Recovery of an overpayment of wages must be identified on a pay statement (News, 25 September 2014)

Table of contents

• The impact of this case
• Relevant background law
• The employment tribunal judgment
• The EAT judgment

Article summary

Where an employer reduces what would otherwise be the employee’s wages or salary for a period in order to recover an overpayment for a previous period, he is making a deduction from salary for the purposes of section 8 of the Employment Rights Act 1996 and must identify the amount of the deduction and the purpose for which it is made on the employee’s pay statement. However, paying less than the usual amount because, for example, the person was known to be absent during that period and therefore not entitled to some pay for that period does not amount to a deduction for these purposes. All that is required on the pay statement when a deduction is made is detail of the amount deducted and some form of words (which may be abbreviated) to indicate what the deduction is for. EAT: Ridge v HM Land Registry.