ADJUDICATION OFFICER DECISION
Adjudication Reference: ADJ-00028380
Parties:
| Complainant | Respondent |
Parties | Aidan Cunningham | Jdm Specialist Cars Ltd. Joe Duffy Mazda |
Representatives |
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Complaint:
Act | Complain Reference No. | Date of Receipt |
Complaint seeking adjudication by the Workplace Relations Commission under section 6 of the Payment of Wages Act, 1991 | CA-00036398-001 | 28/05/2020 |
Date of Adjudication Hearing: 19/08/2021
Workplace Relations Commission Adjudication Officer: John Harraghy
Procedure:
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.
The matter was heard by way of remote hearing pursuant to the Civil Law and Criminal Law (Miscellaneous Provisions) Act 2020 and S.I. 359/2020, which designated the WRC as a body empowered to hold remote hearings.
The parties were advised at the outset that following the delivery of a judgement of the Supreme Court in Zalewski v Adjudication Officer on 06/04/2021 that hearings before the Workplace Relations Commission are now held in public. That may result in decisions no longer being anonymised. Both parties were advised that an Adjudication Officer may take evidence on oath or affirmation.
The parties were also notified of these changes by the WRC in the letter confirming details of the hearing.
Background:
The complainant was employed as a general sales manager with the respondent from April 2014 to July 2020. In March 2020 the complainant and all the respondent’s employees were advised on 27/03/2020 that the business had to close on a temporary basis due to the Government directives. As part of this the respondent also outlined a number of measures that would affect pay and for the complainant this meant a reduction of 25% of basic salary. It was envisaged that when the business reopened some grades, including the complainant, would be subject to a permanent reduction of 15% of basis salary. The complainant was paid an average nett monthly pay of €2,950. He submitted his complaint to the Workplace Relations Commission on 28/05/2020 and is seeking adjudication under section 6 of the Payment of Wages Act, 1991. |
Summary of Complainant’s Case:
The complainant commenced employment with the respondent in April 2014. He did not have a contract of employment and was unable to obtain one from the respondent. He was made redundant in July 2020. He was a General Sales Manager. At the end of March 2020 he received an e mail which outlined temporary wage cuts during the Covid-19 pandemic which resulted in the closure of the business on a temporary basis. There was no prior consultation with the complainant in relation to this reduction. The complainant was also advised that when the business reopened he would be subjected to a permanent 15% reduction in basic salary. When the business reopened the complainant advised his line manager that he would not be willing to accept the 15% permanent reduction and that he wished to be restored to full pay. The complainant submits that he gave no consent to a reduction in wages and that the respondent acted unilaterally in reducing his wages by 25% in April, May, June and July 2020. Such a reduction is a contravention of the Payment of Wages Act, 1991. |
Summary of Respondent’s Case:
The respondent was faced with an unprecedented situation due to the Covid-19 pandemic. They were committed to ensuring compliance with all Government and HSE guidance and protocols. On 18/03/2020 the respondent issued protective notice to all employees. This notice confirmed that the March payroll would be paid but given the business challenges after 31/03/2020 and the potential that the business would have to close all employees were put on “immediate notice” that a number of measures would be necessary. These included temporary layoffs, reduced pay, shorter working hours, unpaid leave, statutory redundancy and other measures. On 27/03/2020 a further update was issued to all employees and this confirmed that he business would close in line with Government policy. This notice also confirmed that there would be temporary payroll reductions for a period of eight weeks and when the trading position improved post closure it was intended to restore 100% basic salary for all not management roles. Managers would be subject to a permanent reduction of 15%. It was submitted on behalf of the respondent that, while employees did not like the proposals, they received cooperation from all grades in relation to these. Their employees understood that these were necessary in this time of crisis and that it was done on the basis of pragmatic business decisions. The complainant at all times accepted that the 25% reduction in basis salary. He did object to a 15% permanent reduction, but the reality is that this was never implemented when the business fully opened. The respondent refutes that it is in breach of the Payment of Wages Act. The complainant’s position was made redundant in July 2020 and it is the respondent’s position that this complaint was submitted as a result of the complainant becoming aware that his position could be at risk of redundancy. |
Findings and Conclusions:
The Payment of Wages Act 1991 defines employee as “a person who has entered into or works under (or, where the employment has ceased, entered into or worked under) a contract of employment…” The Act notes that the term “contract” applies “whether the contract is express or implied and if express, whether it is oral or in writing.” The Act defines “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..” Deductions made by an employer from the wages of an employee are set out in Section 5 of the Act 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.” Having carefully considered the circumstances involved in the within case I am satisfied that the reduction of 25% of the complainant’s salary from April 2020 represents a deduction from his wages. Taking into account the application of Section 5 (1) (a) as outlined above, I am satisfied that the deduction was not required or authorised by any statute or instrument under statute. Taking into account the application of Section 5 (1) (b) as outlined above, I am satisfied that there is no term or clause in the complainant’s contract of employment dated 07/09/2015 which explicitly required or authorises a deduction from his wages or makes any reference to the likely circumstances in which such a deduction might occur. Taking into account the application of Section 5 (1) (c) I am satisfied that the complainant did not give his prior consent in writing to the deduction from his wages. The complainant submitted his complaint form to the WRC on 28/05/2020. I note that he states the following: “I am happy to accept the temporary reduction of 25% until June 30th but refuse to accept any permanent reduction in salary.” This acceptance was conditional and at subsequent meetings he was informed that the permanent reduction of 15% was not negotiable. Other events overtook the implementation of the 15% and so this was not relevant to this complaint. The complainant submitted details of a meeting he had on 28/05/2020 in relation to various matters. The issue of the pay reduction was also discussed again, and I note that the complainant told his managers that he was “not willing to accept the permanent reduction in pay.” It is accepted that the respondent needed to act in response to the Covid-19 pandemic and to comply with Government guidelines. They had assessed the potential business impact and made prudent and pragmatic decisions as a result of this. It is also accepted that their motivation was genuine. However, the respondent is still obliged to comply with the relevant employment legislation regardless of the prevailing circumstances. In relation to the temporary deduction there was no evidence that “the employee has given his prior consent in writing to it” as is required by the Act. In that context the complaint is well-founded and the complainant is entitled to redress. I award him the sum of €4,164 gross which equates to the amount deducted for the months of April to July 2020. |
Decision:
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.
Section 6 of the Payment of Wages Act, 1991 requires that I made a decision in relation to this complaint in accordance with the relevant redress provisions under that Act.
Having considered the submissions and evidence adduced at the hearing I find that this complaint is well founded. I direct the respondent to pay the complainant the sum of €4,164 gross. This amount is subject to the normal statutory deductions which apply to pay. |
Dated: 08th September 2021
Workplace Relations Commission Adjudication Officer: John Harraghy
Key Words:
Pay reduction. Written consent |