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Scope of Unlawful Deductions Claim

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The Court of Appeal has, this morning, handed down an important judgment considering the scope of an unlawful deductions claim.

About 600 employees claimed they had not been given adequate bonuses under an implied contractual promise to replicate a share bonus scheme operated by a predecessor employer. As they remained employees, the tribunal could only order payment under its unlawful deductions jurisdiction (and not its breach of contract jurisdiction, which only applies to ex-employees).

The Court of Appeal held that such claims are, in reality, claims for unliquidated damages and that they fell outside the scope of an unlawful deductions claim. Wall LJ, giving the leading judgment, stated that the unlawful deductions jurisdiction only applied to claims for "a specific sum of money" (para 46) or to an "identifiable sum" (para 51). Where detailed investigation as to the level of alleged underpayment is required (as in this case), the proper route was for the employees to bring a breach of contract claim - which (as they were still employed) had to be done in the county court. Accordingly their claims were dismissed.

Coors Brewers v Adcock