Mr J Camacho v Hirst Magnetic Instruments Ltd: 1401260/2022
EMPLOYMENT TRIBUNALS
Case No 1401260/2022
Between
Mr J CamachoClaimantHirst Magnetic Instruments LtdRespondent
Before
Employment Judge YoungsMr Lewis-Bale (instructed by Counsel) for claimantMr A Johnston (instructed by Counsel) for respondentDate 8 November 2022
JUDGMENT
The judgment of the tribunal is that the complaint of unlawful deductions from wages fails and is dismissed.
REASONS
[1]By a claim form presented on 4 April 2022 (case number 1401260/2022), the Claimant brought a claim for unlawful deductions from wages, relating to salary, car allowance and pension contributions, and non-payment of seven days’ holiday pay outstanding on termination of employment.[2]The Respondent asserts that it was entitled to make deductions from the Claimant's wages due to overpayments made to the Claimant.
The issues
[3]At the start of the hearing the issues were discussed and agreed with the parties as follows:(1) Were the wages paid to the Claimant in February 2022 and/or March 2022 less than the wages he should have been paid?(2) Was any deduction permitted pursuant to section 14 of the ERA?(3) Was any deduction authorised by a written term of the Claimant’s contract of employment? It was not in issue that the Claimant had a copy of the contract before the deduction was made.(4) If the Claimant is successful, how much is the Claimant owed?[4]It was agreed that payments by an employer into a pension fund on an employee’s behalf are not wages within the meaning of section 27(1) of the ERA, and it was confirmed that the Claimant was not pursuing this element of the Claim. Procedure, documents and evidence heard[5]The hearing proceeded remotely via Video Hearing.[6]The Tribunal had before it an agreed Bundle of Documents, witness statements from the Claimant, on his own behalf, and from Mr Scibor-Rylski, a director of the Respondent, on behalf of the Respondent. The Tribunal heard oral evidence from both witnesses. The Tribunal also had the benefit of detailed written submissions from both parties, which were supplemented by oral submissions at the hearing. I took into account all of the evidence and submissions in making my findings of fact and conclusions.
Findings of fact
[7]Prior to 5 July 2021, the Claimant provided services to the Respondent as a consultant through his own company.[8]Following the passing of the Respondent’s then Managing Director, the Claimant became employed by the Respondent from 5 July 2021 as Finance Director. He also became the interim Managing Director on this date, pending the appointment of a permanent Manging Director.[9]A contract of employment was entered into between the parties and signed by the Claimant and on behalf of the Respondent by Director Mr Scibor-Rylski ("the Original Contract”). The Original Contract was dated 21 June 2021, but signed on 5 July 2021, and its key terms relevant to the Claimant's claims are summarised as follows: 9.1. The Claimant's employment and continuous employment began on 5 July 2021; 9.2. The Claimant was employed as Finance Director and agreed to take up the duties of Managing Director for an interim period of up to 12 months; 9.3. His salary was £2,400.00 per week, stated to be “based on working an average of 24 hours over 7 days per week”. 9.4. A deductions from wages clause was included in the contract: “The Company has the right to deduct from your pay, or otherwise to require repayment by other means, any sum which you owe to the Company including, without limitation, any overpayment of pay or expenses, loans made to you by the Company, or any other item identified in this Statement and/or the Employee Handbook as being repayable by you to the Company.” 9.5. There were no addition provisions relating to deductions from wages contained in the Original Contract, and no section of the Company Handbook was relied upon as relevant. 9.6. The Claimant was entitled to 23 days holiday per holiday year, in addition to specified bank / public holidays. The holiday year ran from 1 January to 31 December each year.[10]From 5 July 2021, the Claimant all work done by the Claimant for the Respondent was as a direct employee, and not as a consultant via his own company.[11]The Claimant consistently worked more than 24 hours a week for the Respondent. it was not disputed that he worked for at least 40 hours per week throughout his employment and I find that he did so. However, there was no right to additional pay pursuant to the terms of the Original Contract.[12]On 8 September 2021 the Claimant raised with Mr Scibor-Rylski that he had been working 5 plus days a week. The Claimant stated "I think we need to record the additional days so that I am able to be paid at a later date should that day arise”.