ADJUDICATION OFFICER DECISION
Adjudication Reference: ADJ-00014396
A Solicitor’s Firm
John Fahy BL
Complaint/Dispute Reference No.
Date of Receipt
Complaint seeking adjudication by the Workplace Relations Commission under section 7 of the Terms of Employment (Information) Act, 1994
Complaint seeking adjudication by the Workplace Relations Commission under section 6 of the Payment of Wages Act, 1991
Date of Adjudication Hearing: 05/09/2018
Workplace Relations Commission Adjudication Officer: Ray Flaherty
In accordance with Section 41 of the Workplace Relations Act, 2015 and following the referral of the complaints to me by the Director General, I inquired into the complaints and gave the parties an opportunity to be heard by me and to present to me any evidence relevant to the complaints.
The Complainant commenced employment with the Respondent, a firm of Solicitors, on 19 June 2006, in the role of trainee solicitor. The Complainant qualified as a solicitor on 3 April 2009 and continued in employment with the Respondent in that capacity.
The Complainant submitted her letter of resignation to the Respondent on 17 October 2017 and finished employment there on 31 October 2017.
The Complainant submitted two complaints to the Workplace Relations Commission on 26 April 2018. These comprised of a complaint under Section 7 of the Terms of Employment (Information) Act, 1994 (reference CA-00018739-001) and one under Section 6 of the Payment of Wages Act, 1991, CA-00018739-003).
Summary of Complainant’s Case:
The Complainant made the following submissions in relation to her two specific complaints:
According to Complainant’s submission the Respondent failed to provide her with the statement in writing containing particulars of the principal terms of her contract when she commenced employment with them on 19 June 2006.
The Complainant further submitted that when she qualified as a solicitor, in April 2009 and continued in full-time employment as a solicitor thereafter, no notification was given in writing of the change of the terms of employment which took place at that time.
According to the Complainant’s evidence, her salary changed on eight occasions between 2006 and 2017. The Complainant further stated that she did not receive any notification in writing from the Respondent in relation to any of these changes.
The Complainant submitted that on 13 August 2018, she requested a copy of her personnel file from the Respondent. She further stated that the Respondent advised that they did not hold a personnel file.
In addition, the Complainant stated that the Respondent advised the WRC, in correspondence dated 11 June 2018, that the terms and conditions of the Complainant’s employment was “incorporated, inter alia, in our Office Employment Manual”. In response, the Complainant stated that the office manual in question was a general office manual/staff handbook available to all employees, which contain details regarding grievance and disciplinary procedures as well as information regarding the running of the office. The Complainant contends that the office manual did not contain any specific information in respect of any employees and was silent on a significant number of the provisions set out under Section 3 of the Act.
In conclusion, the Complainant submitted that she had suffered prejudice from the failure of the Respondent to comply with the provisions of the Act. According to the Complainant, if the Respondent had complied with the legislation and provided a written statement of the terms and conditions of employment, she would not be required to demonstrate to the WRC that the payments, in respect of which she made a complaint under the Payment of Wages Act, correctly form part of her remuneration and are not, as claimed by the Respondent, ex-gratia payments which are made for the last six years of her employment.
The Complainant’s complaint under Section 6 of the Payment of Wages Act, 1991, relates to a claim in respect of outstanding wages, in the sum of €3,160.
In support of the claim, the Complainant submitted that, since 2011, she had received an annual lump sum tax free repayment of €3,800, which, according to her evidence, was paid around December each year.
In further submission, the Complainant stated that, after qualifying as a solicitor in 2009, she received a pay increase of €2,600 in 2009 and 2010. The Complainant submitted that she did not receive any pay increase in 2011 and instead it was agreed that she would receive €3,700 as one lump sum tax-free payment, payable at the end of the year. The Complainant submitted that this payment was made every year between 2011 and 2016 inclusive. In addition, the Complainant pointed out that despite being on maternity leave between December 2011 and August 2012, she still received the payment in 2011 and 2012.
The Complainant disputes Respondent’s contention that the annual payment was “ex-gratia” in nature. The Complainant submits that the payment was a contractual payment to which she was entitled as part of her salary.
The Complainant also contends that the lack of a written statement of terms and conditions of employment has seriously prejudiced her in relation to her payment of wages claim.
Based on the above, the Complainant is claiming €3,160 being 10/12ths of the annual payment in respect of the period 1 January 2017 to 31 October 2017, when her employment with the Respondent ceased.
In support of her submissions under this reference, the Complainant cited the case of Foroige v Kieran O’Connell [PWD 178]
Summary of Respondent’s Case:
It was submitted that the Respondent is a broad-based General Practice law firm, employing 10 staff between solicitors and administration.
The Respondent submitted that the Complainant was a valued member of staff, who carried out her duties in a most professional and diligent manner and was always been courteous to clients and staff. It was further submitted that it was with considerable disappointment that the Respondent learned that the Complainant was leaving the practice at the end of October 2017, having submitted a letter of resignation, dated 17 October 2017, which gave a notice period of eight working days, which was considerably shorter than the statutory requirement and presented a major difficulty for the Practice as it simply was not possible to recruit a replacement professional in such a short timeframe.
