Umbrella payslip decision at the Employment Tribunal

• In the case of Mr S Zajota v Umbrella Company Ltd, the Employment Tribunal (‘ET’) dismissed the claim for unauthorised deduction of wages in relation to the umbrella calculation on a payslip
• The Claimant stated there shouldn’t have been deductions from his wages relating to Employer’s National Insurance (‘NIC’) and the Apprenticeship Levy
• The Claimant was employed by Umbrella Company Ltd during periods of work on two assignments (June to September 2021 and January 2022 up to the ET hearing). The Claimant signed the terms and conditions of employment for the first assignment which stated the Claimant was entitled to the National Minimum wage plus ‘additional pay’
• The Claimant also had a take home pay illustration and was provided with payslips and reconciliation statements in respect of the work he did. The reconciliation statements show the basic pay at the relevant assignment rate minus the company costs (such as company margin, employer’s NIC, holiday provision and Apprenticeship Levy
• The ET concluded that the assignment rate, paid to the Respondent by their client, is not the same as the Claimant’s wages. The Claimant’s wages are the gross salary he received once relevant deductions have been taken from the assignment rate
• Therefore, unauthorised deductions were not made from the Claimant’s wages in accordance with s27 of the Employment Rights Act 1996

Aspire comment

This is a common question posed by temporary workers. The Respondent in this case seems to have been transparent in both the contract and reconciliation statements and so, the ET came to the correct conclusion.

Transparency seems to be a recurring theme in the temporary labour industry currently and this case reconfirms the need for itemised pay statements.

Interestingly, the case was listed for a preliminary hearing first to determine who was the correct Respondent as the Claimant had made claims against both the agency and the contracting intermediary in the supply chain. This is extremely common for ET claims in the temporary labour sector. It was decided that the correct Respondent was the contracting intermediary as the Claimant’s employer.

Read the full case here.