Third party salary deductions & Statutory Sick Pay

[obiter dictum]

Been asked to help out a chap who is on long term sick and now on Statutory Sick pay. The issue is he has three payments deducted each week direct from his salary to pay a credit union loan (Third Party)

 

He is going into a payment plan with Step change as his debts are really stressing him out.

 

HR services with his employer point blank refused to cancel his continuous authority mandate, as did the credit union to temporarily suspend payments. He asked me to do a template so put one together under 13(b) Employment Rights Act that he now withdraws his consent for any future payments to be made to this credit union. (Third Party)

 

His wage slip has a minus now attached to it each week and he cannot even afford to eat. Other than ACAS which will be drawn out any suggestions to go in for the kill and make HR services see sense with immediate rectification?

 

Below is the response from HR services.

 

Further to your letter received in our office dated 09/5/2017, I am writing to reafirm that we are unable to end any wage deduction for a credit union without authorisation from that credit union.

 

XXXX XXX involvement with employees and credit unions is solely to deduct an agreed amount from the employees wage and forward the amount to the credit union. You will need to discuss any changes to repayments directly with any deductions to the credit union direct

[Sidewinder]

You would need to know the precise details of the agreement with the credit union and approach it from that angle. I cannot see that you can force the employer to cease deductions under S.13 as the agreement is not between employer and employee but the employer is merely the vehicle by which payments are made to the third party. There is presumably an obligation by agreement between the employer and the credit union as to how and when those payments are passed on and the employee cannot force the employer to breach that relationship. The same would be the case if this were payments required under an Attachment Of Earnings - the employer cannot opt out of their obligation to deduct payments under that order on the employee's say so.

 

SSP is still classed as earnings, so has no special status or protection from deductions per se

 

If these were deductions for say a training course or repayment of a loan directly from the employer then the situation would be different as there would be a breach of trust argument against the employer for inflicting undue hardship when the employee was already under financial stress and the deductions compounded that stress, but the third party involvement changes that

 

I am afraid I do not know how to convince the credit union to temporarily not require the employer to pass over payments

[obiter dictum]

The key with 13(1)(b) is that the employee has withdrawn his previous consent to pay the credit union weekly amounts from his salary as an express instruction in writing

 

Salary is a matter between the employer and employee, not any third party company without express prior consent. That request to pay that third party deductions has now been withdrawn

 

What I am getting at is now that request to pay that third party has been withdrawn in writing directly to the employer, how can the employer under contract to the employee refuse that request??

We are not talking about deductions under 13(1)(a)

 

Right not to suffer unauthorised deductions.

 

(1)An employer shall not make a deduction from wages of a worker employed by him unless—

(a)the deduction is required or authorised to be made by virtue of a statutory provision or a relevant provision of the worker’s contract, or

(b)the worker has previously signified in writing his agreement or consent to the making of the deduction.

Edited May 11, 2017 by obiter dictum

[obiter dictum]

The obvious question putting into context

 

What is the difference then between an employer refusing to cancel a continuous authority mandate to pay a third party company and your Bank saying exactly the same thing with a payday loan company?

[Emmzzi]

sample form here - the wording is why you need to check the original forms http://www.londoncu.com/wp-content/uploads/2015/03/PayrollDeductionForm.pdf "I further pledge that this authorisation cancels any previous deduction form that I have signed and is not to be changed unless by written permission, signed by me on the duly authorised form, and witnessed by an Employee of the Credit Union." refusal to witness = no right to cancel

[obiter dictum]

Many Thanks Emmzzi

[Sidewinder]

Thanks Emmzzi - makes the point that I was trying to make. The credit union is a party to the agreement and the rights and responsibilities cannot easily be waived by one party without the authority of the remaining parties. The nature of the contract would take it outside of the provision of S.13 ERA

 

I am not completely au fait with the specifics of credit unions but there is often an overriding agreement between the employer and the credit union regarding the provision of credit facilities to a workforce - to the extent that if they were to start breaching agreements unilaterally this would most likely jeopardise the entire relationship and the withdrawal of the credit facility for the wider workforce over a dispute with one individual.

 

What is the difference then between an employer refusing to cancel a continuous authority mandate to pay a third party company and your Bank saying exactly the same thing with a payday loan company?[/Quote]

 

The difference would be that the Bank would not be a signatory to the agreement between the individual and the loan company. With a credit union, the employer has an agreement to provide a payroll deduction scheme and agrees to maintain such payments in accordance with that contract. An employee is free to cancel the regular payment authority with the permission of the CU if the account is in credit, but presumably such permission is not being granted here as the employee's account is in arrears following his use of the credit facility

 

I see the only solutions here as being the employee leaving, and there would then be no wages to deduct from, or for the CU to agree to a suspension of payments. If the latter option is not successful then it probably needs escalating upwards within the CU in the hope that somebody realises that their actions in not suspending payments are completely uncharitable and could go against the ethos of credit unions by forcing the employee towards taking further loans from other sources in order to live