Paying your employees

If you have an employee who does not have a bank account, and insists on being paid in cash, what are your options?

As a first step, speak to the employee and ascertain why he cannot open a bank account. It might be that he cannot because for example, he has county court judgments against him or perhaps he can’t read and write.

This is what Lucy Rees, associate solicitor at Leicestershire law firm Harvey Ingram Owston, advises.

“If he is able to open a bank account I recommend that you try and agree a timescale within which he will open an account.

If he refuses to open an account and you withhold his wages he is likely to bring a claim for unlawful deductions from wages and breach of contract in an employment tribunal.

He is likely to succeed in this claim and you will be ordered to pay him any outstanding wages,” she continues.

In addition, points out Rees, it is possible that he might resign and claim constructive dismissal.

He would argue that your conduct has fundamentally breached the implied relationship of mutual trust and confidence and as such he has been forced to resign.

The amount of time he has spent in your employment is also a factor.

Rees explains that if he has less than one year’s continuity of employment (including up to the end of his notice period) he will not have the right to bring a claim for unfair dismissal.

Therefore his only remedy would be to sue you for his notice pay which would be either his contractual notice period or the statutory minimum notice period of one week, whichever is the longer.

“If he has more than one year’s service he has the right not to be unfairly dismissed.

Therefore, in addition to a claim for his notice pay he could claim unfair dismissal.

To defend a claim for unfair dismissal you would have to show that you terminated his employment for one of the five statutory fair reasons, that is, some other substantial reason and that you acted reasonably in all the circumstances of the case,” explains Rees.

She adds that unless you could show substantial reasons why it was becoming impossible for you to pay him in cash, she anticipates that the tribunal would determine that his dismissal was unfair and then award him a basic award based on his age and length of service and loss of earnings.

“Therefore, I suggest that if possible you come to an amicable agreement with him,” concludes Rees.


Ben Lobel

Ben Lobel

Ben Lobel was the editor of from 2010 to 2018. He specialises in writing for start-up and scale-up companies in the areas of finance, marketing and HR.

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