EMPLOYMENT APPEALS TRIBUNAL
APPEAL OF: CASE NOS.
B & Q Ireland Limited, appellant
against the decision of the Rights Commissioner in the case of:
Sharon Barrett, respondent PW478/13
PAYMENT OF WAGES ACT, 1991
I certify that the Tribunal
(Division of Tribunal)
Chairman: Ms N. O'Carroll-Kelly BL
Members: Mr F. Cunneen
Ms M. Mulcahy
heard this appeal at Dublin on 17th April 2014.
Appellant: Mr Marcus Dowling BL, instructed by Ms Louise Harrison, William Fry,
Solicitors, Fitzwilton House, Wilton Place, Dublin 2
Respondent: In person
This case came before the Tribunal by way of the employer (the appellant) appealing against the decision of the Rights Commissioner under the Payment of Wages Act, 1991 reference r-127063-pw-12/JT).
The decision of the Tribunal was as follows:-
The Tribunal has carefully considered the evidence, the documentation produced and the legal submissions made during the hearing of this matter.
Two issues came before the Tribunal for consideration, the removal of the “Winter/Summer Bonus” and the removal of the “Zone Allowance”.
On the 1st April, 2012 the respondents were notified that “with effect from the 1st April, 2012, you will no longer receive the Summer/Winter Bonus traditionally paid in June and November of each year”. Each employee was asked to sign a letter “to confirm receipt of the notification of the amendment”. It is clear from the letter that it is not a letter seeking consent to the amendment as was argued by the appellant. It merely seeks acknowledgement of receipt of the amendment to the terms and conditions of employment. From the evidence adduced it would seem that the contracts of employment differed slightly in relation to the point at issue. One set of contracts stated “...may amend or vary your terms of employment from time to time and these variations or amendments will be posted on their staff notice board if the change is minor or in writing if the change is more substantial.” The other set of contracts stated “Details of the other terms and conditions employment are given in the Employee Handbook. Any changes to the above details will be notified to you directly”. There is one consistency between those two contract clauses and it is set out in the Employee handbook, wherein it states in bold “all bonus schemes are discretionary and are subject to scheme rules. They may be reviewed or withdrawn at any time”. That clause is clear, unequivocal and incapable of any other interpretation.
Section 5 (1) (b) of the Payment of Wages Act states:
“ An Employer shall not make a deduction from the wages of an employee unless (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.”
If the respondents were not content with the appellant retaining the power to unilaterally review or withdraw the allowance, they should not have entered into such a contract.
The deduction complies with the provisions of Section 5 (1) (b) and therefore the Tribunal upsets the Rights Commissioner Recommendation with regard to the winter and summer bonus.
The definition of wages in the Payment of Wages Act 1991 states :-
“ In relation to an employee, means any sums payable to the employee by the employer in connection with his employment, including-
(a) Any fee, or commission , or any holiday, sick or maternity pay, or any other emolument, referable to his employment, whether payable under his contract of employment or otherwise, and
(b) Any sum payable to the employee upon termination by the employer of his contract of employment without his having given to the employee the appropriate prior notice of the termination, being a sum paid in lieu of the giving of such notice.
Provided however that the following payments shall not regard as wages for the purposes of this definition:
(i) Any payment in respect of expenses incurred by the employee in carrying out his employment.
The Tribunal must firstly decide whether or not the allowance is remuneration properly payable, ie does it form part of the “Wages”.
The zone allowance is only applicable to those working in the Dublin stores. As with the winter/summer bonuses the contracts differ slightly. The earlier contracts set out the zone allowance in the salary section of the contract. “Your hourly rate will be €.... with a 41 cent per hour zone allowance. This amount will increase to €... per hour with a 41 cent allowance after your induction/training...” The later contracts set it out in the “allowance section”, a distinct and separate section to the salary section of the contract. The respondents argued that the 41 cent per hour allowance was payable as part of their basic pay/salary. The appellant stated that it did not form part of the basic pay and that in any event the contract of employment allowed for variations in rates of pay dependent on company performance and market conditions, “ your salary will be determined initially by our pay scale and bands and thereafter on individual and Company performance and in conjunction with external markets”. It is noteworthy that the earlier contracts of employment use the word “with” a 41 p/h zone allowance thus separating it from the basic salary. The later contracts set out the zone allowance in the allowance section, thus separating it from the hourly rate. Furthermore, employees of the appellant, doing like work, both inside and outside of the Dublin area are paid the same basic salary. The only difference in pay was that those inside the Dublin area got an allowance to compensate them for working in that area. There can be no doubt that the allowance paid was a separate and distinct payment from that of the salary and had a separate and distinct purpose. Wages are paid in consideration of work carried out. Zone allowances were paid as a form of compensation for working in a particular area and therefore comes under the umbrella of Section 1(1) (i).
Reference was made to a letter dated the 29th January, 2003 wherein it stated “ I am pleased to advise you that from February 1st, 2003 you will receive a 5% increase to your hourly earnings in the form of a Zone Allowance ( 41 cents per hour) This is part of our annual wage review that maintains the company’s rates of pay as competitive in the market. The zone allowance will be shown as a separate line on your payslip. This allowance will be paid through periods of authorised absence, holidays and of any additional hours worked. The allowance will be reviewed, but not removed or reduced.”
The Tribunal notes that the 5% increase was never maintained and therefore there must have been some amendment to the content of the letter. In any event the content of the letter does not form part of the contractual terms.
The removal of the zone allowance was done in good faith as an attempt to save the company. The company was experiencing heavy losses and in fact when it sought the protection of the Court in May, 2013 was, as is necessary for the appointment of an Examiner, insolvent. Whilst that factual situation has no bearing on the company’s contractual obligations to its employees it is something the Tribunal can keep in mind.
This case has striking similarities to the Michael Mc Kenzie and the Permanent Defence Force other ranks Representative Association V Minister for Finance, Minister for Defence, Ireland and Attorney General 22 E.L.R 109. The Tribunal finds that the Payment of Wages Act, 1991 has no application in the circumstance of this case. The removal of the allowance amounts to a reduction in the allowance, albeit a 100% reduction, and is not a deduction from the wages payable.
The Tribunal therefore upsets the Rights Commissioner’s Recommendation under the Payment of Wages Act, 1991.
Sealed with the Seal of the
Employment Appeals Tribunal