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Retention of salary due to zero notice given

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

  1. Paul Norman

    Paul Norman UKBF Ace Free Member

    Posts: 1,837 Likes: 545
    I wondered about that. The opening post invites our thoughts. The reason for this, it seems, is that the OP can then debate our apparent lack of employment law.

    The employee has, of course, not behaved well.

    But the employer, has not followed absolute process in dealing with it, exposing themselves to risk. They are, and will, follow their own counsel on where to go next, but for other employers here on this forum there is a lesson to follow with your HR stuff.

    Have a clear procedure. Follow it exactly. Document everything. That is what the law requires, not that you allow yourself to be taken advantage of.
     
    Posted: Dec 27, 2016 By: Paul Norman Member since: Apr 8, 2010
    #21
  2. Clinton

    Clinton UKBF Ace Full Member

    Posts: 1,743 Likes: 534
    The law is an ass and employee protection has gone too far, IMO.

    Some years ago I had a part-timer who decided to stop working. But rather than give me notice she just decided she'd go home one evening and not return. To make matters worse, she thought, "Why take a chance on Clinton paying me my last week's wages? What if he decides to withold it in leiu of notice?"

    So she nicked all the money in the petty cash ... and left a handwritten note to say what she'd done!

    I went to the cops and they laughed at me because "the amount she took was roughly one week's wages anyway, so what's your problem?".
     
    Posted: Dec 27, 2016 By: Clinton Member since: Jan 17, 2010
    #22
  3. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

    Posts: 7,277 Likes: 1,536
    What does amaze me is the response's from the OP on a open forum with his web site addresses open to view. maybe not the best advertising for a company to make
     
    Posted: Dec 27, 2016 By: Chris Ashdown Member since: Dec 7, 2003
    #23
  4. Employment Law Clinic

    Employment Law Clinic UKBF Ace Full Member - Verified Business

    Posts: 2,860 Likes: 1,382
    Hi @Talay,



    I’ve had clients in the past that have requested terms like yours for employment contracts. I’ve written/included them in contracts, typically with a proviso that they may help discourage staff from leaving without giving notice, but observing how enforceable the clause might be is open to question - they can be practical as a deterrent from someone leaving without giving notice, though, and often (not on this occasion) appear to work for this purpose.


    On the basis that the clause is enforceable (and I don’t wish to suggest it is), the first thing to note is that all you could recover is the extra cost of covering them for their notice period – say, a temp cost you £15ph, that’s an extra £6ph for the weeks’ notice. But if you had received notice, you’d still have the costs of finding another candidate, and you’d still have to paid £9ph, so the only damage you can recover is for any extra expense of covering the notice period. If you deducted anything more, that would become a deterrent, and that's certainly not allowed.


    I don’t see why the contract term wouldn’t be applicable due to the deduction agreement needing to bein writing, as the letter of engagement would help inform several terms, including the starting date & the term in question. It's not unusual for any employment contract to exist without any signature, but still be in writing.


    And I don’t see a problem with the minimum wage either – you pay above the minimum wage, but then make contractually agreed or legal deductions, be these tax, check-off for trade union membership, a subscription to a gym, pension deductions, an advance of salary, or this contractual condition.


    To my mind, the interesting question is whether an employment tribunal could adjudicate on how enforceable the term might be: a deduction from wages that is “agreed” in writing (and the fact it was put in writing, one assumes alongside other terms, such as the employer that is offering the employment) is a legal deduction, but whether the clause is fair would seem more appropriate to a county court. I would think (or at least argue) that an employment tribunal would have to accept the term as enforceable, on the basis it’s in writing, and that an employment tribunal has no jurisdiction (or capability) to determine how enforceable or otherwise the clause is – that is something for a county court to consider.



    (That’s all unconditional: to note Dynamite’s silly description of contributors to the forum as “bar-room”, I haven’t seen the letter of engagement, and neither have I researched any case law – just posting initial thoughts.)


