If you’ve not been paid for work you’ve completed, you will want to understand your rights and options.
The following guide on your right to be paid, and to be paid on time, examines the employer’s obligations around the issue of pay, and whether or not they can refuse to pay or pay when they should. We also look at what you can do if you have not been paid for work done on a self-employed or freelance basis.
Your right to be paid
By law, employers have to pay their workers’ wages on the agreed pay day.
When it comes to the employer’s obligations around pay, the starting point is always your contract of employment. The employment contract contains legally enforceable terms and conditions that regulate the working relationship between you and your employer, including your right to be paid your wages, plus other pay entitlements. This means that if your employer fails to pay you what you are contractually entitled to, either in full or on time, this will typically amount to a breach of contract. In most cases, this will also be classed as an unlawful deduction of wages under the Employment Rights Act (ERA) 1996.
If you have not been given a written contract, or your employment contract is silent on certain issues relating to pay, including things like bonuses or commission, this does not mean that your employer is not obligated to pay you what has been agreed. This is because, to be legally binding, a contractual term does not need to be in writing, and nor do these terms need to be specifically or solely set out within an employment contract. A contract of employment can be either written, verbal or even both, with terms set out across a range of documents, such as in letters, emails and policies within the staff handbook or on the staff intranet site, or comprise a number of documents and oral statements combined.
Other contractual terms can also arise by implication in the context of your employment relationship. These are in addition to those terms explicitly agreed, either verbally or in writing, between you and your employer. This could be, for example, where there is a clear pattern of previous custom and usage, such as your entitlement to an annual Christmas bonus where this has been has been regularly paid to you and other staff over a long period of time. Certain contractual terms can also be implied by statute, including the right to be paid at least minimum wage under the National Minimum Wage Act 1998, or the right to a minimum paid notice period on termination of your employment under the ERA 1996.
Taken together, and provided you can prove your right to get paid, this all means that your employer has an obligation to meet any payments due and to discharge any arrears.
Can an employer refuse to pay or pay you late?
Having undertaken work for your employer, you have a right to be paid your full wages as set out under your contract of employment (whether this be an agreement in writing or otherwise), and at the contractually agreed intervals, such as weekly or monthly. Further, under the ERA’s protection of wages provisions, your employer is not allowed to make unauthorised deductions, provided the pay falls within the statutory definition of ‘wages’. Under the ERA, wages are defined widely as ‘any sums payable’ in connection with your employment, including any fee, bonus, commission and holiday pay, whether payable under your employment contract or otherwise. It also includes any entitlement to statutory pay, such as sick pay or maternity and paternity pay etc, as well as statutory payments that are paid in lieu of wages, such as for time off to look for work on redundancy.
However, there are certain circumstances in which your employer can lawfully deduct or withhold your wages. Under the ERA, your employer can refuse to pay some or all of your wages in any one of the following three scenarios:
- the deduction is required by statute, for example, for income tax and national insurance
- the deduction is authorised under your employment contract, provided you have a written contract or a written explanation before any deduction is made
- you have given your consent in writing to a deduction being made in advance.
In addition to any authorised deductions, as set out above, your employer can also lawfully make certain excepted deductions, for example, if you have been overpaid, or you have been involved in a strike or other industrial action, or even if you work in the retail.
In the context of the retail industry, there are special rules for those working in shops, bars and restaurants. Under the retail worker deduction rules, your employer can make up to a 10% deduction to your gross wages to cover either shortfalls in cash or stock within 12 months of the shortage or deficiency coming to light. The deduction must be no more than one-tenth of your wages during any single pay period, although further deductions can be made later and, if you leave your job, your employer can deduct the full balance from your final pay packet. However, they must give you details in writing of each deduction made.
Essentially, this all means that where your pay is less than the total payable to you by your employer, discounting the limited circumstances in which any authorised or excepted deductions can be made under the ERA, the shortfall will be classed as an unlawful deduction of wages. This is a claim brought on a statutory basis where your employer has either failed to pay you at all or paid you less than that to which you are entitled.
What should I do if I’ve not been paid?
If your employer fails to pay you, or to pay you on time, this can have a significant impact on you and your family, placing you under serious financial pressure when there are bills to pay. It can also place you in at tricky situation, especially where you still work for that employer and are worried about causing conflict by making a complaint.
Fortunately, most employers will be well aware of their obligations to pay, and not to be late in so doing, and of your right to bring a claim for either breach of contract or an unlawful deduction of wages. As such, if you have not been paid for work done, this will often be a computational error or administrative oversight, rather than a deliberate disregard for you or the law.
First and foremost, you should check your payslip to ascertain the nature of any deductions. By law, your employer is required to give you a payslip showing how your pay has been worked out. You may also want to refer back to your contract of employment, and any emails or correspondence, for an explanation as to why your employer may be withholding pay. If there is no obvious explanation as to why you have not been paid the right amount you should talk to your employer, or payroll, to see if the matter can be resolved informally.
