PWD2321

1. Appeal of Adjudication Officer Decision No(S) ADJ-00040138 CA-00051417-001

BACKGROUND:

2. This is an appeal of an Adjudication Officer’s Decision made pursuant to Section 7(1) of the Payment of Wages Act, 1991. The appeal was heard by the Labour Court on 24 August 2023 in accordance with Section 44 of the Workplace Relations Act, 2015. The following is the Court's Determination:-

DETERMINATION:

This matter comes before the Court as an appeal by Danijel Jancikic (the Appellant) against a decision of an Adjudication Officer in his complaint made under the Payment of Wages Act, 1991 (the Act) against his former employer, Tifco Limited, (the Respondent).

The Adjudication Officer decided that the complaint of the Complainant was not well founded.

Background.

A bonus scheme was in place in the employment providing for payment to employees at the conclusion of a contract of the Respondent with a customer. That bonus arrangement was conveyed to employees by the Respondent in November 2021.

On 28th January 2022 the terms of the bonus payment were communicated by letter to all employees including the Appellant. That letter included a provision that

• “if you leave employment before the end of the contract, you will not receive the 10% bonus or the subsequent 5% bonus”

Law applicable to the within complaint

The Act at Section 5(1) provides as follows:

• 5.(1) An employer shall not make a deduction from the wages of an employee (or receive any payment from an employee) unless—
  • (a) the deduction (or payment) is required or authorised to be made by virtue of any statute or any instrument made under statute,

    (b) the deduction (or payment) is required or authorised to be made by virtue of a term of the employee's contract of employment included in the contract before, and in force at the time of, the deduction or payment, or

    (c) in the case of a deduction, the employee has given his prior consent in writing to it.

• 5(6) Where
  • • (a) the total amount of any wages that are paid on any occasion by an employer to an employee is less than the total amount of wages that is properly payable by him to the employee on that occasion (after making any deductions therefrom that fall to be made and are in accordance with this Act), or

      (b) none of the wages that are properly payable to an employee by an employer on any occasion (after making any such deductions as aforesaid) are paid to the employee,

    then, except in so far as the deficiency or non-payment is attributable to an error of computation, the amount of the deficiency or non-payment shall be treated as a deduction made by the employer from the wages of the employee on the occasion.
    
    

The Appellant submitted that he was entitled to receive a bonus of €1,600 on 30^th June 2022. He submitted that the failure of the Respondent to pay him a bonus in that amount on that date amounted to a deduction within the meaning of the Act.

He submitted that he had given notice of the termination of his employment on 3^rd June 2022 specifying that his employment would terminate on 17^th June 2022.

Whereas he accepted that only those workers in employment on 30^th June 2022 were entitled to receive a bonus payment on that date he submitted that he had agreed with a manager of the Respondent that he could ‘bridge the gap’ between the date of termination of his employment and 30^th June 2022 by reference to annual leave outstanding as owing to him on 17^th June 2022. He submitted that this agreement had effect notwithstanding he had received payment in respect of outstanding annual leave entitlement no later than 23^rd June 2022.

The Appellant’s representative clarified to the Court that she would not be calling witness evidence on behalf of the Appellant.

Summary of the submission of the Respondent

The Respondent submitted that only persons in employment on 30^th June 2022 were entitled to payment of a bonus on that date. This condition of payment had been explicitly conveyed to the Appellant on introduction of the bonus scheme in November 2021 and in writing in January and March 2022. No deduction from the wages of the Appellant took place on 30^th June 2022 as alleged.

The Appellant gave notice in accordance with the terms of his contract of employment that his employment would terminate on 17^th June 2022. No agreement was ever reached with any member of the management of the Respondent to alter that date or to ‘bridge the gap’ between that date and 30^th June 2022 through any arrangement as regards outstanding annual leave owing to the Appellant at 17^th June 2022.

Payment in accordance with the terms of the Organisation of Working Time Act, 1997 in respect of all outstanding annual leave due to an employee on cesser of employment was made to the Appellant on termination of his employment.

The Respondent clarified to the Court that it would not proffer witness testimony.