[13]Mr Scibor-Rylski replied on 9 September 2021 and stated “Makes sense to me....No problem with that realisation of realities at my end....Does not need board involvement in my opinion, although we can do so if you prefer.”[14]On 16 October 2021, the Claimant emailed Mr Scibor-Rylski and Mr Cornealius, another Director of the Respondent, informing them that he had decided that he would step down as Managing Director, and perform the functions of a Finance Director only, unless the following demands were met: 1) My unpaid wages are settled immediately. 2) Start being paid regularly in full (5 days per week). 3) My contract is amended to reflect the full time work that I am doing. 4) A sales commission is paid for any contract about £70k (including the latest PFMs to China). 5) A commission of 10% to be paid as the cash comes in.[15]Board approval was required for the amendment of the Claimant's terms and conditions and in particular amendments to provisions relating to remuneration.[16]Mr Scibor-Rylski replied by email on 18 October 2021. He stated that he would discuss the Claimant's points with Mr Cornelius, but that his “first response” to the Claimant's points (in the order in which they were raised) was: 1) As FD you are best placed to know the cash flow position in the company....If you are able to settle any wages in that context, there is no problem. In a way, this point represents you asking yourself a question. 2) As 1, above.... 3) If the contract needs a codicil to reflect reality, it should be drafted and applied in a way that the FD [i.e. the Claimant] considers workable. 4) The company should be in sales mode overall and profitable technical sales should be rewarded by a scheme as you suggest. A topic for the Board to ratify, and the[n] operate....Is £70K the right threshold/criterion? The China sales should certainly be included in any process. 5) Net margin permitting, 10% seems a sensible, generous starting point. We can tune it to product streams and it would need a simple, transparent process. On the basis of the above, I suggest Approve....[17]No agreement was reached at this time in respect of commission. At most, there was an agreement to agree the basis of a commission plan (which is not capable of being a binding agreement).[18]There followed a negotiation around the terms of the Claimant’s employment. This included negotiation around the provision of a company car for the Claimant.[19]The terms of a revised contract of employment were agreed and approved by the Board on 25 October 2021 (“the Revised Contract”). The key terms relevant to the Claimant's claim are as follows: 19.1. The Claimant's employment under the Revised Contract, and continuous employment, began on 5 July 2021; 19.2. The Claimant was employed as Finance Director and agreed to take up the duties of Managing Director for an interim period of up to 12 months; 19.3. His salary was £2,400.00 per week, stated to be “based on working an average of 24 hours over 7 days per week” but “During the Intermin Managing Director period you will be paid a 40 hours per week on a pro rata basis”. Given that the Claimant was the Interim Managing Director from 5 July 2021 onwards, this provision had the effect of formally backdating the change in the Claimant’s hours. 19.4. Provision was made for provision of a company car “to a maximum value of £40,000 on a Salary Sacrifice scheme or other equivalent scheme operated by the company...” 19.5. A deductions from wages clause was included in the contract: “The Company has the right to deduct from your pay, or otherwise to require repayment by other means, any sum which you owe to the Company including, without limitation, any overpayment of pay or expenses, loans made to you by the Company, or any other item identified in this Statement and/or the Employee Handbook as being repayable by you to the Company.” 19.6. Again, there were no addition provisions relating to deductions from wages contained in the Original Contract, and no section of the Company Handbook was relied upon as relevant. 19.7. The Claimant was entitled to 23 days holiday per holiday year, in addition to specified bank / public holidays. The holiday year ran from 1 January to 31 December each year.[20]Salary sacrifice was agreed as the model through which a company car could be provided on the basis that it would not negatively impact the Respondent’s cashflow.[21]The day after the Board meeting (at which the Revised Contract was approved), the Claimant emailed Mr Scibor-Rylski, raising that he has forgotten to “get approval yesterday for my 10% commission on the sale of the 5 PFMs...” The Claimant required the Respondent’s approval to make any such payment, which the Claimant accepted in seeking approval. The commission sought by the Claimant related to what has been referred to as the “China deal”, a deal that was worked on by the previous managing director initially. The Claimant continued the work in this regard in his role as Interim Managing Director.