J Wharton v Sheehan Haulage and Plant Hire Ltd

The Employment Appeal Tribunal held that the Employment Tribunal erred in treating the three-month time limit as running from the date of termination rather than from the date of the payment from which the alleged deduction was made. The claimant’s complaint was properly characterised as a complaint of unlawful deduction from wages under section 23 ERA 1996 and, in the case of an underpayment, section 23(2) runs from the date of the deficient payment. Regulation 14(2) and regulation 30 WTR 1998 and the relevant ERA 1996 provisions were considered in that context. Because the last payment to the claimant was on 18 September 2020, the claimant contacted ACAS within three months of that date and presented his claim within one month of receiving the Early Conciliation certificate, so the claim was presented in time. The EAT set aside the ET’s time‑bar decision and remitted the claim to the ET for determination on the merits.

Background and procedural posture

• The claimant presented a claim to the Employment Tribunal on 5 February 2021 for one week’s notice pay and outstanding holiday pay arising from employment that ended in September 2020.
• The Employment Tribunal (hearing listed on 3 March 2022) dismissed the claims for lack of jurisdiction on the basis that they were presented outside the three‑month time limit, treating the limitation period as running from the date of termination (9 September 2020).
• The claimant appealed. The appeal was sifted to a full hearing by an order sealed 11 June 2023 and heard by the EAT on 25 June 2024; neither party attended the EAT hearing.

Nature of the claim and issues

• Nature of claim: complaints for unlawful deduction from wages under Part II of the Employment Rights Act 1996 and claims for holiday pay under the Working Time Regulations 1998 and for notice pay.
• Central issues: (i) whether the claim should be characterised as an unlawful deduction from wages claim; (ii) if so, from what date the three‑month time limit in section 23(2) ERA 1996 runs (date of termination or date of the payment from which the deduction was made); and (iii) whether the claimant’s ACAS early conciliation preserved the claimant’s ability to present the claim within the extended period.

Court’s reasoning and disposition

• The EAT held that where there is a payment which is alleged to be deficient, section 13(3) treats the shortfall as a deduction from the wages paid on that occasion and section 23(2) therefore runs from the date of that payment.
• Applying that principle, the EAT found the last payment was made on 18 September 2020 and that any shortfall in holiday pay or notice pay should be treated as a deduction from that payment, so the three‑month period ran from 18 September 2020.
• The claimant contacted ACAS on 16 December 2020 (within three months of 18 September 2020) and received the Early Conciliation certificate on 6 January 2021; the claim was presented to the ET on 5 February 2021, within the one‑month extension following the certificate, and therefore in time.
• The EAT set aside the ET’s conclusion that the claim was out of time, allowed the appeal and remitted the claim to the Employment Tribunal for determination on the merits.

Appeal allowed. The EAT found the Employment Tribunal erred in law by treating the three‑month time limit as running from the date of termination rather than from the date of the payment from which the deduction was alleged to have been made; because the last payment was on 18 September 2020 the claimant’s ACAS contact on 16 December 2020 and presentation of the claim on 5 February 2021 fell within the prescribed and extended limits, so the claim was presented in time and the matter was remitted to the Employment Tribunal for determination of the substantive issues.

The claimant’s complaint was presented to the Reading Employment Tribunal on 5 February 2021 and a jurisdiction hearing took place on 3 March 2022, when the ET dismissed the claims as out of time. The appeal was sifted to a full EAT hearing by an order sealed 11 June 2023. Eady J refused an adjournment application and the EAT heard the appeal on 25 June 2024, allowing the appeal and remitting the claim to the ET for determination.