Can I deduct pay from an employee who has arrived at work late the morning after the company party?

Holding Summer or Christmas parties is a part of most businesses; the opportunity to thank your staff for their hard work during the year, and bringing them together outside of the work environment.  What do you do though if someone has too much fun, which then impacts their work the following day?  Our Employment Law team review whether pay can be deducted from an employee if they arrive late at work the morning after, and what steps you can take to make your position clear.                                                                                                       

Under the Employment Rights Act it is unlawful for you to make a deduction from an employee’s wages unless the deduction is required/authorised by law. If there is a provision in the employee’s contract entitling you to make a deduction, or the employee has given their prior written consent to the deduction this may be considered lawful.

A widely drafted clause in a contract of employment stating that you can make deductions from an employee’s pay is unlikely to be sufficient. In order to avoid an employee pursuing a claim for an unlawful deduction from wages, you should specifically state in an employment contract that deductions from pay may be made where an employee does not arrive for work on time.  

Alternatively, you can ask employees to sign a separate agreement in advance of attending a company party, which indicates they agree to a deduction being made from their pay in specific circumstances, for example, if they are late for work without good reason.

If an employee has two or more years’ service then they are protected from unfair dismissal; you should ensure you go through a fair disciplinary procedure prior to deciding whether or not to make a deduction from an employee’s pay because of lateness.  If not, they could bring a claim for constructive unfair dismissal because you’ve issued a penalty without having first gone through a fair procedure. 

If an employee has less than two years’ service, before making a deduction from an employee’s pay, you should consider whether such a deduction could trigger another type of claim, for example discrimination or whistleblowing.  There is no requirement for an employee to have more than two years service to make a claim on the grounds of discrimination, whistleblowing, or several others.  You should exercise caution and seek legal advice if you’re unsure.                                                                                                                       

You could also consider making it clear to staff in advance (for example sending a staff email) that disciplinary action may be considered where an employee fails to turn up to work the following day or turns up late without good reason.  This can therefore discourage employees from the over-consumption of alcohol at staff parties.

If you have questions about disciplinary or dismissal procedures, or you have a different question about staff conduct at a company party, you can contact the Employment team on 023 8071 7717 or email employment@warnergoodman.co.uk.

To receive regular Employment Law updates from the team regarding recent tribunal cases and legislation updates, you can subscribe to our weekly Employment Law Newsletter by completing our subscription form or emailing us at events@warnergoodman.co.uk. 

ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.  All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.