Constructive dismissal after unlawful wage deductions: a case of employer misconduct
A former drainage operative was constructively unfairly dismissed after his employer made unlawful deductions from his wages and failed to pay holiday pay. The tribunal awarded £14,365.57.
1 min read · Last updated 18 May 2026
Case details
Key facts
- The claimant was employed by the respondent as a drainage operative.
- The claimant resigned in response to the respondent's conduct, claiming constructive dismissal.
- The respondent made unlawful deductions from the claimant's wages, including for security charges, PPE, and insurance excess.
- The respondent failed to pay the claimant's holiday entitlement.
- The respondent breached the contract by failing to provide notice pay.
- The tribunal found the claimant was unfairly dismissed and awarded compensation.
Timeline
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Start of deduction period
The respondent began making deductions from the claimant's wages, which continued until 27 December 2020.
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Claim presented
The claimant presented his claim to the employment tribunal.
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Hearing
The substantive hearing took place at Manchester Employment Tribunal before Employment Judge Cline.
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Judgment issued
The tribunal issued its judgment, finding the claimant was unfairly dismissed and awarding various sums.
The legal issue
The tribunal had to decide whether the employer's actions—making deductions from wages for security, PPE, and insurance excess, and failing to pay holiday pay—constituted a fundamental breach of contract that justified the employee's resignation and amounted to constructive unfair dismissal.
The outcome
The tribunal found that the employee was constructively unfairly dismissed. The employer had made unlawful deductions from wages, failed to pay holiday entitlement, and breached the contract by not providing notice pay.
Compensation breakdown:
- Basic award: £960
- Loss of statutory rights: £500
- Notice pay: £1,440
- Unlawful deductions: £10,185.57 (including security charge, wage deductions, damage to equipment, PPE, insurance excess, underpayment of wages, and unlawfully deducted breaks)
- Holiday pay: £870
- Preparation time order: £410
- Total: £14,365.57
Lessons & takeaways
- Employers must have clear written consent or a contractual right before making deductions from wages; otherwise, deductions are likely unlawful.
- Constructive dismissal claims can succeed when an employer's conduct, such as repeated unlawful deductions, amounts to a fundamental breach of contract.
- Employees who resign in response to a serious breach should ensure they do so promptly and without delay to preserve their claim.
- Representing yourself at tribunal is possible, but having a clear record of deductions and communications strengthens your case.
When deductions go too far
This case shows how a pattern of unauthorised deductions from wages can amount to a fundamental breach of contract, giving an employee the right to resign and claim constructive unfair dismissal. The former employee, a drainage operative, faced deductions for security charges, PPE, and insurance excess—none of which he had agreed to in writing. The employer also failed to pay holiday pay and notice pay.
The tribunal found that these actions, taken together, destroyed the trust and confidence required in the employment relationship. The employee resigned in response, and the tribunal upheld his claim for constructive dismissal.
What the employer could have done differently
Clearway Drainage Systems Limited could have avoided this outcome by ensuring all deductions were authorised in the employment contract or by obtaining the employee's written consent. They should also have paid holiday pay and notice pay as required by law. The tribunal noted that the employer's conduct was not just a minor breach but a series of unlawful acts that justified the employee's resignation.
Why this matters
For employees, this case is a reminder that unlawful deductions are not just a wage issue—they can form the basis of a constructive dismissal claim if they are serious enough. For employers, it highlights the importance of following the rules on deductions and paying all statutory entitlements. The total award of £14,365.57 reflects not only the unpaid wages but also compensation for the dismissal itself.
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