Background
This case concerns Mr J Biddulph, a website manager employed by Eastern Counties Leather (a leather goods business), who brought a claim for unpaid wages and breach of contract after resigning from his post in April 2021. At the heart of the dispute was a £10,000 payment made to him in 2019. Mr Biddulph claimed it was commission; the employer said it was a loan. The company withheld his final month’s salary to recover part of this amount and counterclaimed for the outstanding balance.
Mr Biddulph’s appeal to the Employment Appeal Tribunal (EAT) hinged on a new argument: that even if the payment was a loan, it was unenforceable because it didn’t meet the requirements of the Consumer Credit Act 1974.
Key Issues
- Was the Payment a Loan or Commission?
The Employment Tribunal (ET) found the £10,000 was a loan based on clear email evidence, including one where Mr Biddulph provided his bank details “for the £10,000 loan”. There was no agreed commission scheme in place. - Unlawful Deduction or Lawful Repayment?
The ET ruled that the employer was entitled to deduct Mr Biddulph’s final month’s salary under a contractual clause allowing deductions for money owed. It upheld the employer’s counterclaim for the outstanding loan balance. - Appeal Based on New Legal Argument
On appeal, Mr Biddulph tried to argue that the loan breached consumer credit rules and was therefore unenforceable. The EAT refused to allow this argument, as it was not raised at the ET and was inconsistent with Mr Biddulph’s original position—that the payment wasn’t a loan at all. - Was the Loan Regulated?
The EAT confirmed that informal, interest-free employee loans not offered to the public are exempt from regulation under the Consumer Credit Act. It found Mr Biddulph’s new legal argument was “weak, if not hopeless”.
Employment Appeal Tribunal (EAT) Decision
The EAT dismissed the appeal. It emphasised that new legal arguments will only be allowed on appeal in exceptional cases—especially when they contradict the case presented at tribunal. It also confirmed that the employer had a clear contractual right to deduct owed sums from final pay. It also mentioned by making reference to an earlier case law that an Employment Tribunal is not obliged to enquire into a case by drawing attention to a point of law on a basis that is completely different from the Claimant’s pleaded case regardless of the Claimant being legally represented.
Significance
This case reinforces two key points for union members and reps:
- Clarity Around Bonus or Loan Payments: Always insist on written agreements when payments are made outside normal pay—whether bonuses, advances, or loans. Ambiguity can lead to disputes. Copies of such agreements including any email correspondences to that effect should be readily available when advancing proceedings to the Tribunal.
- Tribunal Argument Strategy: Changing legal arguments mid-way—especially on appeal—rarely succeeds. Claims must be consistent and supported by evidence from the outset.
It also clarifies that employer-provided loans—when genuinely informal and interest-free—are not typically subject to consumer credit regulation.
Outcome
Mr Biddulph’s appeal was dismissed. The employer’s counterclaim stood, and the company can now enforce recovery of the remaining loan balance.
