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Late salary payment - what can I do?

Late salary payment what can I do

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We were due to be paid, as every month, on the 24th of this month - this date and frequency are specified in our employment contracts. Payment was 3 days late last month and again, payment for this month is still outstanding. Apparently this is because our MD 'forgot' to do it. [The company is small and us currently recruiting new office admin]. The payment now won't be made until the MD, who lives in Germany, gets back to the UK later this week so payments will be at least a week late, possibly longer.

Not surprisingly, all employees finances are based on being paid on a specific date each month, and the majority of us will incurr charges (or forfeit interest on savings) and risk rent/mortgage payments not being made, which will in turn affect our credit history. This does not appear to concern the MD, who merely thinks it "unfortunate".

What is our legal position? Not just in relation to the delayed payment but specifically the company's liability if we incurr charges/etc. Employment contracts merely state date we are to be paid, otherwise they are silent on this.

Many thanks

Trudy

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By Mark Alcroft
04th Oct 2005 11:11

If your contract specifies payment on a specific date and the Company fails to pay you on that date, and you incur costs as a result, perhaps bank charges as a result of going overdrawn, then you have a potential breach of contract claim to recover those costs as damages.

If the failure to pay is a genuine error, or is caused by a computer failure (which does happen), any decent employer should indemnify you against any costs you might incur as a result of the late payment. This is certainly the approach I've taken on the (very rare) occasions when it has happened.

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By Nkellingley
26th Sep 2005 19:27

I think Keith makes some good points here and I'd agree with him that constructive dismissal might be hard to prove here but certainly not entirely out of the ball park, particularly if it happens month on month and you've made your feelings known about the impact that this has on you and your colleagues financially.

I'd also agree that this sounds like a business in trouble - late paying of staff is a real indicator of issues regarding cash flow. Why don't they pay you by BACS? Which your MD could sign off by the accountant faxing them the sheet and then waiting for a signed fax return.

However if the date of payment is specified in your employment contract, I do think you could firstly claim for breach of contract (not much in the way of compensation here though). And secondly I think a smalls claims court would be happy to award you your financial losses that incurred directly from this late payment if the date is contractually specified. However taking either of these actions would almost certainly result in the end of your employment so take it slowly and exhaust all other avenues first.

Good luck.

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By kluxon
26th Sep 2005 16:31

Trudy

I sympathise with you and your colleagues’ predicament.

The legal situation, however, may not be the best route for you to go down. The issue of pay is central to the employment relationship, in fact the existence or absence of pay is one of the crucial tests of employment. However your situation is around the lateness or casualness of payment rather than its total absence.

A key employment law case was Cantor Fitzgerald which said that pay was indeed central. However in this case the CofA distinguished between an employer's failure to pay, or delay in paying, and its deliberate refusal to do so. The later would amount to a fundamental breech of contract and a possible claim to an employment tribunal of constructive dismissal. The former could amount to the same but it was not so clear cut. The actions and intentions of the parties would need to be looked at – an interesting aside involves the choice of words where by in the Bamber V Baker case the managers use of the term “you will get paid when I choose” lead to a fundamental breech.

So, the long and the short of this is….you may have a claim for constructive dismissal. You would need to take this thru the ET after potentially resigning. You could well win but it would be a gamble.

A better course of action from my point of view would be to collectively raise this issue with your GM. You could do this formally thru a grievance or informally face-2-face. Let him know the issues it causes and the affect it is having on you. Stress the distress and that the certainty of payment is vital. Highlight the real costs that you have incurred as a result.

By all means ask for recompense and be prepared to negotiate. If the GM is at all reasonable he will listen and attempt to do something (may not meet all costs but should meet some). Don’t think I can see a legal right, however, for recompense. If he is unreasonable or salaries don’t materialise at end of week then consider the constructive dismissal options above.

One other point – not wishing to run a scare story – but are you sure company is financially sound? In my experience late paying is only rarely because of an admin mistake (and then maybe only the first time). It is often the first sign of a real cash flow crisis – for instance why does the MD need to be in UK to release the payments? Sounds like it may be a delaying tactic. You may need to address this with the MD to ensure that everything is ok – as unfortunately it is often the staff who are the last to know.

Good luck and would be interested to hear how things go.

keith

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By litoo0
15th Jan 2018 12:05

I agree with Mark Alcroft that you should claim the costs they caused to you, as the due date is specified in the contract. then it makes sense that you claim everything you pay because of the delay of payments

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Replying to litoo0:
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By clive boorman
18th Jan 2018 14:20

Hi there, sorry to but in to your thread. Not sure if you realise this is a post from 2005?

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