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Contracts

Q: Employer contracts/refusal to pay owed wages

I handed in my notice as production secretary for a company after three months in the job. I did not sign my contract because my departure made it invalid. Now, four weeks after I left, my employer refuses to give me my last pay cheque unless I sign and return the contract. Why must I do so when I have been replaced? I was taxed on PAYE and I am owed wages.

A: Your employer is out of order and there is no need for you to sign the contract in order to obtain payment of the amount due to you. Indeed, subject to seeing the contract concerned, I would not advise you to do so, since it may contain terms which would rebound adversely upon you.

There is no doubt at all that, since you worked in the job for three months, you are entitled to be paid in full for the period of your employment, whether you had a written contract signed by both parties or not. You were obviously working with your employer's full knowledge and consent on the basis of an oral contract of some kind.

Whether or not your employer may have a legitimate counterclaim against you which could be offset against what he owes you for work done is open to question, and depends on a number of factors, such as, for example, whether or not you gave the correct period of notice and whether in all other respects you fulfilled your obligations under the oral contract. The terms of the oral contract are a matter of evidence and of the inference to be drawn by a court from the conduct of the respective parties and the surrounding circumstances. For example, you may have orally agreed the terms of the written contract but simply omitted to sign it, in which case the written terms would still apply. Alternatively you may have refused to sign the written terms because you objected to something contained in them, in which event a court might possibly infer from the circumstances that all the terms other than the particular ones to which you objected were agreed, and that you worked for three months on that basis.

Another possibility is that your employer may seek to withhold payment on the ground that you were incompetent or failed in some other way to carry out your duties properly, but in that case he will have to prove it on the balance of probability, and show what damage he suffered by way of counterclaim.

The best thing to do is to have your solicitor write him a letter demanding payment on threat of court proceedings in default. That will at least draw him out in respect of any potential counterclaim. Your mere failure to sign the written contract is not, of itself, sufficient excuse for withholding payment. Your employer is, of course, entitled to deduct PAYE tax and NHI contributions in the normal way.

First published July 2000