If the matter cannot be resolved on an informal basis, you may need to lodge a formal grievance using your employer’s internal complaints process. They should have in place a written grievance procedure incorporating principles of fairness as to how a complaint should be resolved. This will typically involve your employer investigating the matter, holding a meeting with you so that any dispute can be discussed in full, and providing you with a written decision and a right of appeal if the matter is not resolved in your favour.
Finally, as a matter of last resort, to bring an employment tribunal claim, you must submit an ET1 claim form within 3 months less one day. This is the limitation date for these types of claims, although the starting day of this time limit depends on what kind of deduction there has been. For example, where there has been a deduction or shortfall of wages, the time limit will run from the date on which payment fell due, whilst for a series of deductions, the time limit will run from the last deduction or payment in that series.
Importantly, you must first go through ACAS early conciliation before being allowed to submit a claim to the employment tribunal, although this will stop the clock on your tribunal time limit. However, ACAS must receive your early conciliation notification before expiry of the limitation date. If you submit your notification within time, and if you and your employer each agree to engage in early conciliation, you will both be provided with the opportunity to resolve the matter on mutually agreeable terms via an ACAS conciliator.
If you miss the time limit for issuing a tribunal claim, you can instead issue proceedings through the courts, although expert legal advice should always be sought first.
Checklist if you’ve not been paid
The following checklist summarises some best practice advice when it comes to not getting paid for the work that you have done, either by way of an unauthorised deduction from your wages or where payment has been withheld in full:
- Check your pay slip, contract of employment, and any emails or correspondence, to help figure out why you have not been paid, either in full or at all
- Talk to your employer to see if they have made a mistake that can be easily rectified
write to your employer, setting out the details of your formal grievance, including the amount you believe that you are owed and the reasons for this - Respond to any requests from your employer for documentary evidence in support of your position, such as bank statements showing your wages have not been paid in
- If the matter cannot be resolved internally, seek expert legal advice.
For former employees, you will no longer be in a position to raise an internal grievance with your employer over a pay dispute, although unintentional errors and oversights can often still be resolved informally by contacting someone from HR or payroll. Failing this, you can enter into written post-termination negotiations with your employer to try to resolve the matter without recourse to legal proceedings.
Taking legal action against your employer for failing to pay you
The way in which you seek to resolve any pay dispute will not only depend on the nature of the pay, it can also turn on whether you still work for your employer or if a post-termination dispute has arisen, for example, for a failure to provide you with paid notice.
In the context of post-termination disputes, a claim for unpaid notice or pay in lieu should be brought as a claim for breach of contract, also known as wrongful dismissal, rather than one for unlawful deduction from wages. For claims up to £25,000, these can be made to the employment tribunal. If the sum is higher than this, a claim would need to be made via court proceedings. Importantly, the period of time within which to issue a tribunal claim is just 3 months, less one day, whereas you have up to 6 years to claim through the courts.
If you are too late and out of time to issue tribunal proceedings, or the pay issue falls outside of the statutory protection of wages provisions, for example, if it relates to expenses or some other form of excluded payment, such as payments due in connection with retirement, you would again need to bring a claim for breach of contract through the courts.
For all other claims, for existing employees, it is often best to bring a claim for unlawful deduction of wages, where it is possible to bring a tribunal claim without incurring any costs, whilst court proceedings can be costly and far more time-consuming. In most cases, any deduction will be classed as unlawful if it is not required by legislation, it was not authorised in your employment contract or you did not consent to this in writing. If your claim is successful, you will be entitled to recover the amount deducted, although this may be subject to a two-year cap, together with any financial losses sustained because of the deduction, such as bank charges because you did not receive the correct amount of wages.
If your employer pays your wages late, this technically counts as an unlawful deduction, although the tribunal would not allow you to recover your wages twice. If your employer persistently and repeatedly fails to pay your wages on time, this might amount to a fundamental breach of contract for which you could forcibly resign and claim constructive dismissal. However, a one-off isolated breach will not normally justify your resignation.
Self-employed and not been paid for work you’ve done?
It’s best practice for the self-employed and freelancers to agree invoice payment terms in writing before undertaking work under a commercial arrangement. This can help avoid any misunderstandings and provides certainty for you and the client.
If a client is late paying an invoice, a polite reminder is often all it takes for the issue to be resolved.
However, if the client continues to fail to pay, despite you prompting and raising the issue directly, you may need to initiate debt collection proceedings.
Wage dispute FAQs
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Legal disclaimer
The matters contained in this article are intended to be for general information purposes only. This article does not constitute legal advice, nor is it a complete or authoritative statement of the law, and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should be sought.
Author
Gill Laing is a qualified Legal Researcher & Analyst with niche specialisms in Law, Tax, Human Resources, Immigration & Employment Law.
Gill is a Multiple Business Owner and the Managing Director of Prof Services - a Marketing Agency for the Professional Services Sector.
