Pay and the Minimum Wage (L12) Flashcards
What is the wage/work bargain?
Core feature of the employment contract.
Specifies type of work and required payment -> both legally binding obligations.
Freedom of contract implies employer’s freedom to design payment systems.
Performance-related payment.
Time service contract (most common system today).
General principle of ‘no work, no pay’ is simple.
Complexities in application, issues of fulfilment and partial fulfilment (Collins et al p252), e.g. partial performance.
How are deductions from wages made in performance-related contracts?
If work is not completed, the employer does not have to pay on the basis that a contractual obligation was not met.
How, simply, are deductions from wages made in time-service contracts?
The employee must make herself available to work for the agreed hours (wage/work bargain).
Employer must show the employee did not work the agreed hours/performed agreed tasks.
Strike action gives the employer the right to deduct wages for hours/days not worked.
How are deductions from wages made in time-service contracts when the employee only attends work for part of the agreed time?
Employer can deduct pay for the time not worked OR refuse work and withhold pay altogether.
E.g. industrial action short of a strike such as working slowly.
Miles v Wakefield Metropolitan Borough Council [1987].
Important power for the employer especially when employees take action short of strike (ASOS).
How are deductions from wages made in time-service contracts when the employee only fulfils core work tasks but neglects some contractual duty?
Wiluszynski v Tower Hamlets London Borough Council [1989] ICR 493 CA.
i.e. the employer can refuse partial performance (time/availability or work/duties).
What happens if an employee in a performance-based pay system breaches an implied term?
Employer’s power to withhold wages on the basis of quality of performance.
Sagar v Ridehalgh & Sons Ltd [1931].
Oral contract for weaver/ rates of pay fixed by collective agreement / custom to deduct wages if, in view of the management, the work was not performed with reasonable skill and care.
Court held the employer not required to pay for items considered defective.
What happens if an employee under a time-service contract breaches an implied term?
Several implied employee duties can justify deductions from wages:
Duty to take reasonable care of the employer’s property.
Duty to perform the contract in good faith.
Duty to cooperate in the performance of work to further the employer’s business objective.
What limitations does s13 ERA 1996 put on employers deducting from wages under the common law rules?
1a) Deductions must be required or authorized by legislation, or relevant provision of the contract, or
1b) Worker has previously given consent for the deduction, signified in written agreement.
- Can be obtained in the contract of employment or contract for personal performance of work (if a copy is provided)!!
- But at least has to be there — transparency.
ERA ss21 & 22 provide limitations on deductions from retail workers’ wages. What are they?
Deductions for shortfalls in retail - not more than 1/10 week’s wages.
E.g. petrol station.
Common for owners of petrol stations to deduct the amount of money stolen from the station from the employees’ wages.
ERA s23-26 provides for enforcement at an employment tribunal for unlawful deductions. What is provided for?
3 months time limits.
Burden on employer to show authorisation.
But no state enforcement/system of inspectors - victim complains as at common law.
Employer to pay amount of unlawful deduction (limitation period of 2 years).
What are wages?
Has been held to include overtime payments, shift payments, meal and overnight allowances.
Tips and service charges may be covered if there is a contractual arrangement for them to be distributed to staff.
See e.g Saavedra v Aceground Ltd t/a Terrazza Est [1995] IRLR 198.
See s27 ERA.
What exceptions exist under ERA s14 for when deductions for wages are lawful?
(1) Section 13 does not apply to a deduction from a worker’s wages made by his employer where the purpose of the deduction is the reimbursement of the employer in respect of—
(a) an overpayment of wages, or
(b) an overpayment in respect of expenses incurred by the worker in carrying out his employment,
(5) Section 13 does not apply to a deduction from a worker’s wages made by his employer where the worker has taken part in a strike or other industrial action and the deduction is made by the employer on account of the worker’s having taken part in that strike or other action.
What were some arguments FOR the introduction of the NMW?
A minimum floor of protection for disadvantaged workers.
Lifting people out of poverty.
Baseline to negotiate higher wages.
What were some arguments AGAINST the introduction of the NMW?
Fear that it increases unemployment.
Wages = meeting point between offer and demand.
Demand lowers.
Raises inflation (neoclassical economic argument).
Higher wages = more money circulating in the market.
Money is worth less so higher inflation.
A minimum wage risks becoming the maximum.
No incentive for workers to join trade unions
What is the scope of application of the NMW?
Section 1(2) NMWA 1998.
Broad category of workers.
Only independent contractors are excluded.
But there are some excluded categories such as volunteers, prisoners family members, workers who live in the employer’s household if treated as family members.
Female migrant workers… this is controversial.