Discussion and conclusion

In Marek Balans v Tesco Ireland Limited [2020] IEHC 55 Finnegan J. considered Section 5 of the Act as follows:

• Section 5 of the Act of 1991 prohibits the making of deductions from wages save in certain circumstances. Section 5(6) provides that where the total amount of any wages that are paid on any occasion by an employer to an employee is less than the total amount of wages that is properly payable by him to the employee, then, except insofar as the deficiency or non – payment is attributable to an error of computation, the amount of the deficiency or non – payment should be treated as a deduction made by the employer from the wages of the employee on the occasion.

  Central to the court's analysis must be the concepts of wages properly payable and the circumstances in which, if there is a deficiency in respect of those such payments, it arose as a result of an error of computation.

  The provisions of s. 5(6) of the Act of 1991 were considered by Finnegan P. in Dunnes Stores (Cornelscourt) Limited v. Lacey [2007] 1 I.R. 478. A Rights Commissioner had found in favour of the respondents holding that the cessation of service pay amounted to an unlawful deduction, which was upheld by the EAT. It was argued that the EAT should address the question of remuneration properly payable to an employee before considering the question of a deduction or whether a deduction was unlawful. Finnegan P. concluded at p. 482:-

  • “I am satisfied upon careful perusal of the documents relied upon by the respondents that the same cannot represent the agreement or an acknowledgement of the agreement contended for but rather contain a clear denial of the existence of any such agreement. No other evidence of an agreement was proffered. In these circumstances I am satisfied that the Employment Appeals Tribunal erred in law in failing to address the question of the remuneration properly payable to the respondents, such a determination being essential to the making by it of a determination. Insofar as a finding is implicit in the determination of the Employment Appeals Tribunal that the appellant agreed to pay to the respondents service pay and a long service increment, then such finding was made without evidence and indeed in the face of the evidence: I am satisfied that there has been no deduction of pay from the respondents within the terms of the Act of 1991 but rather their remuneration has been unilaterally increased by the appellant making a payment which recognises their long service in excess of that which was payable prior to the 18th September, 2002. In either case there has been an error or law. Accordingly I allow the appeal.”
  This decision supports the proposition that the first matter which should be addressed by the Labour Court is to determine what wages are properly payable under the contract.

It is accepted by both parties before the Court in the within appeal that payment of the bonus at issue was due to eligible employees on 30^th June 2022 and that it was a condition of payment of that bonus on that date that the worker be in the employment of the Respondent on that date.

Both parties accepted that a letter written by the Respondent to the workers in the employment in January 2022 setting out this condition of payment was received by the Appellant and that the terms set out in that letter were the terms governing payment of the bonus. Both parties also accept that a further letter of March 2022 made clear that a bonus payment would be made on 30^th June 2022 and that it was a condition of that bonus that any beneficiary must be in the employment of the Respondent on that date.

It is accepted by both parties that the worker gave two weeks’ written notice of the termination of his employment on 3^rd June 2022 and that he specified therein that his employment would terminate on 17^th June 2022. It is accepted by both parties that the worker’s contract of employment required him to provide two weeks’ notice of termination of employment.

It is accepted by both parties that all of the Appellant’s outstanding annual leave entitlements on cesser of his employment were paid to him by the employer in accordance with the requirements of the Organisation of Working time Act, 1997 at Section 23 no later than 23^rd June 2022.

It is also accepted by both parties that, notwithstanding any contention or disputation as to whether it had actually terminated on the 17^th June 2022, the employment of the worker had certainly terminated no later than 23rd June 2022.

The Court concludes that the Appellant held no contractual or other entitlement to be paid a bonus payment by the Respondent on 30^th June 2022. There is no submission before the Court that wages of any other amount were properly payable to the Appellant on that date.

The Court therefore concludes that the amount of wages properly payable to the Appellant on 30^th June 2022 was nil. There is no dispute that the amount of wages actually paid to him on that date was nil.

The Court therefore concludes that the wages properly payable to the Appellant at the material time were equal to the wages which were in fact paid to him at that time.

In those circumstances, no deduction within the meaning of the Act has been made from the wages of the Appellant as contended by him.

The Court must consequently find that the complaint of the Appellant is not well founded.

Determination

For the reasons set out above the Court determines that the within appeal must fail.

The decision of the Adjudication Officer is affirmed.

The Court so decides.

	Signed on behalf of the Labour Court
	Kevin Foley
CO'R	______________________
5 September 2023	Chairman