Miss C Powell v The Nail and Beauty Zone Limited and 4 others — 2020

Miss C Powell brought a single claim of unlawful deduction from wages concerning a £340 deduction from her September 2019 pay. The respondent accepted that the deduction should not have been made in September 2019, but argued that it was effectively corrected by not deducting five days’ pay from her October 2019 salary for alleged holiday taken in excess of entitlement. The tribunal held that the September 2019 deduction was a deduction for the purposes of s.13(3) ERA 1996.

The tribunal found that the deduction was made because the claimant had given notice of resignation and was told she would be charged for not working her full four-week notice period. It concluded that the contractual deduction clause did not authorise the September deduction on these facts. The reference in the contract to a "no notice period penalty" was not shown to justify the deduction, and if it were intended to operate as a penalty it would not be a lawful basis for deduction. The tribunal also held that the error-in-computation exception in s.13(4) did not apply because this was a deliberate deduction, not an arithmetic mistake.

The tribunal rejected the respondent’s argument that the later failure to deduct sums for October 2019 holidays could cure or offset the September deduction. It held that the October payment was not a payment "in respect of a deduction" for the purposes of s.25(3) ERA 1996, and that set-off was not available. It also found that the respondent had not shown entitlement to deduct five days’ pay for excess holiday; on the evidence, the claimant had taken 15.5 days’ holiday by termination and, on the tribunal’s calculation, at most half a day’s holiday was taken in excess of entitlement. The tribunal therefore ordered the respondent to pay £340 gross under s.24(1) ERA 1996.