ADJUDICATION OFFICER DECISION
Adjudication Reference: ADJ-00029622
Maximus SOS Limited T/A Offbeat Donut Co.
Georgina Robinson Robinson Solicitors
Michael Treanor BL Peninsula
Complaint/Dispute 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: 20/08/2021
Workplace Relations Commission Adjudication Officer: Janet Hughes
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 complaint concerns a dispute regarding the application of the terms concerning holiday calculations contained in a statement of terms of employment signed by the Complainant and the Respondent. A first hearing of the complaint took place on 27th May 2021. On the online complaint form the specific details of the complaint were given as: the employee is entitledpursuant to her contract of employment to €1,751.24 representing her 2019 holiday entitlement and €1,313.43 representing her 2020 holiday entitlement’. On the WRC form, the Complainant through her representative had “ticked the box” indicating a complaint under the Organisation of Working Time Act. On 25th May 2021 the Complainant in response to an email of 13th May 2021 from the Respondent gave a detailed statement of her complaint. From the form submitted supported by the contents of the detailed statement it was clear that the complaint concerned the extract from the contract which states: “If you work for at least 365 hours during the holiday year you will receive a paid holiday entitlement of four weeks during the complete holiday year”. As such it was clear prior to the hearing that while there was correspondence from the Respondent concerning the statutory entitlements of the Complainant in particular to public holiday pay, the complaint was concerned with a matter of annual leave entitlements under the terms of employment, not relying on the terms of the Organisation of Working Time Act.
At the hearing on 27th May when the subject matter of the complaint was confirmed by Ms Robinson, i.e., that this was a complaint about the term of contract, the error in completing the form was explained by the instructing solicitor as occurring because when completing the form once holiday pay was entered into the system, she was diverted to the Organisation of Working Time Act. She acknowledged that it was her error in completing the form which had caused the difficulty. Ms Robinson then requested that the complaint be heard under the Payment of Wages Act 1991. As the adjudication officer in accepting that the intention was clear, that is to say the subject matter of the complaint, expressed a preference that the parties would agree to the amendment from the Organisation of Working Time Act to the Payment of Wages Act. Mr O’Casey expressed a preference that the decision would be made by the adjudication officer. Following a break in the hearing and having considered the matter the parties were advised that the hearing would be reconvened and that a notice would issue showing that the complaint would be heard under the Payment of Wages Act 1991. There was no objection to this course of action. At the resumed hearing Mr Treanor BL acting on behalf of the Respondent included the following statement in a submission:
“30. The within claim was lodged pursuant to s27 Organisation of Working Time Act 1997. The Claimant was at all times represented by Ms Georgina Robinson of Robinson Solicitors. 31. Until the date of the within submissions, the Respondent was not legally represented. Accordingly, what follows is based on the best recollections of persons with no legal expertise or experience before the Workplace Relations Commission. 32. After discussion between the adjudication officer and Ms Robinson, an application was made to amend the Claimant’s claim to substitute the Claimant’s claim pursuant to s27 Organisation of Working Time Act 1997 for a claim pursuant to s6 Payment of Wages Act 1991. 33. At hearing, the Claimant failed to tender any document which exhibits the error upon which the Claimant seeks to rely. 34. Due to the apparent decision of the Workplace Relations Commission to proceed with a claim pursuant to 1991 Act and the apparent withdrawal of the claim pursuant to 1997 Act, these submissions only address the claim as listed. However, it should be noted that the Claimant has not particularised any claim pursuant to the 1991 Act. The Respondent is at a material disadvantage.”