[22]Mr Scibor-Rylski replied to say that he had added the bonus to the agenda / minutes draft. He continued “Technically I would like to define this as a discretionary board awarded sales performance bonus for profitable sales won and paid above a threshold [from outside HMI’s sales structure]. Combines incentive and reward. Will liaise with [Mr Cornelius] on this in any event. Are you happy with that approach?”.[23]The Claimant replied the same day, 26 October 2021, stating: “I don’t think it needs to be in the minutes. It is to be paid to JC Business Solutions Ltd for obvious reasons. I just need an email from you agreeing with the award of sales commission to my company”.[24]Mr Scibor-Rylski replied again at 11.53 on 26 October 2021, recognising that the Claimant was also doing the work of a Sales and Marketing Director (something that the Claimant had raised), stating that a sales commission award delivered in a “tax efficient manner” made sense and then going on to query the detail of the proposed commission payment as follows: “You have suggested a 10% bonus, to be paid to your service company (JCBS) when payments are received. I assume that our expected net margin on this order is well north of that. Paid on invoice? If this is not a discretionary payment, it must be paid against an agreement, presumably? That means that you need an email from me, confirming that an agreement exists on this matter.... I can say that an agreement is in place on principle, although the details would need to be filled in now.”[25]Again, no agreement was reached in respect of commission at this time. The details were not bottomed out. There was no further discussion about commission at this time. At this time, therefore, commission was not owed or due to the Claimant or, for the avoidance of doubt, to his company, JC Business Solutions Ltd.[26]At 13.07 on 26 October 2021, the Claimant emailed an employee in the Respondent’s finance team (who was subordinate to the Claimant) in relation to a payment of commission to the Claimant’s company. The Claimant said: “I will raise an invoice from JCBS for this. Payment to the business account is only for 10% of 65% of the total contracts value”.[27]On 29 October 2021, a payment of £23,896.60 was made by the Company to the Claimant’s company, JC Business Solutions Ltd. The payment was authorised by the Claimant, but the Respondent had not agreed or approved this payment.[28]On 4 November 2021 there was an exchange of emails between the Claimant and an employee (subordinate to the Claimant) in the finance team about the Claimant’s pay. This included discussion relating to the payment of a car allowance for the Claimant. The car allowance had been calculated as £166.80 a week, on the basis of 12,000 miles at 72.28 pence per mile over the course of a year. The Claimant approved this, and weekly car allowance payments to the Claimant commenced from 5 November 2021. However, there was no agreement from the Respondent to depart from the terms of the Claimant’s contract, which entitled him to a car on the basis of a salary sacrifice or equivalent arrangement. The Claimant was therefore not entitled to be paid a car allowance.[29]The Claimant also authorised payment to himself of unpaid wages (or back pay) of £21,760.00, being the payment for 16 hours a week since the commencement of his employment, which is the difference between 24 hours a week and the 40 hours a week provided for by the Revised Agreement.[30]Due to the financial position of the Company, the Claimant agreed to reduce his salary to the equivalent of 4 days a week for most of January 2022 and throughout February 2022.[31]The Claimant was subsequently dismissed by the Respondent, with his effective date of termination being 15 March 2022. The Claimant did not receive any pay for the period 31 January to 15 March 2022, as the Respondent determined that the Claimant had been overpaid.[32]On termination of his employment, the Claimant had seven days’ accrued annual leave outstanding, which he was not paid for, as the Respondent determined that the Claimant had been overpaid.[33]The Claimant issued proceedings on 4 April 2022 claiming that he should have been paid: 33.1. Salary throughout February 2022 (£2720 per week (based on x4 days per week) for 4 weeks) of £10,880 33.2. Salary in March 2022, for 1 week based on a five day week, of £3,400 33.3. Car allowance (£166.80 per week for 5 weeks) of £834 33.4. £714 in respect of employer's pension contributions (5% of salary) 33.5. Payment in lieu of seven days accrued holiday entitlement of £4,993.52.[34]As referred to above, the Claimant did not pursue the claim for pension contributions.