With regard to the specific elements of the Complainant’s claims, the Respondent made the following submissions:
The Respondent contends that the Complainant’s claim that she was not given a statement in writing of the terms and conditions is not factually correct. According to the Respondent’s submission, the Complainant was given a written contract on commencement of employment.
It was further submitted that, subsequently, the Complainant, along with all other employees, was given a copy of the Office/Employment Manual. According to the Respondent, this comprehensive document details, inter alia, all the information broadly required under Section 3 of the Terms of Employment (Information) Act 1994.
The Respondent also submitted that the ongoing review/revision/updating of the said Employment Manual was one of the responsibilities of the Complainant, while in the employment.
In conclusion, the Respondent submitted that they are in broad compliance with the requirements as set out under Section 3 of the Act.
The Respondent made the following submission in reply to the Complainant’s claim for payment in the amount of €2,160 under Section 6 of the Payment of Wages Act, 1991:
The Respondent submitted that, on occasion, bonus or ex-gratia payments were made to staff at Christmas time, only when business turnover and resources permitted same. The Respondent further submitted that the payment now be claimed by the Complainant did not form part of her core contractual salary. Rather, the Respondent claims that the payment was a discretionary payment made at the sole discretion of management.
It was further submitted that any bonus/ex-gratia payment were only paid to staff, who are in the employment of the Respondent at the end of December in the relevant year when a bonus/ex-gratia payment was being made.
According to the Respondent’s admission, the Complainant had left around at the end of October 2017 and was not entitled to be considered for a bonus/ex-gratia payment for 2017.
The Respondent further submitted that no other former employee, who left their employment or who had given notice or who was under notice during the year for which a payment could be considered, has ever, in the history of the firm, received a bonus/ex-gratia payment in that year.
In conclusion, the Respondent submitted that the bonus payment/ex-gratia payment, being claimed by the Complainant, does not form part of her core salary and, therefore, does not fall to be considered by the WRC under Section 6 of the Payment of Wages Act 1991, as there are no monies due or outstanding. The Respondent submits that the Complainant has been paid in full, in accordance with the terms of the contract of employment, expressed or implied.
Findings and Conclusions:
Section 3 (1) of the Terms of Employment (Information) Act, 1994, provides as follows:
3.— (1) “An employer shall, not later than 2 months after the commencement of an employee's employment with the employer, give or cause to be given to the employee a statement in writing containing the following particulars of the terms of the employee's employment, that is to say—
(a) the full names of the employer and the employee,
(b) the address of the employer in the State or, where appropriate, the address of the principal place of the relevant business of the employer in the State or the registered office (within the meaning of the Companies Act, 1963),
(c) the place of work or, where there is no fixed or main place of work, a statement specifying that the employee is required or permitted to work at various places,
(d) the title of the job or nature of the work for which the employee is employed,
(e) the date of commencement of the employee's contract of employment,
(f) in the case of a temporary contract of employment, the expected duration thereof or, if the contract of employment is for a fixed term, the date on which the contract expires,
(g) the rate or method of calculation of the employee's remuneration,
(h) the length of the intervals between the times at which remuneration is paid, whether a week, a month or any other interval,
(i) any terms or conditions relating to hours of work (including overtime),
(j) any terms or conditions relating to paid leave (other than paid sick leave),
(k) any terms or conditions relating to—
(i) incapacity for work due to sickness or injury and paid sick leave, and
(ii) pensions and pension schemes,
(l) the period of notice which the employee is required to give and entitled to receive (whether by or under statute or under the terms of the employee's contract of employment) to determine the employee's contract of employment or, where this cannot be indicated when the information is given, the method for determining such periods of notice,
(m) a reference to any collective agreements which directly affect the terms and conditions of the employee's employment including, where the employer is not a party to such agreements, particulars of the bodies or institutions by whom they were made.”
Based on Section 3 of the Act, as set out above, the responsibility is on the employer to give an employee a written statement of terms of employment within two months of commencement of the employment. In this case, the Complainant contends that throughout her eleven years of employment with the Respondent, during which she submits there were several changes to her terms and conditions of employment, she never received a contract or statement in writing of the terms of employment.
In response, the Respondent submits that the Complainant was provided with a copy of the “Office/Employment Manual”. The Respondent further contends that this document is “In broad compliance with the requirements as set out under Section 3 of the 1994 Act. In addition, the Respondent submitted that ongoing review/revision of this Manual was the responsibility of the Complainant.
Having carefully reviewed the copy of the Office Manual which was presented in evidence at the Hearing, I am not satisfied that it fulfils the Respondent’s obligations as set out in Section 3 of the Act. The document in question is a general Office Procedures document which only covers a small number of the particulars as set out in Section 3 of the Act. In essence, this is a general document provided to all employees and does not contain any of the personal information that one would expect a statement of employment, compiled in compliance with the Act, to contain.
Consequently, taking all of the above into consideration, I find that the Complainant was not provided with terms of employment in line with those set out in the Act and her complaint in that regard is, therefore, well founded.