This submission was addressed at the reconvened hearing when the facts of what occurred at the initial hearing were set out by the undersigned. Mr Treanor accepted that there was no impropriety on the part of the adjudication officer but expressed concern about such a practice within the Workplace Relations Commission in a general sense which is confusing in its application and where quite substantial changes have been known to be made by adjudication officers. The undersigned cannot comment on changes made by other adjudication officers in unknown circumstances. However, it was stated to Mr Treanor that the change of legislation in this instance was considered justified because the Respondent was well on notice regarding the issue in dispute and indeed a discussion regarding the provision of the contract occurred at the initial hearing but ultimately did not materialise by way of providing those contracts in good time to the adjudication officer. It was pointed out to Mr Treanor that Mr O’Casey had issued emails as far back as 2020 in which it was evident that he was aware of the fact that the claim related in some way at least to the statement of terms of employment and it was crystal clear to the Respondent prior to the hearing as to the nature of the complaint, i.e., the disputed terms of a contract and not the annual leave entitlements under the Organisation of Working Time Act. The Respondent therefore was at no material disadvantage in terms of the notification or understanding of the complaint resultant from the decision of the undersigned to allow the case to be heard under the Payment of Wages Act 1991. While the decision was made at the initial hearing, no consideration of the complaint took place until notification of the hearing under the Payment of Wages Act 1991 was issued, thus allowing the Respondent ample time to prepare a response based on that legislation and any other related aspects of a defence.
The parties were requested to provide a copy of the disputed contract details in advance of the reconvened hearing. This was offered by the Respondent. What was received was a photograph of the final page of a contract submitted on behalf of the Complainant on [X date]. A submission was provided by the Respondent on the day before the hearing. The full disputed contract including the highlighted section concerning the calculation of leave was provided by the Complainant only after the submission for the Respondent was lodged and was then only available to the adjudication officer on the morning of the hearing.
As stated to the parties at the hearing, the manner in which documents were submitted to the reconvened hearing: late; incomplete in terms of calculation of amounts claimed and the reference for those claims and counter claims; gross and not net payments claimed (compensation under the Payment of Wages Act 1991 is issued as a net and not gross payment); arguments made in one submission withdrawn at hearing in response to the contract received virtually at the last minute when the Respondent should have retained and held a copy of the same statement; statements regarding the account of the first set of proceedings which implied facts which were incorrect - all were extremely unsatisfactory. No party to an adjudication hearing is well served by the absence of a statement, supporting documentation and where relevant legal precedents provided to the adjudication officer in good time. A statement which sets out the facts by reference to legislation where necessary. The same standard is not expected of lay representatives, but it is a minimum standard which an adjudication officer is entitled to expect in the case of paid professional representatives. Accepting that the Respondent’s decision to engage professional representation in this case was very much a last-minute decision, the fact is that this Respondent was on advance notice of the complaint and the basis of the complaint prior to the first hearing and a further three months elapsed before the reconvened hearing providing a lengthy opportunity to engage and brief a representative. As it was in this case, a considerable amount of time was spent at the reconvened hearing listening to arguments which were then withdrawn or half withdrawn, requiring the parties to provide a calculation of the disputed amount, all calculations based on gross amounts and ultimately seeking to agree on a calculation of losses which did not succeed and left disagreed gross amounts for consideration and all of which contributed to wasting the time of those present unnecessarily.
The complaint was considered by way of arguments related in the main to the contract and the value of the unpaid amount. Witnesses were not called on either side and I am satisfied that this was not necessary to decide the matter.
The Complainant did reference a second matter, the date on a P45 given as September and not July which it was said caused difficulties for the Complainant in securing unemployment benefit and caused her financial hardship. Asked at the reconvened hearing how this matter could be related to the Payment of Wages Act 1991, Ms Robinson BL acting for the Complainant confirmed that she could not relate that issue to the Payment of Wages Act. This aspect was not pursued further at the hearing and is not considered in the findings or the decision in this case.
Summary of Complainant’s Case:
The Complainant was employed by the Respondent as a baker from 23rd July 2019 until 19th July 2020 when she resigned. A statement of terms of employment was signed by the Complainant and on behalf of the Respondent on 23rd July 2019. The rate of pay was €11.50 per hour and the hours of work varied over the period of the employment. The annual leave year was 1 January to 31 December each year. The statement of terms of employment under annual holidays states:
“Your holiday year begins on 1st January and ends on 31st December each year. If you work for at least 365 hours during the holiday year you will receive a paid holiday entitlement of four working weeks during the complete holiday year. Alternatively, you will receive a paid holiday entitlement of 8% of the total hours worked in the leave year, subject to a maximum of four working weeks.”