The law
[35]Sections 13(1)-(3) of the Employment Rights Act 1996 (“ERA”) provide that:(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.(2) In this section “relevant provision”, in relation to a worker’s contract, means a provision of the contract comprised – (a) in one or more written terms of the contract of which the employer has given the worker a copy on an occasion prior to the employer making the deduction in question, or (b) in one or more terms of the contract (whether express or implied and, if express, whether oral or in writing) the existence and effect, or combined effect, of which in relation to the worker the employer has notified to the worker in writing on such an occasion.(3) Where the total amount of wages paid on any occasion by an employer to a worker employed by him is less than the total amount of the wages properly payable by him to the worker on that occasion (after deductions), the amount of the deficiency shall be treated for the purposes of this Part as a deduction made by the employer from the worker’s wages on that occasion.[36]“Wages” is defined in section 27 of the ERA, the relevant provisions being as follows: (1) in relation to a worker, means any sums payable to the worker in connection with his employment, including – (a) any fee, bonus, commission, holiday pay or other emolument referrable to his employment, whether payable under his contract or otherwise, … … (3) Where any payment in the nature of a non-contractual bonus is (for any reason) made to a worker by his employer, the amount of the payment shall for the purposes of this Part – (a) be treated as wages of the worker, and (b) be treated as payable to him as such on the day on which the payment is made. (4) In this Part “gross amount”, in relation to any wages payable to a worker, means the total amount of those wages before deductions of whatever nature.[37]Payments by an employer into a pension fund on an employee’s behalf are not wages within the meaning of section 27(1) (Somerset County Council v Chambers UKEAT/0417/12/KN). At paragraph 18 of his Judgment, His Honour Judge Peter Clarke concluded: “As to the employer’s pension contributions to the superannuation fund on the claimant's behalf ordered to be paid by way of unauthorised deductions, I accept Mr Oudkerk’s submission that the Employment Judge had no jurisdiction to so order. Although it is well recognised in the European jurisprudence that entitlement to a pension is deferred pay, that does not mean that an employer’s contributions to the pension fund on behalf of an employee amount to wages. As section 27(1)(a) makes clear, wages means any sums payable to the worker in connection with his employment, it does not mean contributions paid to a pension provider on his behalf. On this footing his Wage Act claim in relation to pension contributions necessarily fails regardless of whether or not he was at the relevant times an employee entitled a membership of the scheme. For completeness I reject Mr Oudkerk’s alternative submission that this part of the claim is excluded by section 27(2)(c) of the Employment Rights Act. Pension contributions are not payments by way of a pension in connection with a worker’s retirement: the former is a payment into the scheme, the latter is a payment out.”[38]There are certain deductions from wages permitted by statute, as set out in section 14(1) of the ERA, which states: (1) Section 13 does not apply to a deduction from a worker’s wages made by the employer where the purposes of the deduction is the reimbursement of the employer in respect of – (a) an overpayment of wages, or (b) an overpayment in respect of expenses incurred by the worker in carrying out his employment, made (for any reason) by the employer to the worker.[39]Tribunals dealing with unlawful deduction claims have jurisdiction to resolve any issue necessary to decide whether a sum claimed is properly payable pursuant to section 13, including an issue as to the proper construction of the worker’s contract (Agarwal v Cardiff University and another [2018] EWCA Civ 1434). Conclusions Were the wages paid to the Claimant in respect of February and/or March 2022 less than the wages he should have been paid?
