EMPLOYMENT APPEALS TRIBUNAL
APPEAL(S) OF: CASE NO.
Steffan Chmiel,
- appellant 1 PW725/2012
TE253/2012
Dariusz Szewczyk,
– appellant 2 PW726/2012
TE254/2012
Krzystof Gogolok,
- appellant 3 PW727/2012
TE255/2012
against the recommendation of the Rights Commissioner in the case of:
Concast Precast Limited
- respondent
Under
PAYMENT OF WAGES ACT, 1991
TERMS OF EMPLOYMENT (INFORMATION) ACT, 1994 AND 2001
I certify that the Tribunal
(Division of Tribunal)
Chairman: Ms Niamh O’Carroll Kelly BL
Members: Mr. J. Horan
Mr. P. Woods
heard this appeal at Davitt House on 14th January, 2014
Representation:
Appellant(s): Mr. Richard Grogan, Richard Grogan & Associates, Solicitors,
16 & 17 College Green, Dublin 2
Respondent(s): Mr. John Maguire, Irish Concrete Federation,
8 Newlands Business Park, Naas Road, Clondalkin, Dublin 22
This case came before the Tribunal by way of the employees appealing the decision of the Rights Commissioner (Ref – R-097647-TE-10/EOS) under the Terms of Employment (Information) Acts, 1994 to 2001 and (Ref – R-097651-PW-10/EOS) under the Payment of Wages Act 1991.
Determination:
The Tribunal has carefully considered this matter. The issue the Tribunal has to decide on is whether or not the appellants are entitled to be paid during the period of lay - off. The respondent company is in the business of providing concrete and other by-products to the construction, building and maintenance industries. Whilst it is not a construction company, its business is inextricably linked to the construction industry.
The appellants were members of SIPTU. Evidence was given, that SIPTU, on behalf of its members entered into a very lengthy and comprehensive consultation process with the respondent. That process began in 2003 and continued for several years. The appellants were given a contract of employment together with the company handbook both of which were produced following agreements reached during the consultation process. The contract of employment and the company handbook where produced in English and in Polish. The contract is signed and dated. The company handbook at 2.3.2 states:
“The company reserves the right to lay you off from work or reduce your working hours where due to circumstances, beyond it’s control, it is unable to keep you in full time employment. You shall receive as much notice of such lay-off or short time as is reasonably possible to give”
Whilst neither the contract nor the company handbook specifically state that employees will not be paid during the period of lay –off, it is clear that it was agreed between the parties. Evidence in the form of a letter was produced stating that it had been agreed between SIPTU and the respondent that in an attempt to save the company and jobs that employees would not be paid during the period of lay-off. The members of SIPTU, of which the appellants were, had a ballot on the issue. The claimant stated, through his Solicitor that he voted against the ballot. However, it is noted that once the ballot was passed he did not raise a grievance nor did he surrender his membership of SIPTU. He remained silent on the issue until the hearing of these proceedings.
Evidence was given by JM that as the company secretary of the Irish Concrete Federation (an organisation that he founded) that he personally was involved in the consultation process with SIPTU in relation to the issue of pay during lay –off. He stated that the custom and practise since the last recession in the 1980’s was that nobody in the industry was paid during the period of lay - off. He gave evidence of five other companies in the industry that had layed off employees during this recession and stated that it was within his personal knowledge that none of those individuals had been paid during that period.
Appellant 1 and appellant 3 were laid-off in August 2010 for a period of four weeks and appellant 3 was on lay-off for a period of four months and then made redundant. They were not in receipt of any remuneration from the employer, during this period of lay-off. The appellants were in receipt of Social Welfare during the period of lay- off.
The appellants brought a claim under the Payment of Wages Act, 1991 stating that they were entitled to be fully remunerated for the periods of lay-off. The claim was initially heard before the Rights Commissioner who by determination issuing on the 21st September, 2012 found that the respondent had not contravened it’s obligation under Section 5 of the Payment of Wages Act 1991 which said section generally prohibits employers from making deductions in wages save in circumstances specifically provided for and regulated for in Section 5. It is noted that the respondent/employer was present at the hearing before the Rights Commissioner and the employer asserted that it had been the custom and practice of the company never to pay wages during lay off periods, a view not shared by the appellants.
