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The maximum deduction that could be made from an employee's wage following a one day strike action was the value of the day's pay that otherwise would be paid to that employee and his or her annual salary had to be apportioned between the working hours as defined in the contract spread over the 52 weeks of the year. The correct test was to determine whether the employee could sue for the withheld wages rather than focusing on what the overall losses to the employer were by reason of the partial non-performance.
The claimant employees (T) sought a declaration that deductions made from their wages by their employer (C) were excessive. T were employed by C, a college, as full time support staff under contracts whose material provisions were identical. Under their contracts T were to work a 37 hour week but each was entitled to receive their normal remuneration for all Bank and public holidays normally observed in England and Wales and to a further 25 working days each holiday year. T had taken part in industrial action consisting of a one day strike. C responded by making a deduction from the monthly wages due for the month in which the strike occurred. T did not dispute that C was entitled to make a deduction but disputed the quantum. The parties agreed to a summary trial of the action on agreed facts. T submitted that Miles v Wakefield MDC (1987) AC 539 HL established that the maximum deduction that could be made in such circumstances was the value of the day's pay that otherwise would be paid to T and that their annual salary had to be apportioned between the working hours as defined in the contract spread over the 52 weeks of the year. This produced a formula for calculation of a day's pay of 1/260 achieved by deducting the 104 weekend and non-working days from the 365 days in the normal calendar year and discounting the odd day. C supported the deductions made by reference to the "no work no pay" principle and submitted that what could be deducted was the loss to the employer of the withdrawal of the services of the day of the strike, and that this sum was necessarily greater than the amount that the employee would receive by way of pay. C further submitted that the formula should be 1/228 days which discounted the paid holidays to which T were entitled because the value of T's services to C was only provided in the working days, although the wages paid for those services were also paid over the holiday period.
HELD: T's submissions as to what could be deducted from an employee's wages were correct. The correct test was to determine whether the employee could sue for the withheld wages rather than focusing on what the overall losses to the employer were by reason of the partial non-performance, Miles applied. Applying those principles to the contracts of employment in the present cases, the wage that was payable for the month in which T had taken strike action was 1/260 rather than 1/228 of the annual wage payable. This was the extent of the employee's inability to sue and therefore the limit of the employer's ability to deduct from the wage packet. C was not entitled to make the deductions of the sums it did for the industrial action undertaken by T.