Guildprime Specialists Contractors Ltd v Knight

A written agreement by which an employee consents in advance to deductions from wages for a loan is a complete answer to an unauthorised-deduction claim under section 13 of the Employment Rights Act 1996. The validity or enforceability of a separate consumer-credit arrangement does not alter that conclusion.

An Employment Tribunal has only the statutory jurisdiction conferred on it. Questions concerning the interpretation, status or enforcement of a regulated consumer-credit agreement fall within the exclusive jurisdiction of the County Court under the Consumer Credit Act 1974. A loan is not wages.

The claimant was dismissed for redundancy. The Employment Tribunal dismissed his unfair-dismissal claim but upheld his complaint that £4,147.15 deducted from his final pay to discharge a vehicle loan was an unauthorised deduction.

The Tribunal held that the loan arrangement was regulated by the Consumer Credit Act 1974, was not in proper form and could not be enforced. The employer appealed. It contended that the claimant had given written consent to the deductions in his offer letter and written employment terms, and that the Tribunal had no jurisdiction to decide issues under that Act.

The central issue was whether the final deduction was unlawful under Part II of the Employment Rights Act 1996.

1. Appeal allowed. The Employment Tribunal’s decision upholding the unauthorised-deduction claim was set aside, and the claim was dismissed. Its dismissal of the unfair-dismissal claim otherwise stood.

2. The documents signed by the claimant constituted prior written consent to deductions from his pay for the vehicle loan. That consent covered the final deduction as it had the earlier monthly deductions. On the proper construction of section 13(1) of the Employment Rights Act 1996, this was a complete answer to the statutory complaint.

3. Sunderland Polytechnic v Evans [1993] ICR 392 supported the conclusion that the statutory expression “any deduction” does not mean only a lawful deduction. Accordingly, an asserted defect in the separate agreement between the employer and the vehicle-finance provider could not found an unauthorised-deduction claim where the employee had signed the written authority.

4. The Tribunal also erred by determining that the arrangement was a regulated and non-exempt consumer-credit agreement. The jurisdiction to determine matters concerning such agreements was exclusively that of the County Court under section 141 of the Consumer Credit Act 1974. The Employment Tribunal had no jurisdiction to make that determination and should have confined itself to Part II of the 1996 Act.

5. In any event, the arrangement was a loan, alternatively recoupment of an overpayment of wages, and had been agreed in writing. A loan is not wages. The refusal to allow the employer’s counsel adequate time to address the novel consumer-credit point was procedurally unfair, though remission was unnecessary because the EAT could finally determine the claim.

• Employment Appeal Tribunal: Allowed the employer’s appeal and set aside the Employment Tribunal’s ruling on unauthorised deductions.
• Employment Tribunal, East London: Dismissed the claimant’s unfair-dismissal claim but upheld his unauthorised-deduction claim. No citation was stated.