, 2016 By: Newchodge Member since: Nov 8, 2012
    #19
  20. Plumb Spares Direct

    Plumb Spares Direct UKBF Contributor Full Member

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    I think you''re over thinking this waaaay too much. An 'ambulance chaser' solicitor is unlikely to take such a trivial case on. It will cost the 'employee' time and money to resolve this, would they take that risk? especially as they are at the very least morally negligent. As for the contract, we once inherited an employee and he simply wouldn't sign the contract of employment etc so we eventually just left it. We employed an HR service at the time and their view was that as long as you have it on record that you had supplied the employee with one, that it was enforceable. We have had so much of this mucking about from employees over the years that it really grinds on me and personally I would just not pay him and ignore them. The likelihood is that the little worm will just crawl away back under their rock
     
    Posted: Dec 27, 2016 By: Plumb Spares Direct Member since: Dec 19, 2016
    #20