Claimant v Arena Lounge UK Limited
Outcome
Individual claims
The tribunal found the claimant was not constructively dismissed. The respondent was contractually entitled to deduct unpaid loan of £10,000 from salary. The claimant walked out on 4 February 2024 without notice intending to force the respondent to waive the loan. There was no repudiatory breach by the employer.
The tribunal found no breach of contract. The employment contract expressly permitted the respondent to deduct outstanding loans from the claimant's salary. The claimant had been loaned £10,000 in January 2023 and had not repaid it despite it being 9 months overdue. Deduction was contractually permissible.
The tribunal found the claimant was entitled to unpaid holiday pay for the 2023-2024 holiday year under the Working Time Regulations 1998. The claimant had not taken any holiday during this period and had not been paid in lieu. The amount is to be determined at the remedy hearing.
Facts
The claimant was employed as Head Chef at an Indian restaurant from August 2020 to February 2024. In January 2023, he borrowed £10,000 from the respondent, agreeing to repay within 3 months. By February 2024, the loan remained unpaid despite being 9 months overdue. The respondent withheld the claimant's January 2024 salary, relying on a contractual right to deduct outstanding loans. The claimant walked out on 4 February 2024 without notice, hoping to force the respondent to waive the loan. He had not taken any holiday in 2023 or 2024 and had not been paid holiday pay.
Decision
The tribunal dismissed the constructive dismissal and breach of contract claims, finding the respondent was contractually entitled to deduct the unpaid loan from the claimant's salary. The claimant walked out voluntarily; there was no repudiatory breach. The holiday pay claim succeeded under the Working Time Regulations, with quantum to be determined at a remedy hearing.
Practical note
A clear contractual clause permitting deduction of outstanding loans from salary will enable an employer to defend a constructive dismissal claim based on withholding pay, even where the employee walks out in protest at non-payment.
Legal authorities cited
Statutes
Case details
- Case number
- 3305177/2024
- Decision date
- 7 August 2025
- Hearing type
- full merits
- Hearing days
- 2
- Classification
- contested
Respondent
- Sector
- hospitality
- Represented
- Yes
- Rep type
- lay rep
Employment details
- Role
- Head Chef
- Service
- 3 years
Claimant representation
- Represented
- No