EMPLOYMENT APPEALS TRIBUNAL
APPEALS OF: CASE NO.
Niamh Carmody
(appellant 1) PW253/2014
Sharon Jolly
(appellant 2) PW254/2014
Catherine Gilsenan
(appellant 3) PW255/2014
Evelyn Dunleavy
(appellant 4) PW256/2014
Carol Roach
(appellant 5) PW257/2014
Julie Creed
(appellant 6) PW258/2014
Sonia Borwick
(appellant 7) PW259/2014
Frances Cullen
(appellant 8) PW260/2014
against the decisions of the Rights Commissioner in the case of:
Northside Homecare Services Limited
(respondent)
under
PAYMENT OF WAGES ACT 1991
I certify that the Tribunal
(Division of Tribunal)
Chairman: Mr. D. Mac Carthy SC
Members: Mr. A. O'Mara
Mr J. Jordan
heard this appeal at Dublin on 23rd October 2015
Representation:
Appellants: Mr Ray Stanley, Siptu, Health Division, Liberty Hall, Dublin 1
Mr. Hugh Hegarty, Siptu, Liberty Hall, Dublin 1
Respondent: Mr. Eugene Smartt, Solicitor, Newlands Retail Centre, Newlands Cross, Clondalkin, Dublin 22
This case came before the Tribunal by way of employees’ appealing a Rights Commissioner’s decisions under the Payment of Wages Act, 1991, reference r-137868-pw-13/DI: r-137884-PW-13DI: r-137887-PW-13/DI: r-137879-PW-13/DI: r-137889-PW-13/DI: r-137868-PW-13/DI: r-137847-PW-13/DI: r-137874-PW-13/DI.
The determination of the Tribunal was as follows:
Mr. Smartt, on behalf of the company, has made the ingenious argument that this is not the correct forum to hear these appeals because the matter is one of contract law and the Payment of Wages act was never intended to deal with a dispute concerning a change to a contract of employment. He also argued that there is a distinction to be made between a reduction and a deduction relating to pay.
Mr. Smartt has not persuaded the Tribunal. It is clear to the Tribunal that the Payment of Wages Act conferred jurisdiction on the Rights Commissioner and the Tribunal to deal with deductions.
Section 5(6)(a) provides that “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.
He also drew attention to Clause 23 of the appellants’ contracts of employment which states:
Changes in the terms of this contract or in other terms, conditions and rules of employment will be notified to you one month before the proposed change and will have earlier effect only with your agreement.
Background
The appellants all worked for the respondent as carers. The care manager wrote to the claimants individually on 13 May 2013 inviting them to a meeting on 20 May 2013. The meeting was to inform staff members of ‘some of the cost containment steps that are necessary to ensure the future of our service’. The appellants were informed that their employer intended to merge with two other providers of care services. They were also informed that due to financial difficulties their pay would be cut by approximately 12%. The appellants did not agree to this cut to their wages. The new wage structure was effective from 1st July 2013.
The appellants are seeking payment of the shortfall in their wages for the period 1st July to 17th September 2013.
Determination
The Rights Commissioner in his decision found against the appellants on the basis of the finding of Edwards J. in the High Court in the case of McKenzie and Others that:
“the Court agrees with the respondent’s submission that the Payment of Wages Act, 1991 has no application in the circumstances of this case. First, as has been pointed out, correctly in the Court’s view, the reduction in the PDF allowance is not a “deduction” from wages payable. It is a reduction of the allowance payable. The Act has no application to reductions as distinct from “deductions”. Secondly, even if that were not so, any alleged breach of the Payment of Wages Act, 1991 is not a justiciable controversy before the High Court in circumstances where that Act sets up a specific enforcement mechanism to be availed of elsewhere in such circumstances”.
The Rights Commissioner also referred to an EAT determination in the case of Santry Sports Clinic v five Employees where the award made by the Right Commissioner was overturned by the EAT on the basis of the McKenzie judgement.
The Tribunal is satisfied that the appeal under consideration here can be distinguished from the McKenzie case in that that case related to a reduction to an allowance while this case relates to the wages of the appellants.
In response to the Judgment in the case of Earageail Eisc Teoranta v Doherty & others delivered on 5th June 2015 the Tribunal must consider carefully the exceptions listed at (a), (b), and (c) of Section 5(1) of the Payment of Wages Act 1991. Of particular interest here is S 5(1) (b) which allows a deduction when,
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.
The High Court has in the Earagail Éisc Teoranta and the B&Q cases “distinguished” the McKenzie decision and stated that the words quoted above were obiter dicta, as that case concerned allowances only and was not therefore stating a general rule that “deductions” are unlawful but “reductions” are not.
In their submission to the Tribunal the respondents gave details of the difficult fiscal position it is encountering and emphasised its duty to trade responsibly. In reply the appellants’ point out that the Payment of Wages Act does not allow for deductions to be made for the purpose of fiscal necessity. Also when the High Court returned the Earagail Eisc Teoranta case to the Tribunal it specifically directed that the Tribunal consider the financial position of the employer at the time when wages of the employees were cut together with the clause of the contracts of employment allowing changes to wages. It is common case that the respondent was faced with a sharp fall in income that necessitated significant changes to the running of the service. The Tribunal recognises the difficulties faced by the respondent but it finds that the respondent did not sufficiently engage with the employees and neither did it allow them to make submissions concerning the future of the organisation in advance of the transfer of undertakings. Accordingly, the Tribunal finds that the respondent was in breach of Section 5 (1) of the Payment of Wages Act 1991. The decisions of the Rights Commissioner are upset.
The appellants are awarded the following amounts in compensation: appellant (1) is awarded the sum of €542; appellant (2) is awarded the sum of €229; appellant (3) is awarded the sum of €308; appellant (4) is awarded the sum of €229; appellant (5) is awarded the sum of €306; appellant (6) is awarded the sum of €224; appellant (7) is awarded the sum of €675 and appellant (8) is awarded the sum of €326.
Sealed with the Seal of the
Employment Appeals Tribunal
This ________________________
(Sgd.) ________________________
(CHAIRMAN)