ADJUDICATION OFFICER DECISION
Adjudication Reference: ADJ-00028367
A project manager / translator
An interpretation and translation group
Loughlin Deegan, Solicitor
Complaint Reference No.
Date of Receipt
Complaint seeking adjudication by the Workplace Relations Commission under section 6 of the Payment of Wages Act, 1991
Date of Adjudication Hearing: 15/02/2021 remote hearing
Workplace Relations Commission Adjudication Officer: Marguerite Buckley
In accordance with Section 41 of the Workplace Relations Act, 2015 following the referral of the complaint to me by the Director General, I inquired into the complaint and gave the parties an opportunity to be heard by me and to present to me any evidence relevant to the complaint.
This matter was heard by way of remote hearing pursuant to the Civil Law and Criminal Law (Miscellaneous Provisions) Act 2020 and SI 359/20206, which designates the WRC as a body empowered to hold remote hearings.
The Complainant was employed by the Respondent and its predecessor company since 2007.
She had a number of fixed term contracts before she received a permanent contract on 26 May 2008.
Summary of Complainant’s Case:
The Complainant's case is that between 1 April 2020 and 31 May 2020 she was subject to a 15% loss of income.
On the 23 March 2020 she received an email from her group head advising
"Based on the revenue impact assessments we have done we believe we will see our revenue denigration of 15 – 25% that will impact us from March, through Q2 and potentially the first part of Q3.
After much consideration we determined we need to act proactively to risk preserve cash, protect our company's long-term health, and most importantly, wherever possible, retain employees through this difficult period. To do so we must be focused on taking costs out of our business while avoiding headcount reductions. In order to do this, we are taking difficult but determined actions to protect the financial position of our company. These actions include:
· A temporary reduction in pay for all salaried employees to be effective in April.”
The Complainant received a further email 1 April 2020 following up on the email of 23 March 2020. This email set out how the reduction would affect her. She was advised that effective from 1 April 2020 for the duration of the period during which the company wide 15% salary reduction was in effect, her base salary was to reduce from €37,852.46 to €32,174.59 gross per annum, payable bi- weekly.
The new bi-weekly amount was to be reflected in payroll dated 17 April 2020.
The Complainant emailed the Respondent and advised that she did not agree with the pay cut. She set out that she was open to discuss proposals in order to reach an agreement that would suit everyone. Her position was that in March and April 2020 revenue for her office was higher than expected. She had researched what was being proposed on the Citizens Information website and she had queries and was not satisfied with the answers she was receiving from the Respondent.
The first deduction was made on 30 April 2020 was for €132.78 net.
The Complainant considered this a pay cut which was not agreed to. She lodged her complaint with the WRC on 15 May 2020.
The Complainant submitted that this was a unilateral decision by the Respondent to which she objected.
Summary of Respondent’s Case:
The Respondent submitted that all employees were given a 15% wage reduction for an initial 60-day period in Ireland. It submitted that the reduction in the reasons behind it were clearly communicated to all employees on the Irish site globally. From 1 April 2020 of 31 May 2020 this wage reduction was in place.
The Respondent group also implemented several other cost-saving measures. While the Respondent group lost significant revenue due to Covid 19, by June 2020 the outlook had improved. Salaries were restored to 100% with effect from 1 June 2020.
The Respondent submitted that revenue from its business was at the time of the wage reduction expected to decrease by 21% in 2020 compared to 2019. However, the ultimate outcome was not as bad as expected. Revenue for 2020 was down 12% on 2019.
The Respondent implemented the Temporary Wage Subsidies Scheme (TWSS) for a period. However, did not meet the eligibility criteria and repaid the amount it received to the Irish Exchequer.
It submitted that it did not implement the 60-day wage reduction lightly. It was done to protect jobs. Of the 53 people employed by the Respondent in Ireland, all of them were affected by the wage reduction. Only a handful queried or objected to the reduction and only two (including the Complainant) made a complaint under the Payment of Wages Act 1991.
The Respondent confirmed that the total reductions which were spread over 5 pay periods amounted to €939.03 gross.
The Respondent explained that in all the Complainant's contracts (both fixed term and permanent) contained a variation of terms and conditions clause.
The Respondent submitted that the exercise of the variation clause was in a reasonable manner. It submitted that the variation was effective.
On that basis, its submission was that the wages properly payable to the Complainant during the 60-day period was the reduced wage level and that was the level that was paid to her.
It set out that the Complainant received all wages that were properly payable to her and no deduction was implemented and therefore no contravention of section 5 of the 1991 Act took place.
The Respondent also made alternative submissions that a deduction was permitted by the variation clause in the Complainant's contract of employment and therefore was permitted by section 5(1)(b) of the Payment of Wages Act 1991. It also made submissions on the award that could be awarded.
Findings and Conclusions:
This is a complaint pursuant to the Payment of Wages Act. The Payment of Wages Act 1991 sets out as follows:
5.— (1) An employer shall not make a deduction from the wages of an employee (or receive any payment from an employee) unless—
(a) the deduction (or payment) is required or authorised to be made by virtue of any statute or any instrument made under statute,
(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, or
(c) in the case of a deduction, the employee has given his prior consent in writing to it.
