Can Employees Claim Unauthorised Deductions From Wages for Work Outside the Employment Contract?
In a recent case the Employment Appeal Tribunal has considered how an employee can make a claim where they have taken up a more senior position but not had a contractual salary increase.
What Is a Quantum Meruit Claim?
Quantum meruit means 'the amount he deserves' or 'as much as he has earned'. A quantum meruit claim is a claim for a reasonable sum in respect of services supplied or work performed. Usually, the claimant would need to show that the defendant expressly or impliedly requested or freely accepted the services.
What Is an Unauthorised Deductions From Wages Claim?
An unlawful deductions from wages claim is a type of Employment Tribunal claim that can be pursued in response to an unlawful deduction or underpayment of wages payable in connection with a contract of employment.
Quantum Meruit Claim Upheld
In Abellio East Midlands Ltd v Thomas the claimant, Mr Thomas was employed by AEM Ltd as Area Manager for Leicester. His salary was £42,000. He subsequently became Area Manager for Nottingham, which was a bigger and more complex network. Mr Thomas was told his salary would increase to £52,000 subject to HR's approval. He began working in the Nottingham Area Manager role HR only authorised an increase to £48,000, saying it would rise to £52,000 once Mr Thomas had completed a probationary period. Mr Thomas did not accept this and therefore the parties did not reach an agreement on the salary, although Mr Thomas continued to carry out the role.
Mr Thomas's employment ended in November 2019 and he brought an unlawful deduction from wages claim seeking the £52,000 salary he said he had been promised. He also argued in the alternative that he should be entitled to a quantum meruit for the services he had provided.
The Employment Tribunal rejected Mr Thomas' argument that there had been an oral agreement, as the salary increase was subject to HR approval which was not given. There had therefore not been an unlawful deduction of wages. However, Mr Thomas' quantum meruit claim was upheld, as both Mr Thomas and AEM Ltd had accepted that Mr Thomas' new role as Nottingham's Area Manager was entirely different to his role as Leicester's Area Manager, and that it carried a salary of £52,000. Thomas was therefore entitled to the difference in salary between March and November 2019.
AEM Ltd appealed.
The Appeal
The EAT allowed the appeal. It held that as the claim was based on work carried out by Mr Thomas outside the scope of his contract of employment, it did not fall within the statutory definition of 'wages' under section 27 Employment Rights Act 1996. The claim could not therefore be brought in the Employment Tribunal and should instead have been pursued in the civil court.
Key Takeaways for Employers
This litigation could have been avoided had the parties concluded their discussions on salary before Mr Thomas started work. Employees do sometimes fail to expressly sign up to contracts or contractual variations, and employers can rely on implied acceptance if the employee nevertheless works under the new terms. However, in this case Mr Thomas had objected to the salary arrangements HR had put in place. This should have been the signal to manage Mr Thomas proactively, in order to achieve certainty on his salary before allowing him to commence his new post.