Unauthorised Deductions from Wages
by Liam
In the Employment Appeal Tribunal case of Key Recruitment UK Limited v Lear, the EAT have considered unauthorised deductions from wages in relation to commission claw-back.
It is common for employers who pay commission to employees to reserve the right to have that commission repaid if the client or customer defaults on their invoice or contract.
The EAT considered whether it is lawful to deduct clawed-back amounts from an employee’s wages. It held that it could be.
To maximise the chances of you being able to claw-back commission it is important that there is an express clawback provision in the contract of employment, that it is clear in what circumstances and at what time commission becomes due for repayment and that there is an express deductions clause that allows any commission due for repayment to be deducted from any sums owed to the employee.
It is unlikely in most cases of commission claw-back that the money owed to the employer can be classified properly as an overpayment of wages (that can be deducted properly without an express clause in the contract). This is because at the time the payment was made, it was correct - it subsequently became incorrect as a result of the client’s default on an invoice or contract.
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