The Payment of Wages Act, 1991 prohibits the employer from deducting the wages of an employee unless specifically provided for by Statute (e.g. for Income Tax purposes) or where there has been prior agreement of the parties.
Lay-off is defined in Irish Law in the Redundancy Payments Act of 1967 at section 11 (1) as follows:
“Where after the commencement of this Act an employee’s employment ceases by reason of his employer being unable to provide the work for which the employee was employed to do, and
- It is reasonable in the circumstances for that employer to believe that the cessation of employment will not be permanent, and
- The employer gives notice to that effect to the employee prior to the cessation,
that cessation of employment shall be regarded for the purposes of this Act as a lay-off.
It is certain that the Employer must therefore establish two things before a lay-off as defined can have any relevance and/or application in the particular workplace. Firstly, the employer must give notice of an upcoming cessation of employment. Secondly, the employer must reasonably believe that the said cessation will not be permanent.
The Tribunal is satisfied that the employer gave notice. That notice was produced at the hearing. The letter is dated the 17th June, 2010 and states “We regret to advise you that due to the completion of a number of ongoing projects, and the unavailability of alternative work it is necessary to place you on temporary lay-off. The Temporary lay –off will start week commencing Friday 25 June, 2010. We are monitoring the situation and will update you at the earliest opportunity.” The Tribunal is also satisfied that the company’s genuine belief, at the material time, that the lay -off would not be permanent was in fact correct. Appellant 1 and appellant 3 returned to work following the period of lay off and to date is still working for the respondent.
No evidence was adduced by the appellants as to what their belief was at the material time. The Tribunal note that whilst it is the employer’s belief that is relevant, the appellants’ views on the matter, if backed up with relevant facts, can have a persuasive value.
At common law there is no general right to lay-off without pay. However, it has always been accepted that there are some limited circumstances wherein there will be such a right. This right can be implied so that for example in the UK case of Browning and Others v Crumlin Valley Collieries (1926) 1 KB 698 the Court found the there was an implied term that a mine owner could lay off miners without pay while repairs are effected through no fault of the mine owners.
In the matter at hearing the situation is much stronger than in the Browning case in that the terms during that period of lay-off where specifically agreed between the union and the respondent. Even in circumstances where the agreement between the parties was found to be void or unenforceable, it is well established at common law that lay-off without pay may be operable where an employer can demonstrate it has been the custom and practice of the trade and/or workplace and that the custom must be reasonable, certain and notorious. This concept is referred to by Mr. Justice Jelp in Devonald and Rosser (1906) 2 KB 728 wherein he affirms (a previous finding of Lord Denman in R v Stoke upon Trent):
“A custom so universal that no workman could be supposed to have entered into this service without looking to it as part of the Contract”
It is worth noting that the line of legal authority which highlights the need for a custom which allows for lay-off without pay to be a certain and notorious custom, has generally been considered in cases where the contract of employment has been silent on the issue of lay-off. The circumstances which currently present themselves are distinguishable insofar as there is a very clear provision in the contract of employment and in the company handbook for the appellants lay-off and there is an agreement in relation to the non payment of wages during that period. If there wasn’t such an agreement or if that agreement, as stated earlier was held to be unenforceable then the Tribunal must therefore decide whether a contractual right to lay-off gives a further implied right to withhold pay.
In the Irish case of John Lawe -v- Irish Country Meats Limited 1998 ELR p266 wherein the issues of an employer’s right to lay-off without pay and the issue of the recognised custom and practise applicable in the workplace were considered by the learned Judge White in the Circuit Court. The Judge accepted that there is no inherent right to lay-off without pay at common law though he further recognised that there are certain limited circumstances which give rise to the right to lay-off without pay. This included a situation where an employer is able to establish that the entitlement arises out of well-established custom and practise. In the Lawe case a lay-off without pay was affected and whilst there was a recognised custom and practice which allowed for lay-off in certain circumstances none of these circumstances had applied here, and the employer had in fact used the lay-off process as a preliminary step to redundancy. The lay off in Lawe further lacked the reasonable belief that the cessation in employment would not be permanent as is required under the section 11 definition.