    Karl Limpert
     
    Posted: Dec 28, 2016 By: Employment Law Clinic Member since: Aug 10, 2009
    #24
  5. Newchodge

    Newchodge UKBF Big Shot Free Member

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    But Karl, even if it is agreed in writing, I understood the deduction could not take the wages paid below NMW.

    The alternative may be the contractual liability point - if a contract allows deductions for an employee's action (usually, but not only, stock shortages) then there is no NMW limit. Whether failing to give notice is an employee action that can be covered in this way is debatable, but certainly arguable.
     
    Posted: Dec 28, 2016 By: Newchodge Member since: Nov 8, 2012
    #25
  6. Employment Law Clinic

    Employment Law Clinic UKBF Ace Full Member - Verified Business

    Posts: 2,860 Likes: 1,382


    That could never make sense though, Cyndy, surely. Tax, NIC, a pension contribution, check-off, payment towards employee-perks, they’d all be deducted from the gross minimum wage paid, but all could be perfectly legitimate. There are clauses in the ERA limiting the amount of a deduction to cover losses in a retail environment for cash shortages from a till, but I can’t see how the minimum wage would always have to be paid net of any deductions at all – the gross pay could often have to be a lot more, particularly if someone happened to be on a top rate of tax, and opted to make a large pension contribution; where is the line then drawn?


    Perhaps I’m misunderstanding you Cyndy, as I don’t follow the point about no limit, but some deductions have to be allowed from the gross NMW paid.


    Karl Limpert
     
    Posted: Dec 28, 2016 By: Employment Law Clinic Member since: Aug 10, 2009
    #26
  7. Employment Law Clinic

    Employment Law Clinic UKBF Ace Full Member - Verified Business

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    Compulsory contractual deductions - something that has to be paid to get the job, perhaps a contribution towards a uniform, or whatever odd clauses an employer requires to reduce the amount they pay - I could see falling foul of the NMW, but none of the deductions I mentioned - including the clause being discussed in this thread - are compulsory for the employment (in this case, the employee, could simply have worked their notice, and received their pay of £9ph. They could even have self-certified as unfit for work, and again be due their notice. But they apparently didn't). I can't perceive why they would fall foul of the NMW Regulations, but a useful discussion among "bar-room" lawyers.



    Karl Limpert
     
    Posted: Dec 28, 2016 By: Employment Law Clinic Member since: Aug 10, 2009
    #27
  8. Newchodge

    Newchodge UKBF Big Shot Free Member

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    I read it that there are 2 (many more, actually) deductions that are relevant. Deductions that have been agreed in writing: these cannot take the nett amount below the minimum wage. In this case, whether they have been agreed in writing, as opposed to proposed in writing is a moot point. Or deductions that are permitted because of the action of the employee, which is specified in the contract, such as stock shortages (which are limited in law) but can take the nett amount below the minimum wage. Whether failing to work a notice period falls within this is, again, open to judgment.
     
    Posted: Dec 28, 2016 By: Newchodge Member since: Nov 8, 2012
    #28
  9. Employment Law Clinic

    Employment Law Clinic UKBF Ace Full Member - Verified Business

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    I could well be missing something that you’re thinking of, Cyndy, but (ignoring statutory deductions – tax/NIC) why couldn’t an employee agree in writing with an employer that the employer will directly pay their gym membership (perhaps at a discounted rate, as an employee perk), or pay for the employee's crèche use directly from their wages? And if this is permissible (I can’t think why it wouldn’t be, but interested in your thoughts, Cyndy), why would a deduction for another purpose be unlawful?


    Karl Limpert
     
    Posted: Dec 28, 2016 By: Employment Law Clinic Member since: Aug 10, 2009
    #29
  10. Newchodge

    Newchodge UKBF Big Shot Free Member

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    1. A voluntary deduction, such as a gym membership, is obviously permissible, because it is, effectively a loan repayment.

