Case Study: Unlawful Deduction from Wages and Failure to Pay the Minimum Wage

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Case Study: Unlawful Deduction from Wages and Failure to Pay the Minimum Wage

We were instructed to represent a young lady who worked in a hair salon.

She was taken on with the promise of an “apprenticeship” and paid a very low salary of £30 per day on the
assumption, possibly naively on her part, that she would receive some form of apprenticeship or training to advance
her career.

She continued to work under these terms and conditions for quite a significant period of time until she started to
become disillusioned and she spoke to some family members about the situation she found herself in who queried
whether or not it was lawful for her employer to employ her on these terms, especially as it seemed that there had been a failure to pay the minimum wage.

When we advised of her predicament, we advised that she may have a claim against her former employer (by this
time she had resigned because of the circumstances in which she found herself) on the basis that her employer had
failed to pay her minimum wage.

These types of claims can be advanced on the basis that the employer has made an unlawful deduction from wages.
We therefore issued proceedings in the Central London Employment Tribunal advancing three claims; (1) a claim
that she had not been paid the minimum wage under the National Minimum Wage Act 1998; (2) a claim that her
employer had made unlawful deductions from her wages under Section 13 of the Employment Rights Act 1996; and
(3) a claim under Section 95(1)(c) that she had been unfairly constructively dismissed.

Her employer resisted all claims, but did not cooperate particularly well in the preparation for the Tribunal
proceedings.

An interesting aspect of this case is that it is the employers obligation to keep records of people’s hours for the
purposes of being able to prove, if required to do so, that they have paid their employee’s the minimum wage.
Right at the beginning of proceedings we sent, by recorded delivery, a letter to her employer advising that we felt
that our client had been paid less than the minimum wage and asked them to produce records in accordance with
Section 10(1)(a) of the Minimum Wage Act. Here is a copy of our letter. It was no surprise when we did not
receive a response to this letter.

Throughout proceedings, her employer denied that she had been paid less than minimum wage, effectively asserting
that she did not work the hours that she claimed she had worked but ultimately, given the fact that her employer
had not produced records confirming the hours that they alleged that she worked, the Tribunal found in her
favour in relation to the minimum wage claim and the unlawful deductions claim. It dismissed her claim for unfair
constructive dismissal as it did not feel that the reason that she resigned was the minimum wage issue – please see
here for more details.

We were also successful in securing an award under section 17 of the Minimum Wage Act which is a remedy not
frequently claimed in the Employment Tribunal. This clause within the Minimum Wage Act contains a penalty
clause, effectively, to order employers to pay an additional fixed amount of compensation to employees when they
are proven to have paid less than the minimum wage.

We attach a copy of the Employment Tribunal Judgment here should you wish to look at this case in more
detail.