It is very tempting sometimes to try
and recover sums owed by an employee from their final pay when they
leave. This is one of the few areas where the law is very clear.
Unless you have the written approval of the employee that you can
deduct such sums from their final pay, it is unlawful to do so and a
Tribunal will uphold any claim for unlawful deduction.
Having verbal approval is not
sufficient and having a signed receipt for the sum given to the
employee is not sufficient. The statement must clearly state for
example 'I hereby authorise the Company to deduct the sum of £x from
my pay and to deduct any sums owing on my leaving the Company from any
final sums owing to me'. Such a statement must then be signed and
dated by the employee to be valid. Only then can you deduct from pay
and final pay.
If you deduct without such authority
you will lose any claim against you for unlawful deduction. But more
important, you will then also lose the right to try and recover the
amount by action brought in the county court. This was shown in the
case of Potter v Hunt Contracts Ltd, in which it was confirmed that
the amount unlawfully deducted reduces the sum recoverable by the
employer. In this case the employer had unlawfully deducted £278.50
but was owed £523. By unlawfully deducting the first sum, they could
only attempt to recover the sum of £244.50 at county court.
Therefore, if you want to recover sums
from the county court, be sure that you have the correct authority to
deduct other sums from final pay before doing so.