    2. A written agreement to repay the cost of uniform provided if the employee leaves within 6 months of starting employment is valid, but it cannot be said to be voluntary as the employee has to have the uniform, and cannot take gross pay minus uniform deduction below minimum wage.

    3. A penalty for breach of contract, such as breakage of employer equipment, while it is not voluntary, is also not compulsory as there is no compulsion to break the equipment this can therefore be deducted even if it takes the employee below NMW.

    4. Compulsory deductions without written agreement, such as tax and NI and attachments of earnings are irrelevant when calculating NMW.

    The contract clause in the engagement letter (setting aside whether it was received or accepted) is, to my mind, akin to example 3 - there is no compulsion to leave without working notice, so may take the employee earnings below NMW.
     
    Posted: Dec 28, 2016 By: Newchodge Member since: Nov 8, 2012
    #30
  11. Employment Law Clinic

    Employment Law Clinic UKBF Ace Full Member - Verified Business

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    Digressing, how or where are disputes about the NMW decided? HMRC enforce them, but where does an employer take a case if they disagree with HMRC's findings? (I've never had such a problem with an employer, and I'm sure it's obvious, but I've indulged in the festive season, and can't think of it at all.)

    It would be ridiculous to think @Talay could have to defend this in three different arenas.


    Karl Limpert
     
    Posted: Dec 28, 2016 By: Employment Law Clinic Member since: Aug 10, 2009
    #31
  12. Newchodge

    Newchodge UKBF Big Shot Free Member

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    I think it's a straightforward tribunal case. Or not that straightforward, as the case may be. Sorry, misread your post. Th employee goes to the ET. I assume the employer has an opportunity to comment on the HMRC investigaion as it develops and before it is decided. Not sure if there is a right of appeal.
     
    Posted: Dec 28, 2016 By: Newchodge Member since: Nov 8, 2012
    #32
  13. Employment Law Clinic

    Employment Law Clinic UKBF Ace Full Member - Verified Business

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    That’s a helpful post, Cyndy, but I don’t see this as a penalty (as long as the deduction is no more than the extra cost of covering the expected notice period – that’s not obvious that it would be though, it seems to be high for that purpose), but I can see your argument. But there was no compulsion to leave without notice, they could have served the notice whether they liked the job or not – they agreed to accept it, apparently on the terms being discussed.
     
    Posted: Dec 28, 2016 By: Employment Law Clinic Member since: Aug 10, 2009
    #33
  14. Employment Law Clinic

    Employment Law Clinic UKBF Ace Full Member - Verified Business

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    LOL, is this meant to be a criticism of @Newchodge? While I agree that solicitors (and other professionals) should stick to their narrow remit rather than try to comment on all & sundry, as some do, clearly you’re not someone I would consult for PR, or anything else, @Jack Dynamite. Cyndy advises on employment law, and personally I consider her to be extremely competent in the field; I would most certainly not suggest my take on the deductions are definitely correct, hence why I appreciated the input & discussion with @Newchodge, and hopefully we’ve given @Talay something more to help inform his decisions.



    Karl Limpert
     
    Posted: Dec 29, 2016 By: Employment Law Clinic Member since: Aug 10, 2009
    #34
  15. Gecko001

    Gecko001 UKBF Enthusiast Free Member

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    From where did the Op get this "retention clause"? It looks like an invalid clause as far as I can see. It might be worthwhile to go to court to find out whether you have a valid case, but maybe consulting an employment lawyer or HR consultant would be a more economical way.
     
    Posted: Dec 29, 2016 By: Gecko001 Member since: Apr 21, 2011
    #35
  16. Newchodge

    Newchodge UKBF Big Shot Free Member

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    Ok let me try again.

    An employee may contractually agree to all sorts of things, however they may not agree to sign away their statutory rights without a formal procedure.

    An employee is entitled to receive NMW.