Conclusions
[40]It is not disputed that the Claimant was not paid wages for the period 31 January to 15 March 2022. The Respondent and the Claimant agree the amount of basic pay that was not paid in respect of this period as being £14,280.00 (as confirmed in paragraph 13 of the Respondent's submissions). He was therefore paid less than he ordinarily should have been paid.[41]In addition to basic pay, the Claimant claims that he should have been paid a car allowance. Where properly payable, a car allowance amounts to wages under section 27(1) of the ERA. However, as set out in my findings, there was no right for the Claimant to be paid a car allowance, whether contractual or otherwise. The Claimant though his actions accepted that arrangements regarding payments to the Claimant required Board authorisation. The Board authorised the Claimant to have a company car through a salary sacrifice or equivalent scheme, on the basis that this would not negatively impact the Respondent’s cashflow. It cannot be said that payment of a car allowance is equivalent to a salary sacrifice scheme. I accept the Respondent’s evidence and submission that a car on the basis of a salary sacrifice arrangement did not impact negatively on cashflow, whereas a car allowance did. Accordingly, the car allowance was neither “wages” within the meaning of the ERA nor due to the Claimant and he was not paid less than he should have been paid in this regard.[42]The Claimant also claims a payment in lieu of seven days’ annual leave. He did not receive any payment in lieu of annual leave. It is not disputed that the Claimant had seven days accrued annual leave outstanding as at the termination date. The value of that annual leave is disputed by the Respondent. The Claimant's calculation of a day’s pay is based on a week’s pay of £3,400 plus car allowance per week of £166.80. Having found that the car allowance was not properly payable, I conclude that any payment for annual leave should be based on basic pay only. The Respondent agrees that basic pay for these purposes if £3,400 a week but submits that each days’ pay is payable at a rate of £3,400 divided by seven. I do not accept this submission. The Claimant’s annual leave entitlement is clearly referable to a full time employee. There is no suggestion that he would have to take annual leave to have a weekend off. A day’s pay for these purposes should be worked out based on the established method of dividing a year’s pay by 260. In this case, if a week’s pay is accepted as being £3,400, a year’s pay would be £176,800 and 1/260 of that gives a figure of £680 a day. Seven day’s pay is therefore £4,760.[43]Accordingly, the amount of unpaid wages for the period to the termination date totals £19,040.00. These sums were properly payable to the Claimant as wages (subject to any lawful deductions). The deductions made by the Respondent were made from these wages and therefore section 13 of the ERA is engaged. Was any deduction permitted by section 14 of the ERA or authorised by a written term of the Claimant’s contract of employment?[44]The Claimant’s Revised Contract, entered into in advance of any deduction by the Respondent, permits deductions of “any sum which [the Claimant] owe[s] to the [Respondent] including, without limitation, any overpayment of pay or expenses...”.[45]I have found as a fact that the Claimant was not entitled to be paid a car allowance. That being the case, the payment of the car allowance amounts to an overpayment to the Claimant, whether an overpayment under section 14 of the ERA or, in accordance with the Revised Contract, under sections 13(1)(a) of the ERA. The car allowance as a minimum was paid as pay (within the meaning of the Revised Contract) and, as it should not have been paid, amounted to an overpayment. The Claimant was in receipt of a car allowance of £166.80 a week from the 5 November 2021 pay date until his last full payment of wages was made on 28 January 2022. This amounts to 13 weeks of car allowance at £166.80 a week. The total overpayment of car allowance was therefore £2,168.40. The Respondent was entitled to deduct this amount from the Claimant’s wages.[46]In relation to the payment of £21,760.00 made to the Claimant on 5 November 2021 by way of previously “unpaid wages” (or back pay, as it is referred to on the relevant pay slip), the Claimant was entitled to be paid this amount for the following reasons: 46.1. There was no challenge to the number of hours worked by the Claimant throughout his employment, and I accept that he worked 40 hours a week or more from 5 July 2021 onwards. In evidence, Mr Scibor-Rylski's objection was not that he disputed whether the Claimant had worked the hours he said he had worked, but Mr SciborRylski felt that the Claimant should have continued to defer payment for those hours given the Respondent’s then precarious financial position. 