Labour Research December 2019

Law Queries

Deduction of holiday pay

Q. I’ve just changed jobs and my previous employer deducted three days’ pay from my final pay, saying I’d taken more holiday than I was entitled to by the time I left. Can I get this back?

A. Your employer can only deduct wages from your pay if authorised to do so, even if it believes you are not entitled to the money (section 13, Employment Rights Act 1996).

There are some deductions it is entitled to make by statute, such as tax and National Insurance, but otherwise this authorisation must come from your terms and conditions of employment or another written agreement you’ve signed in advance of the deduction.

If you don’t have a clause in your contract, or a signed written agreement stating your employer can deduct overtaken holiday, you can reclaim this as an “unlawful deduction of wages” claim in an employment tribunal. 

You can also bring an unlawful deduction claim if you challenge the amount of pay deduction (for example, you think it should have been two days and not three).