    An employee may (for example) sign to say that, if they leave employment within 6 months of starting employment they will repay the cost of uniform supplied to them. That is a valid agreement. However, if implementing that agreement takes the employee's pay over the reference period below NMW, the agreement cannot be enforced. That is because the employee has no control over having to have the uniform, but is allowed to resign whenever they wish. They should not be subject to a detriment for exercising their right to leave.

    That is because the employee cannot sign away their right to NMW.

    An employer can contractually hold the employee responsible for certain losses attributable to the employee's negligence. For example stock and till shortages in retail. Recovering those shortages may, legally, take the employee's wages below NMW. There are, separately, limits to the amount that can be recovered, but those limits are not related to NMW. So an employer may make a contractual reduction to below NMW in response to the employee's negligence.

    So, potentially, and without having seen the clause, the employee may have agreed a contractual right to reduce their pay to below NMW if they commit a specific contractual breach - not giving proper notice. Leaving without giving contractual notice is a choice of the employee, not something imposed by the employer. That may, or may not, allow the employer to pay less than NMW for the work carried out prior to the breach of contract.

    I think. However I have also been a bit festive recently and I stand (wobblily) ready to be corrected.
     
    Posted: Dec 30, 2016 By: Newchodge Member since: Nov 8, 2012
    #36
  17. Employment Law Clinic

    Employment Law Clinic UKBF Ace Full Member - Verified Business

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    I think this is the crux of where Cyndy & I beg to differ – a detriment (deduction from the gross wage) that could bring the net pay below the NMW.


    If the employee decides to leave (or in the case of @Talay’s employee, leaving without serving their notice), I don’t think they can get out of any contractual terms they’ve otherwise agreed to – they’ve agreed to make the payment via their wages, just as they could agree to pay for gym membership, a pension contribution, etc., from their wages. I don’t think it matters that the net wage then falls below the NMW in such an instance, as the employee agreed to it (if that part of the contract is deemed to be valid in its own right).


    (Of course, as Cyndy observes, the festive season could help distort our thinking.)


    Karl Limpert
     
    Posted: Dec 31, 2016 By: Employment Law Clinic Member since: Aug 10, 2009
    #37
  18. Newchodge

    Newchodge UKBF Big Shot Free Member

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    Right, I see where you're coming from.

    The 2015 legislation, here, http://www.legislation.gov.uk/uksi/2015/621/regulation/12/made states that items 'do not count as deductions', or in English, can be deducted even if they take the wages below NMW. The one I am thinking of is:

    deductions, or payments, in respect of the worker’s conduct, or any other event, where the worker (whether together with another worker or not) is contractually liable; So, if there is a valid contract condition that leaving without giving notice will result in deduction of the pay for the amount of notice not given, then the deduction may be made.

    However the next provision states that certain things do count as deductions, ie cannot be deducted if they take wages below NMW. In particular:

    deductions made by the employer, or payments paid by or due from the worker to the employer, as respects the worker’s expenditure in connection with the employment; Paying for uniform is, in my view, expenditure in connection with employment, if the uniform is compulsory. Therefore cannot be deducted from a NMW employe
     
    Posted: Dec 31, 2016 By: Newchodge Member since: Nov 8, 2012
    #38
  19. Employment Law Clinic

    Employment Law Clinic UKBF Ace Full Member - Verified Business

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    While the payment towards a uniform may be a 'compulsory' deduction, the employee agreed to the payment (as a condition of employment), but didn't have to - they could have declined the job. Having agreed to the payment/deduction, I think they're liable to it, regardless of minimum wage; they simply have to work long enough to cover the cost.


    Karl Limpert
     
    Posted: Dec 31, 2016 By: Employment Law Clinic Member since: Aug 10, 2009
    #39
  20. Newchodge

    Newchodge UKBF Big Shot Free Member

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    Ok, we'll have to agree to differ.

    Regards

    Cyndy
     
    Posted: Dec 31, 2016 By: Newchodge Member since: Nov 8, 2012
    #40