Employment Update February 2009: Unlawful deduction from wages

19 February 2009

Employment Group

No tribunal claim where chance to earn bonus was lost

The claimants in the case of Lucy and others v BA worked for BA and were based in Manchester. BA then closed its Manchester base. The claimants were not made redundant but were no longer rostered for flying duties and so lost the chance of getting special allowances to which they might otherwise have been entitled.

They initiated a tribunal claim for unlawful deduction from wages (UDFW).

The tribunal decided that, because the allowances were unquantifiable, they could not form the subject of an UDFW claim.

The EAT disagreed but has still not allowed the claims to proceed in the tribunal.

Such allowances might be quantifiable and tribunals were well used to determining amounts payable by way of salary, commission or compensation.

However, the problem with the special allowance in this case was that it was not 'wages' within the meaning of Section 27 ERA 1996 and so could not form the subject of an UDFW tribunal claim. There was a fundamental difference between basic wages, or salary, and remuneration which was only earned if specific tasks were carried out. The claimants were not really claiming wages but damages for the loss of opportunity to earn the special allowances. They would have to bring a contractual claim in the County Court on their 'loss of chance' claim, as they were still in employment. It was only in connection with claims arising out of a dismissal that an employment tribunal could consider such an issue.

Point to note -

  • This case is a reminder of the limits of tribunal jurisdiction. While still in employment, employees may only make UDFW claims in respect of sums of money which fall within the statutory description of wages.

  • Breach of contract claims must be made through the civil courts and are more expensive to make with a much greater risk of being ordered to pay a contribution to the other party’s legal costs if the claim is withdrawn or dismissed.