46.2. Following a demand from the Claimant for payment of unpaid wages, an agreement was subsequently agreed between the Claimant and the Respondent’s Board of Directors to amend the Claimant’s contract of employment. The Revised Contract states that the Claimant’s employment under the Revised Contract started on 5 July 2021 and that he would be paid for 40 hours a week whilst acting as Managing Director, which he was doing from 5 July 2021. The terms of the Revised Contract are clear in this regard. A plain reading entitles the Claimant to be paid for 40 hours a week from 5 July 2021 46.3. The correspondence surrounding the issue of additional hours and, subsequently, the replacement of the Original Contract with the Revised Contract further makes clear that the Claimant intended that he be paid back pay for the additional hours worked and, in my conclusion, it was therefore clear to the Board what they were being asked to agree. 46.4. The Claimant had previously been informed that as Finance Director he was able to decide when the Respondent had sufficient cashflow to settle any unpaid wages owing to the Claimant, without further approval from the Board, but in any event, as above, the basis on which the Claimant was requesting the contractual amendment was clear, and the Revised Contract accurately reflected this. 46.5. In any event, on termination of employment the amount of unpaid wages would have fallen due and should have been paid to the Claimant, had it not already been paid.[47]Accordingly, the payment of £21,760.00 by way of backpay was properly payable to the Claimant at the time it was paid, and the Respondent was not entitled to make a reduction in respect of this sum.[48]Turning to the commission / bonus payment. I have found as a fact that there was no agreement to pay commission to the Claimant or to JC Business Solutions Ltd. Whether an agreement may have been reached in the future as to the payment of commission is not relevant and therefore not something that I have to consider. The payment of £23,896.60 on 29 October 2021 should not have been paid. It was paid to JC Business Solutions Ltd at the behest of the Claimant. There is no dispute that JC Business Solutions Ltd is controlled by the Claimant.[49]However, as the payment was not paid directly to the Claimant, a determination is required as to whether the provisions of the ERA and/or the Revised Contract permit deductions to be made from direct payments to the Claimant on the basis of the commission payment having been paid to the Claimant's company.[50]In relation to the commission / bonus payment the Respondent made the following submissions: 50.1. There was no agreement in place between the Respondent and JC Business Solutions Ltd under which such a payment to that company could properly be made and no good reason why a payment should be made to a service company in respect of work that had been undertaken by the Claimant in his capacity as an employee. 50.2. There was no agreement by the Respondent’s Board of directors as to the payment of commission. An agreement in principle is not sufficient to amount to authorisation from the Board. 50.3. That it was clear at the time that the Claimant gave the instruction to make the payment to JC Business Solutions Ltd that he did not have authorisation from the Respondent's Board to raise an invoice from his service company and/or to be paid commission/bonus upon that invoice. 50.4. A non-contractual bonus, once paid, is to be treated as wages under section 27(3) of the ERA. The payment was only made to a separate legal person because that is how the Claimant chose to authorise the making of a payment to himself. It was submitted that, if the payment of such a bonus was unauthorised, it ought to be regarded as immaterial for the purposes of section 27 whether the payment was made directly to the Claimant or to a company which existed for the sole purpose of the provision of services by the Claimant. In either event, the payment would have been made on account of work undertaken by the Claimant qua worker and would properly amount to remuneration paid in respect of that work. 50.5. If the bonus payment is properly regarded as amounting to wages, any deduction in respect of that payment would properly be regarded as a deduction on account of an “overpayment of wages” within the meaning of section 14(1)(a). 50.6. If not, the Respondent submitted that it was entitled to make a deduction under the express term of the Revised Contract.[51]The Claimant made the following submissions: 51.1. The defence of set-off is not available to an unlawful deduction from wages claim, and therefore even if a lawful debt were somehow owing from the Claimant to the Respondent the Respondent is not permitted to recover lawful debts by unlawful means. 51.2. The commission / bonus payment cannot be as an overpayment of pay/wages to the Claimant when taking into account that: 51.2.1. the definition of 'wages' in the ERA covers any sums payable to the worker in connection with his employment. 51.2.2. This payment did not relate to duties undertaken by the Claimant specifically in connection with the employed role(s) he undertook for the Respondent. The payment related to something done outside of the scope of that employment. 51.2.3. It was agreed that the services were to be deemed to have been provided by the Claimant's service company and the payment in question agreed to be paid to that Company, JC Business Solutions Ltd. 51.2.4. The payment was not a payment made to the Claimant. It was made to a separate legal entity. It cannot therefore have been an overpayment of wages made to the Claimant.