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Time Limits: Unlawful Deduction from Wages

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Does section 23 Employment Rights Act 1996 proscribe a ‘period of limitation’ for the purposes of section 39 Limitation Act 1980 meaning that there was no backstop on recovering compensation for unauthorised deductions from wages?

Yes, held the Court of Appeal in Bath Hill Court v Coletta.

Upholding the decision of the EAT, which overturned the decision of the tribunal, the Court of Appeal held that Mr Coletta was not limited to recovering deductions from wages dating to more than six years prior to the issue of his claim. (The proceedings pre-empted the coming into force of the 2014 Regulations, capping such recovery at two years.) Instead he was entitled to recover deductions stretching over his entire fifteen years of employment.

Endorsing a common-sense approach to interpreting what constitutes a limitation period, the Court held that section 23 proscribes a period after which a person with a legal right is unable to assert that right in legal proceeding, that that is sufficient to engage section 39 and the other provisions of the Limitation Act are thereby disapplied.

Technical questions of whether section 23 is a bar on a right or a bar on a remedy; or whether it creates a jurisdictional bar do not affect this. The only consideration is whether the claim is brought in time and the provisions of the 1980 Act do not apply to create an additional backstop on recovery.

Drawing a parallel between provisions of employment law dealing with series of deductions and the regime surrounding constructive knowledge in personal injury law, the Court held that a limitation period does not need to make obvious on its face (i.e. without judicial determination) the maximum extent of the period in respect of which a remedy may be obtained. The fact that this may create difficulties for respondents was held to be no reason to go behind the clear statutory language.

The impact of this case is limited by the Deduction from Wages (Limitation) Regulations 2014, which now impose a two year backstop on almost all claims for unlawful deductions from wages. (This claim related to a period before the two year backstop was introduced).

Thanks to Ryan Ross, pupil barrister at Old Square Chambers, for preparing this case summary.