The Employment Rights Act 1996 stipulates that claims for unauthorised deductions from wages have to be brought within three months of the last deduction. In Coletta v Bath Hill Court (Bournemouth) Property Management Ltd, the Employment Appeal Tribunal (EAT) held that for claims brought before January 2015, there was no limitation on arrears as long as the claim was brought within the time limit.
Mr Coletta started work as a porter for Bath Hill Court (a management company for a block of flats) in 2000, becoming head porter about seven years later. In 2014, he started tribunal proceedings claiming that he had been paid below the National Minimum Wage during his entire period of employment (a period of 15 years in total).
The tribunal agreed with him, but at a subsequent remedies hearing, it held that under section 9 of the Limitation Act, his award could only be backdated to six years prior to the start of proceedings and not the full 15 years that he claimed he was owed.
Appeal to EAT
Mr Coletta appealed, arguing that the time limit of six years stipulated in section 9 of the Act was disapplied by section 39 which states that the Limitation Act does not apply to a claim that has another limitation period under another statute.
That other limitation period, according to Mr Coletta, was contained in section 23 of the Employment Rights Act 1996 (ERA) which sets a three-month time limit from the last deduction or payment in a claim involving a series of deductions.
As such, he argued that as long as he brought his claim within three months from the date of the last deduction, he should be able to recover the whole amount as the ERA did not stipulate a limitation period. Otherwise, as he pointed out, there would be a double limitation period for unauthorised deduction of wages claims. That is, that a claim had to be presented within three months of the (last) deduction; and relate only to deductions arising in the six years prior to the date of claim.
On the face of it, the EAT accepted that section 9 might indeed apply to unauthorised deductions of wages claims. However, as section 23 ERA placed a three-month limitation on bringing such claims, it was clear that section 39 applied and section 9 did not.
The EAT also rejected the employer’s argument that the ERA only limits the period within which a claim has to be brought for the last in a series of deductions, as opposed to any of the other deductions. It was a question of fact for the tribunal to decide whether there had been a series of deductions. As long as it was satisfied that there had been, then the three-month time limit applied.
Although Parliament could have imposed a more stringent limitation on arrears, it had not done so until the introduction of a two-year time limit in the Deductions from Wages (Limitation) Regulations 2014.
Prior to January 2015, however, section 23 ERA prescribed no such limitation on the arrears that a tribunal could award, provided that the claim had been presented within the period of limitation of three months from the deduction, or the last in a series of deductions, in issue. Although, therefore, there was no limitation on arrears, there was thus still a "period of limitation" for the purposes of section 39.
Although it accepted that this decision might present some “real-world difficulties” for employers, the EAT allowed the appeal.
This case predated the introduction of the two-year time limit in the Deduction from Wages (Limitation) Regulations 2014. Had Mr Coletta presented his claim after 8 January 2015 his loss would have been limited to 2 years.