Underpayment of wages

Deductions from your pay

Your employer is not allowed to make a deduction from your pay or wages unless:

it's required or allowed by law, e.g. National Insurance, income tax or student loan repayments
you and your employer agree the deduction in writing
the contract of employment states that they can do this
there is a statutory payment due to a public authority
you've not worked due to taking part in industrial action
it's the result of a court order or employment tribunal decision.

The Employment Rights Act 1996 affords protection against unlawful deductions from wages to employees, agency workers (but not self employed people) and apprentices. If the employer is attempting to deduct a previous overpayment, please see overpayment of wages.

Steps to take if you have been underpaid

Step 1: Check and talk about it

• check if it's a lawful deduction (see above)
• read your payslip and contract of employment for an explanation
• speak to your payroll or employer/agency to find out if this is an administrative error. If so, your employer/agency should pay you what you are owed as soon as possible
• if the employer/agency is attempting to deduct a previous overpayment, please see overpayment of wages.

Step 2: If unresolved, put it in writing

Write to the employer/agency using our letter template. It is useful to also read through our example letter and remember;

• always be polite, clear and firm
• the bold words in the sample letter show where you need to enter information
• send any other relevant information that supports the claim (e.g. photo of payslips or P45)
• do not delay, send it immediately
• send the letter via email or recorded delivery to ensure proof of postage.

Step 3: If unresolved, write again

If you do not receive a response to the first letter, write again using our letter template

and;

• amend the letter noting when you sent the first attempt and add that this is your second and final attempt
• amend any relevant dates and give another 5 working days
• add that if there is no response to this final attempt you will have no option but to 'contact the RCN'
• do not delay, send it immediately.

Step 4: Talk to us

If you do not receive a response to the second attempt within the final 5 days, call us on 0345 7726100. We will advise you what to do next. You may have grounds for a grievance or possibly an Employment Tribunal (ET) claim for unauthorised deductions from wages under Part II Employment Rights Act 1996 but strict time limits apply (3 months from the date of the last underpayment).

Employment tribunal claims

If you can't sort things out directly with your employer (either informally or formally via a grievance), it is important to call us for advice on 0345 772 6100. We will explore the options with you. With our support, one option could be to bring an employment tribunal claim for unlawful deduction from your wages. But to do this ACAS has to be notified. They will offer you the opportunity to use Early Conciliation.

A claim to an employment tribunal can be made within three months (less one day) of the underpayment. If there is more than one deduction from your wage, then provided that the complaint is made within three months (less one day) of the last deduction, and there isn’t a break of more than three months in the series (less one day), you can also claim for the earlier deductions. If there has been a break of more than three months between successive deductions that will break the chain. In addition, for claims presented on or after 1 July 2015, there is a two-year cap on back pay. See the Deductions from Wages (Limitation) Regulations 2014.

If you miss the three month time limit and cannot make a claim to an employment tribunal, you can pursue your claim through the county court via a breach of contract claim. The limitation period is six years from the date of the breach. In Scotland, this should be done through the sheriff’s court within five years of the unlawful deduction.

Timing is very important. Make sure you are within the time limits for making a claim to the employment tribunal.

Monies owed if you are self-employed

You can make a claim in the small claims court for up to £10,000 in England and Wales and £3,000 in Scotland and Northern Ireland. If the case is thought to be too complex, or above the small claims track limit, the judge can decide that you will have to use the full county court. The county courts deal with a wide range of civil cases including employment and consumer disputes, personal injury and debts.