ADJUDICATION OFFICER DECISION
Adjudication Reference: ADJ-00024134
A Senior Systems Engineer
An International Technology Advisor Company
Complaint/Dispute Reference No.
Date of Receipt
Complaint seeking adjudication by the Workplace Relations Commission under section 27 of the Organisation of Working Time Act, 1997
Complaint seeking adjudication by the Workplace Relations Commission under section 6 of the Payment of Wages Act, 1991
Date of Adjudication Hearing: 23/10/2019
Workplace Relations Commission Adjudication Officer: Patricia Owens
In accordance with Section 41 of the Workplace Relations Act, 2015 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 Claimant was employed by the respondent as a Senior Systems Engineer from May 2012 until he was made redundant by the Respondent in June 2019. The Respondent is a Limited Company operating as international technology advisors.
On 4th March 2019 the Claimant was informed that his role was at risk of redundancy and invited to participate in a redundancy consultation process with the Respondent. However, on 7th March the Claimant submitted a medical certificate and remained on sick leave until he returned to work on 6th June 2019. The Respondent has a sick pay policy which provides for an entitlement of up to a maximum of 30 days enhance sick pay. The Claimant contends that he was left short a day’s pay in March 2019. In view of his entitlement under the sick pay policy he submits that he was not paid for the public holiday which fell within that pay period i.e. 17th March 2019. The Claimant is seeking payment for this day.
On 21st June 2019 the Claimant’s employment was terminated by reason of redundancy. The Claimant submits that the Respondent is incorrectly calculating his salary for months within which he did not work the full number of working days, specifically April 2019 and June 2019. The Claimant is seeking an adjustment to his pay for both months.
Summary of Complainant’s Case:
CA00030647-001 (Organisation of Working Time)
The Claimant submits that he was left short a day’s pay in respect of 18th March 2019, a public holiday in the Republic of Ireland. He submits that he was on sick leave from 5th March 2019 to 6th June 2019. He advises that as per his contract he has an entitlement to 30 days sick pay minus social welfare benefits. He advises that 18th March was treated as a normal working day for him and that public holiday entitlement for that day was not applied.
CA00030647-002 (Payment of Wages)
In the initial written submission to the WRC the Claimant outlined the above matter in greater detail in relation to his case under the Payment of Wages Act including details of the methodology for calculating the daily rate. However, at the hearing he further submits that the Respondent was incorrectly calculating the daily rate.
He submits that the Respondent pays him an annual salary of €61,180 which is paid in equal instalments of €5098.33 per month regardless of the number of working days in each month. He also submits that for months when he is paid on a pro rata basis that the Respondent calculates his daily rate by dividing the annual salary by the number of working days in the year and multiplying by the number of days worked in that month. He submits that the number of working days in 2019 is taken by the Respondent to be 260, however, he submits that both this method of calculation and the number of working days in the year is incorrect. He submits that the nine public holidays should not be considered, thus the number of working days in 2019 would be 251 days.
He submits that as the annual salary is averaged out monthly then it is the monthly salary that should be used for the calculation. He submits that the monthly salary should be divided by the number of working days in that month and multiplied by the number of days worked. He submits that this resulted in an underpayment to him in April 2019 (based on sick leave) and in June 2019 based on being made redundant.
Example 1 (The Respondent’s method of calculation)
Annual Salary /number of working days in 2019 = daily rate i.e.
Example 2 (The Claimant’s method of calculation)
Monthly Salary/number of working days in relevant month = daily rate
€5098.33/21 = €242.7776
In this context he contends that his pay for April and June 2019 should be adjusted by the Respondent based on Example 2 above
Summary of Respondent’s Case:
The Respondent submits that the Claimant was employed by the company as a Senior Systems Engineer and that he was advised that his role was at risk of redundancy on 4th March 2019. The Claimant submitted a medical certificate on 7th March and remained on sick leave up until his return to work on 6th June 2019. The Respondent confirmed that as per the Claimant’s contract and the company sick leave policy the Claimant was entitled to a maximum of 30 days sick pay minus social welfare benefits. The Respondent further submitted that a review of payments structures was carried out following receipt of this claim and the Respondent acquiesced to having made an administrative oversight by failing to pay the Claimant this entitlement.
The Respondent confirmed that the outstanding payment was discharged to the Claimant in October 2019 and provided copies of the relevant payslip by way of supporting documentation.
The Respondent submits that for all employees the annual salary is divided equally by 12 to provide for a consistent monthly payment. The Respondent also submits that in circumstances where an employee works less than the full-time commitment in a given month the daily rate applicable is calculated by reference to the annual salary divided by the number of working days in a year. The Respondent considers this to be an accurate and consistent method of calculating a day’s pay and submits that the Claimant has erred in his calculation. The Respondent also submits that 260 working days is correct for the purpose of calculating the daily rate in 2019. The Respondent contends that to reduce this by the 9 public holidays would result in payment in excess of the annual salary.
Findings and Conclusions:
CA – 00030647 – 01
The Respondent confirmed that following a review of payments it was accepted that payment had not been made for 18th March 2019 and that payment should have been made in that regard. It was also confirmed by the Respondent that the outstanding payment had been discharged on 18th October 2019 and a copy of the Claimant’s payslip was provided to support this position. The Claimant confirmed that he had received the payment.
In relation to the payment of wages for the public holiday of 18th March 2019 I find that the matter has now been addressed by the Respondent.
There is no set requirement for calculating pro-rata percentages, either from Revenue or in the relevant legislation, so employers are not bound to adopt a specific method. However, whatever method is adopted it is important that employers communicate this to employees and apply the method consistently.
I have considered carefully the examples put forward by the Claimant and note that there is a considerable difference in the daily rate arising from the Respondent and the Claimant’s differing methods of calculation.
I considered both methodologies with a view to establishing which one provides for a consistent daily rate as follows:
The Claimant’s methodology would result in a daily rate of €242.7776 for April 2019 and a daily rate of €268.3331 for June 2019.
The Respondent’s methodology would result in the same daily rate apply in both April 2019 and June 2019 i.e. €235.7776
I note that as the Claimant proposal results in a different calculation each month therefore there is no consistency in the daily rate.
The Respondent, in setting a monthly salary based on the equal division of the annual salary is averaging the salary to provide for consistent and predictable payments to employees. A similar approach of dividing the annual salary by the number of working days in a year provides for a consistent and predictable daily rate for employees regardless of the month. The Respondent is also consistent in the application of this methodology on all occasions and to all employees. I note that the Respondent did advise the Respondent of the method of calculation and of the details of annual salary when this matter was raised by the Claimant after termination of employment.
I note that an annual salary is inclusive of payment for the nine public holidays unless an employee works on that day, in which case additional payment is due. That is not the case in this instance. I also note that the Claimant’s employment was terminated on 21st June 2019 but that he was paid up to the end of that month.
Taking all the above into account I find the Respondent’s method of calculation to be correct and the application of 260 working days to also be correct. I would, however, recommend that the Respondent include details of this methodology in their start up documentation for new employees.
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.
In relation to CA – 00030647 001 regarding payment of wages for the public holiday of 18th March 2019 the matter has now been addressed by the Respondent and no further action is required.
In relation to CA – 00030647 – 002 I consider that the Respondent’s method of calculation is appropriate and that the Respondents have discharged their responsibilities under the Payment of Wages Act. In these circumstances this claim fails.
Dated: 17th December 2019
Workplace Relations Commission Adjudication Officer: Patricia Owens
Calculation of daily rate, public holiday