Judge White said (at page 271):-
“If the Lay-Off was intended to be temporary and the custom and practise…applied…and notice was given that the lay-off would be temporary, the company was entitled to lay-off without pay”
The Tribunal must ask itself, therefore, if the reasonable implication of this observation of the learned Judge is that he accepted that a lay-off when correctly and honestly utilised carries an implication that there will be no pay for the duration of lay-off.
In the case of Industrial Yarns -v- Greene (1984) ILRM 15 to the Tribunal. In that case, Costello J considered the nature of the Contract of Employment once the Lay-off (as envisaged in sections 11 through 13 of the 1967 Act) has come into operation. The Honourable Judge found that where such a person is laid off on foot of a notice and where there is a reasonable belief that the cessation of work will not be permanent the contract of employment is not rescinded or at an end. The appellants makes the case that if the contract of employment subsists after the fact of lay off then the rights and obligations flowing from same must also subsist and that must include the right to be fully paid. The Tribunal cannot accept that this is a logical extension of what Costello J said. In the context of the Judgement the Judge was dealing with the employer’s erroneous use of Section 11 as a vehicle for forcing employees to seek redundancy and forgo their entitlement to Minimum Notice. The Judge recognises that Lay-off under Section 11 is supposed to provide an interim measure of relief without having an overall negative effect on the Contract of Employment. The Judge recognises that a fundamental aspect of any contract of employment is being put to one side (i.e. the right to be provided with work) and that this is possible to do without necessarily terminating the contract and without impacting negatively on other reliefs, benefits and obligations so that for example – service still continues to accrue. It is noted by the Tribunal that Judge Costello was not asked to consider the issue of the right to lay-off with or without pay.
The Tribunal notes that wages are defined in the Payment of Wages Act 1991 as:-
“wages”, in relation to an employee, means any sum payable to the employee by the employer in connection with his employment, including-
- any fee, bonus 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,…..
Therefore in reconciling the definitions which the Tribunal must give consideration to, it is noted that “wages” arise in “connection with employment”, and “lay-off” arises for periods of “cessation of employment”. It is not absurd to suggest that a lay off which gives rise to a cessation of work must by implication also give rise to a cessation of wages.
Having considered the law in the area and the able arguments presented by the appellants representation, the Tribunal cannot agree that the appellants were entitled to be fully remunerated during the course of their lay-off.
The Tribunal is satisfied that the contract of employment specifically allowed for and recognised the periodic need to operate a scheme of lay off. The Tribunal is satisfied that the appellants union agreed on behalf of its members that there would be no pay during the period of lay off. The Tribunal is satisfied, and based on the evidence of JM, that the well established custom and practice in the industry is not to pay employees during periods of lay-off. The Tribunal is satisfied that the employer reasonably believed that the lay-off would not be permanent and that an appropriate notice to that effect was delivered thereby satisfying the requirements as defined in the Redundancy Payments Act, 1967. The Tribunal accepts that whilst the contract does not specify that there will be no wages payable during lay-off, there is a letter setting out the agreement reached between SIPTU and the respondent to that effect. Even in the absence of that agreement any other interpretation would be nonsense. The Tribunal would go so far as to say that the cessation of pay during periods of lay-off is self-evident. There would be no logic to the practise of lay off otherwise. Lay-off allows an employer to buy time to generate work, secure contracts and/or get over lull (sometimes seasonal) periods. The expectation is that normality will resume and an employer wants to avoid shedding an experienced workforce on a permanent basis.
At a national level it is noted that persons who are temporarily laid off are allowed to collect social welfare for such periods of lay-off, as the appellants did. It would defy logic if such a person found to be so entitled to social welfare would also be entitled to be fully remunerated for the same period. That would be contrary to the very well established principle in relation to double compensation.
The Tribunal determines, for the aforementioned reasons that the claims under the Payment of Wages Act 1991 fail.
The Tribunal heard undisputed evidence on technical breaches of the Terms of Employment (Information) Act 1994 and 2001. In circumstances where the appellants did receive contracts of employment and were not prejudiced by the breach of Section 3 referred to by the appellants representative the Tribunal uphold the decision of the Rights Commissioner.
Sealed with the Seal of the
Employment Appeals Tribunal
This ________________________
(Sgd.) ________________________
(CHAIRMAN)