Senior manager wins claim for unpaid wages and holiday pay against community interest company
A senior manager who was not paid for five months and then underpaid for six more has won her claim for unauthorised deductions. The tribunal found she was an employee from March 2021 and entitled to full pay.
2 min read · Last updated 18 May 2026
Case details
- #unpaid-wages
- #holiday-pay
- #deferred-payment
- #start-date-dispute
- #cash-flow-difficulties
Key facts
- The claimant's employment with the Second Respondent started on 1 March 2021.
- The agreed gross monthly salary was £2,500.
- The claimant was not paid from March to July 2021 due to cash flow issues.
- The claimant was paid £2,000 net per month from August 2021 to January 2022.
- The claimant was dismissed on 28 February 2022 and received no final pay.
- The claimant took 15 days annual leave out of an entitlement of 22.4 days.
Timeline
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Discussion about role
The claimant was asked to become a Director and senior manager of the Second Respondent.
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Employment started
The claimant's employment with the Second Respondent began, with a deferred salary of £2,500 gross per month.
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First payslip issued
A payslip dated 1 April 2021 was issued showing a gross payment of £3,353.63, though no actual payment was made.
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First payment received
The claimant received her first payment of £2,000 net for August 2021.
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Dismissal
The claimant was dismissed with immediate effect and informed she would receive one week's pay in lieu of notice.
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ACAS early conciliation
The claimant notified ACAS of a potential claim.
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ACAS certificate issued
The ACAS Early Conciliation Certificate was issued.
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Claim presented
The claim was presented to the Employment Tribunal.
The legal issue
The tribunal had to decide whether the claimant was an employee from March or August 2021, and whether the respondent had made unauthorised deductions from wages and holiday pay.
The outcome
The tribunal found in favour of the claimant on all heads of claim.
- The claimant's employment started on 1 March 2021, not August as the respondent argued.
- The respondent made unauthorised deductions by failing to pay wages from March to July 2021 (£12,500), paying a shortfall of £500 per month from August 2021 to January 2022 (£3,000), not paying wages for February 2022 (£2,269), and not paying accrued holiday pay on termination (£1,812.50).
- The total amount of deductions was not specified in the judgment but the claimant's claims totalled £19,581.50.
Lessons & takeaways
- Keep clear records of your start date and any agreements about deferred salary.
- If your employer cites cash flow problems as a reason not to pay, you may still be entitled to full wages.
- Holiday pay accrues from day one and must be paid on termination, even if you have taken less than your full entitlement.
- A payslip showing a payment does not mean the money was actually paid – check your bank statements.
When 'we'll pay you later' becomes an unlawful deduction
This case shows what can happen when a small organisation promises to pay an employee but then fails to do so due to cash flow difficulties. The claimant, a senior manager, agreed to a deferred salary arrangement with the second respondent, a community interest company. She worked from March 2021 but received no pay for the first five months. From August 2021 she was paid £2,000 net per month instead of the agreed £2,500 gross. She was dismissed in February 2022 without receiving her final month's pay or holiday pay.
The respondent argued that the claimant's employment did not start until August 2021 and that any shortfall was accounted for in a final payment. However, the tribunal preferred the claimant's evidence, supported by witness testimony and documentation including a payslip dated April 2021 and emails discussing her salary. The tribunal found that the respondent's CEO had given inconsistent evidence and that the claimant's account was more credible.
What the respondent could have done differently
The respondent could have avoided this claim by paying the agreed salary from the start, or at least by being transparent about the financial situation and agreeing a formal deferral in writing. Instead, the respondent issued a payslip showing a payment that was never made, which undermined its credibility. The tribunal also noted that the respondent's CEO claimed to have taken instructions from the claimant as Chair of Trustees, but then disputed her start date – a contradiction that weakened the respondent's case.
Why this matters for similar claims
This case is a reminder that employment status and start dates are determined by the reality of the working relationship, not by what the employer later claims. It also confirms that holiday pay accrues from the first day of employment and must be paid on termination, even if the employee has taken less than their full entitlement. For employees in small organisations or start-ups, agreeing to deferred pay can be risky – if the business struggles, the employee may be left without wages and have to bring a tribunal claim to recover them.
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