[52]Looking first at section 14 of the ERA, in order for an employer to be able to lawfully make a deduction in respect of overpayments to a worker, the overpayment must be one of wages. For a payment to be wages under the ERA, it must be a sum “payable to the worker in connection with his employment”.[53]The Claimant asserts that commission was payable in respect of sales, that he did not have a sales role within the Company and therefore he was able to invoice sales work through his service Company on the basis that it was separate from the roles he was employed to do. I do not accept this submission. At the material time, the Claimant was the Managing Director of the Respondent. In this role, he had overarching responsibility for the Respondent’s operations, which would include sales and the financial viability of the Company. The previous managing director had worked on the China deal. The Claimant continued with this deal in his role as Managing Director. The Claimant was working, and then paid to work, full time for the Respondent. The duties cannot meaningfully be severed from the Managing Director role, as suggested by the Claimant. Further, there was no contract between the Respondent and JC Business Solutions for the provision of sales (or similar) services.[54]I found as a fact that the Claimant worked on the China deal as an employee of the Respondent.[55]Discretionary and contractual bonuses both fall within the definition of “wages” if they are payable to the worker. The commission/bonus in this case was claimed by the Claimant in relation to work done as an employee of the Respondent. If any bonus had been due to the Claimant, it would have been payable as wages to the Claimant. In this regard, the current situation is different from the position in Chambers. As referred to above, in that case it was held that “Although it is well recognised … that entitlement to a pension is deferred pay, that does not mean that an employer’s contributions to the pension fund on behalf of an employee amount to wages. As section 27(1)(a) makes clear, wages means any sums payable to the worker in connection with his employment, it does not mean contributions paid to a pension provider on his behalf”. Employer pension contributions are not payable to the employee; they are only payable to the pension fund. Any commission due in this case was payable to the Claimant. The fact that an employee may choose for their pay to be paid to a third party does not alter the fact that the payment is payable (albeit not then paid) to the employee. On that basis, I am satisfied that the payment of £23,896.60 was an overpayment of wages within the meaning of the ERA, and that therefore a deduction from the Claimant’s wages for February and March 2022 was lawful pursuant to section 14 of the ERA.[56]In any event, I find that the payment of £23,896.60 was an overpayment of pay within the meaning of the terms of the Original and Revised Contracts. The Revised Contract was entered into prior to any deduction from wages being made by the Respondent. Looking again at the EAT’s Judgment in Chambers, the EAT was clear that whilst pension payments are not wages within the meaning of the ERA, because they are not payable to the employee but only to a third party, “it is well recognised … that entitlement to a pension is deferred pay”. The fact that employer pension contributions are paid to a third party does not prevent those contributions from being part of the employee's pay, even if the same payment does not amount to "wages” under the ERA. The Revised Contract states that the Respondent had "the right to deduct from [the Claimant's] pay … any sum which [he] owe[d] to the [Respondent] including, without limitation, any overpayment of pay”. The Revised Contract does not require that the overpayment of pay be made direct to the Claimant in order for the deduction to be authorised under the contract (and for completeness, neither did the Original Contract). Any payment of commission in relation to the China deal was pay for the Claimant, and any overpayment of commission was an overpayment of pay for the Claimant. The Claimant choosing to divert that payment elsewhere does not, in my conclusion, prevent that from being pay within the meaning of the Revised Contract.[57]Accordingly, I am also satisfied that the payment of £23,896.60 was an overpayment of pay within the meaning of the Revised Contract, that in entering into the Revised Contract the Claimant signified his agreement or consent to the making of deductions in respect of overpayments of pay, and that he did so prior to the deduction being made, and that therefore a deduction from the Claimant’s wages for February and March 2022 was lawful pursuant to section 13(1)(a) of the ERA, the provisions of the Revised Contract falling within the exception set out in that section.[58]The Respondent was therefore entitled to make deductions from the Claimant’s wages of £26,065 (being the sum of the £2,168.40 car allowance payments and the £23,896.60 purported bonus payment). The amount deducted from the Claimant's wages was £19,040.00, which was less than the amount of overpayments made to the Claimant.[59]The Claimant's claim for unlawful deductions from wages therefore fails and is dismissed.