When submitting her original complaint under this reference, the Complainant detailed two elements to a claim. The first related to the non-payment, in 2017, of what she contends was “an annual lump sum tax-free payment” of €3,800, which was paid in December each year between 2011 and 2016. The second element of the Complainant’s complaint related to the non-payment of annual leave pay in the sum of €392.00. At the Oral Hearing, the Complainant confirmed the following further receipt of payment from the Respondent, prior to the Hearing, this element of a complaint had been resolved to her satisfaction. Therefore, only the elements relating to the non-payment of the annual lump sum remain to be considered.
In relation to the lump sum claim, the Complainant set out in detail the timings and amounts of the payments in question in the years between 2011 and 2016. I am satisfied that following a review of this evidence, the Complainant received a payment of approximately €3,800, which was paid in the month of December in relation to 3 of the payments, with the remaining two being paid in February and March respectively.
The Respondent did not dispute that the payments, as detailed by the Complainant, were made. However, the Respondent contended that the payments in question represented bonus/ex-gratia payments, which were paid at the discretion of the Respondent. It was further contended that the payments were dependent on profitability and were only paid to staff who were in the Respondent’s employment at the end of December in the years when the payments were made.
In summary, the Respondent contended that the payments in question did not form part of the Complainant’s core pay or salary and, as a result, do not fall for adjudication under Section 6 of the Payment of Wages Act 1991.
Section 1 (1) of the Act, defines “wages” as follows:
“wages”, in relation to an employee, means any sums payable to the employee by the employer in connection with his employment, including—
(a) 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, and
(b) any sum payable to the employee upon the 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 be regarded as wages for the purposes of this definition:
(i) any payment in respect of expenses incurred by the employee in carrying out his employment,
(ii) any payment by way of a pension, allowance or gratuity in connection with the death, or the retirement or resignation from his employment, of the employee or as compensation for loss of office,
(iii) any payment referable to the employee's redundancy,
(iv) any payment to the employee otherwise than in his capacity as an employee,
(v) any payment in kind or benefit in kind”
Having carefully considered the evidence adduced, I am satisfied that these payments were made to the Complainant in each of the six years prior to tendering her resignation in October 2017. In my view, the fact that these payments are referred to as “tax-free” and/or did not appear on the Complainant’s pay slips, does not detract from the fact that a pattern of payment existed and, as a result, the Complainant had a reasonable expectation that the payments would continue in 2017.
In the absence of a contract of employment and/or a statement of employment, there is nothing to suggest that the Complainant, or any other employee, was aware that, as the Respondent contended, payment of the bonus/ex-gratia lump sum was conditional on the recipient being in employment at the date of payment.
The Respondent further contended that the Complainant had been paid in full in accordance with her contract of employment, expressed or implied. As can be seen from the finding above, in relation to her specific complaint under the Terms of Employment (Information) Act, 1994, the Complainant was never issued with a contract of employment or a statement of her terms and conditions. Therefore, the Respondent’s contention in this regard is not credible.
In addition, I find that the evidence presented in relation to the fee income generated by the Complainant in the six years in which payments were made, undermines the Respondent’s contention that the payments were linked to the profitability of the business. While I accept that the profitability of the business may be impacted by factors other than just the fee income generated by the Complainant, the evidence clearly suggests that the annual payments were made irrespective of fluctuations in fee income in those years.
Taking all of the above into consideration, I am satisfied that the pattern and consistency in relation to the payment of the lump sum amount in the previous six years had created a reasonable expectation for the Complainant that she would receive the payment, or at least a pro rata amount, with respect to her 10 months of employment in 2017.
Consequently, I find it unreasonable that the Complainant was denied this payment purely on the basis that she was not in the Respondent’s employment at the point in time when the payment was due to be made.
The 1991 Act provides, at Section 5 (6), that:
(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”.
Having carefully considered all the evidence adduced and the circumstances pertaining to the payment of this lump sum by the Respondent in the previous six years, I am satisfied that an amount, pro rata to her employment, is properly payable to the Complainant for 2017. Consequently, I find that the Respondent’s failure to make this payment to the Complainant represents an unlawful deduction in line with Section 5 (6) of the 1991 Act.
Section 41 of the Workplace Relations Act 2015 requires that I make a decision in relation to the complaints in accordance with the relevant redress provisions under Schedule 6 of that Act.
Having carefully considered all of the evidence adduced and based on the considerations/findings as detailed above, I set out my decisions in relation to the specific elements of the Complainant’s complaint as follows:
I find that the Complainant’s complaint, under the Terms of Employment (Information) Act, 1994, is well-founded and, in accordance with Section 7 (2) (d) of the Act and having regard to all the circumstances, I award the Complainant the sum of €1,000 as just and equitable compensation for the Respondent’s breach of the Act.
I find that the Complainant’s claim under Section 6 of the Payment of Wages Act 1991 is well-founded and I order the Respondent to pay an amount of €3,160 (gross) in respect of the deductions made. This award is subject to the normal statutory deductions relating to wages.
Dated: 28 August 2019
Workplace Relations Commission Adjudication Officer: Ray Flaherty
Terms of Employment (Information) Act
Statement of Employment
Payment of Wages Act