G Thom v Hobart Real Estate Partners Limited

A claim for unauthorised deduction from wages under Employment Rights Act 1996 requires a legal entitlement to an identifiable and quantifiable sum properly payable. A tribunal may construe the contract and determine disputes about entitlement, and a complex calculation does not itself defeat jurisdiction. However, it has no jurisdiction where the claimed payment remains an unliquidated sum because essential terms governing its calculation have not been agreed.

A discretionary performance-fee clause did not create a quantifiable entitlement where neither the performance fee nor a method of calculating it had been agreed. A unilateral statement of a percentage did not amount to declaration of a payable bonus where the sum to which that percentage applied remained undefined.

The claimant, a director employed by the respondent, claimed an unauthorised deduction from wages in respect of a performance fee connected with the Worship Square investment. Clause 6.2 of her contract stated that she may receive at least 10% of the company’s performance fee, with the terms and percentage to be negotiated and agreed for each project.

The Employment Tribunal held that email correspondence had not produced an agreement on the percentage or the calculation of a performance fee. It concluded that any contractual discretion did not yield an identifiable and quantifiable sum, and dismissed the claim for want of jurisdiction. The claimant appealed, contending that the respondent had declared a 10% entitlement and that the relevant sum could be calculated from payments made following the disposal of the project.

1. Appeal dismissed. The Employment Tribunal correctly held that it lacked jurisdiction to determine the claim as an unauthorised deduction from wages.

2. Under sections 13 and 27 of the Employment Rights Act 1996, the claimed sum must be properly payable pursuant to a legal obligation. The tribunal may determine disputed contractual meaning and a difficult calculation may still be quantifiable. The statutory jurisdiction nevertheless presupposes an identified sum of wages rather than an unliquidated claim.

3. Clause 6.2 was discretionary. If the respondent exercised the discretion, both the terms of the performance fee and the claimant’s percentage had to be fixed. In practical terms, the multiplier and the multiplicand, or a method for calculating the latter, had to be ascertainable.

4. The Employment Judge was entitled to find that the March and April 2019 emails did not conclude an agreement. They did not establish either a performance fee payable to the respondent or the percentage payable to the claimant. The correspondence ended with the parties still in disagreement.

5. The claimant could not recast the claim on appeal as one for a declared bonus. In any event, the emails at most declared a 10% percentage. They did not define the profit or performance fee to which it applied. The proposed calculation depended upon an agreement with Bridges which was never reached, and the claimant could not show that the sums later paid to a different Hobart company were a performance fee under clause 6.2.

6. Even if a rational exercise of discretion might have required a 10% multiplier, no rational exercise necessarily produced a multiplicand. No identifiable or quantifiable sum was therefore properly payable, and the statutory deduction claim was correctly dismissed.

• Employment Appeal Tribunal: dismissed the claimant’s appeal: [2023] EAT 37.
• Employment Tribunal: Employment Judge Heath dismissed the unauthorised-deduction claim for want of jurisdiction. The judgment and reasons were sent to the parties on 10 September 2021.