(2) An employer shall not make a deduction from the wages of an employee in respect of—
(a) any act or omission of the employee, or
(b) any goods or services supplied to or provided for the employee by the employer the supply or provision of which is necessary to the employment,
(i) the deduction is required or authorised to be made by virtue of a term (whether express or implied and, if express, whether oral or in writing) of the contract of employment made between the employer and the employee, and
(ii) the deduction is of an amount that is fair and reasonable having regard to all the circumstances (including the amount of the wages of the employee), and
(iii) before the time of the act or omission or the provision of the goods or services, the employee has been furnished with—
(I) in case the term referred to in subparagraph (i)is in writing, a copy thereof,
(II) in any other case, notice in writing of the existence and effect of the term,
(iv) in case the deduction is in respect of an act or omission of the employee, the employee has been furnished, at least one week before the making of the deduction, with particulars in writing of the act or omission and the amount of the deduction, and
(v) in case the deduction is in respect of compensation for loss or damage sustained by the employer as a result of an act or omission of the employee, the deduction is of an amount not exceeding the amount of the loss or the cost of the damage, and
(vi) in case the deduction is in respect of goods or services supplied or provided as aforesaid, the deduction is of an amount not exceeding the cost to the employer of the goods or services, and
(vii) the deduction or, if the total amount payable to the employer by the employee in respect of the act or omission or the goods or services is to be so paid by means of more than one deduction from the wages of the employee, the first such deduction is made not later than 6 months after the act or omission becomes known to the employer or, as the case may be, after the provision of the goods or services.
Complaint to adjudication officer undersection 41 of Workplace Relations Act 2015
6. (1) A decision of an adjudication officer under section 41 of the Workplace Relations Act 2015, in relation to a complaint of a contravention of section 5 as respects a deduction made by an employer from the wages of an employee or the receipt from an employee by an employer of a payment, that the complaint is, in whole or in part, well founded as respects the deduction or payment shall include a direction to the employer to pay to the employee compensation of such amount (if any) as he considers reasonable in the circumstances not exceeding —
(a) the net amount of the wages (after the making of any lawful deduction therefrom) that —
(i) in case the complaint related to a deduction, would have been paid to the employee in respect of the week immediately preceding the date of the deduction if the deduction had not been made, or
(ii) in case the complaint related to a payment, were paid to the employee in respect of the week immediately preceding the date of payment,
(b) if the amount of the deduction or payment is greater than the amount referred to in paragraph (a), twice the former amount.
(2) (a) An adjudication officer shall not give a decision referred to in subsection (1) in relation to a deduction or payment referred to in that subsection at any time after the commencement of the hearing of proceedings in a court brought by the employee concerned in respect of the deduction or payment.
(b) An employee shall not be entitled to recover any amount in proceedings in a court in respect of such a deduction or payment as aforesaid at any time after an adjudication officer has given a decision referred to in subsection (1) in relation to the deduction or payment.
The Payment of Wages Act prohibits the making of deductions from an employee’s wages unless required or authorised by the Act or the employee has consented to the deduction.
It is for the Complainant to show in the first instance that wages were properly payable to her and not paid by the Respondent.
The evidence presented to me was that while the Respondent expected a downturn in income, the ultimate outcome was not as bad as expected. Revenue for 2020 was down 12% on 2019. The Respondent for a period implemented the Temporary Wage Subsidies Scheme (TWSS). However, it did not meet the eligibility criteria and repaid the amount it received to the Irish Exchequer.
As regards the variation clause in the Complainant’s contract, such clauses are intended to permit minor non-material changes, which do not relate to core terms, such as updates to reflect changes in law or statute or a change in a work practice.
While I accept that the Respondent experienced difficulties due to the Covid-19 Pandemic, I do not accept that the decision to impose the deductions in the Complainant’s salary was reasonable and proportionate considering the Respondent was a multi-national Company and the work the Complainant was doing was not greatly impacted by the Pandemic.
Imposing pay cuts, even of a temporary nature, without consultation or consent, by reliance on such variation clauses is not reasonable.
I accept the Complainants evidence that 15% of her wages were deducted by the Respondent. I do not accept that this was a reduction in pay.
My power under the Payment of Wages Act is to make an order in relation to complaints preceding the date on which the complaint was made. The complaint was made on the 15/5/2020.
The deductions made to the Complainants pay were spread over five pay periods and were in the following amounts:
Pay period 8 Paid on 17 April 2020 €174.70 (gross)
Pay period 9 Paid on 1 May 2020 €218.38 (gross)
Pay period 10 Paid on 15 May 2020 €218.38 (gross)
Pay period 11 Paid on 29 May 2020 €218.38 (gross)
Pay period 12 Paid on 12 June 2020 €109.19 (gross)
The Complainant was paid fortnightly in arrears. My jurisdiction in this case covers pay periods 8,9 10 and 11.
Section 41 of the Workplace Relations Act 2015 requires that I make a decision in relation to the complaint in accordance with the relevant redress provisions under Schedule 6 of that Act.
I decide that the complaint is well-founded, and that the Respondent shall pay to the Complainant compensation that is reasonable of €829.84.
Dated: June 21st 2021
Workplace Relations Commission Adjudication Officer: Marguerite Buckley
Unlawful deduction from pay