At the reconvened hearing the value of the complaint and payments withheld were given as follows: 2019, three weeks holiday pay based on average hours amounting to €1,186.06 gross; 2020, four weeks based on average hours amounting to €1,685.00 gross. The calculations were based on an average of a 43-hour working week. Paid hours of work were disputed by reference to the system not always working where the Complainant was based and so the hours were not all recorded. The hours worked in 2019 were given as 791.21 hours and for 2020 as 400.27 hours. There was one week’s holiday pay received between 2019 and 2020 which explains the figure of the claim of three weeks for 2019.
The Complainants representative contended that the facts of the matter were very clear. The Respondent provided the statement of terms and is the stronger party in this situation. The terms of the contract are black and white. Once the figure of 365 hours was worked by the Complainant the terms of the statement were triggered. This is to say that once 365 hours were worked the Complainant was informed in the statement of terms that she would receive four working weeks during the complete holiday year. There was a carry forward of leave from 2019 into 2020 due to Covid and closures of the business. It was not until the Complainant had left the employment and she started to receive her payments that she realised that the Respondent was not going to honour the statement of terms of employment. No occasion had arisen during the course of employment where the issue could have been raised by the Complainant due to the situation surrounding openings and closures due to Covid. The Complainant had been obliged to take leave in January and at no point was she told that she could not carry forward the remainder of her leave from 2019. Whereas the Respondent would argue that the standard text provided to other employees contained the figure of 1,365 hours, the Complainant had no knowledge of other employees’ statements of terms. The Complainant had raised the matter as soon as possible once she realised that she was not receiving her entitlements.
Summary of Respondent’s Case:
The following is the summary of the Respondent’s case as set out at the hearing. In a written submission the Respondent’s representative put forward potential issues regarding the authenticity of the contract which he then stated were resolved by the provision of the full text of the statement shortly before the hearing. The Respondent’s representative referred to the complaint being out of time for that part of the leave claimed for 2019 and then agreed at the hearing that leave from 2019 was brought forward into 2020 because the Complainant was obliged to take some of her allocation from 2019 in 2020. Reference was made to the issues surrounding the hearing of the complaint under the Payment of Wages Act as discussed on the first hearing date and that issue is addressed in the background.
The following is what remains from the substance of the submission on behalf of the Respondent.
The Respondent has no knowledge of how the figure of 365 hours relied upon by the Complainant occurred. It was an error. That figure should self-evidently have been 1,365 hours and this is the standard text that is contained in the standard form contract which issues to all employees. The Respondent has no knowledge of how a statement of main terms containing an error of 365 instead of 1,365 came into the possession of the Complainant. The complaint is disputed.
The history of the annual leave paid to the Complainant is as follows:
In the entirety of the Complainant’s employment the Complainant worked 1117.25 hours.
At a rate of 8% the Complainant accrued an entitlement of 94.02 hours paid annual leave amounting to €1,081.23.
During her employment the Complainant took 56 hours of paid leave at a rate of €11.50 per hour amounting to €644.
At the end of the Complainant’s employment, she was paid €437.23 in respect of 38.02 hours of untaken paid leave.
The total leave entitlement of the Complainant was €1,081.23 or 94.02 hours at a rate of €11.50 per hour.
These payments were made in full.
It was submitted that the contention of the Complainant is that she is entitled to accrue annual leave at a rate in excess of 370% of the statutory rate. The Complainant was always aware of and operating on contractual terms that reflect the standard calculation within the Respondent business of 8% of hours worked.
Based on the complaint-the calculation of the amount to be paid to the Complainant would be €1151.24 for 2019 and €1313.43-both gross figures. The claim that the Complainant worked 43 hours per week on average is rejected. The payslips provided to the Adjudication Officer show that the average paid hours prior to termination did not amount to 43 hours per week.
The Complainant seeks to obtain a vast and unearned profit and profit from a small misstatement in a document. This is not a personal profit which she ever sought during the course of her employment or ever held herself out to be entitled to during the course of her employment. The Complainant never reasonably believed she was entitled to four weeks of annual leave is she worked 365 hours.
It was submitted on behalf of the Respondent that the text of the statement of terms should be read in full:
“Beyond merely seeking to rely upon a typographical error, the Claimant wilfully disregards and makes no mention of the plain text of the statement of main terms which provides: Alternatively, you will receive a paid holiday entitlement of 8% of the total hours worked in the leave year, subject to a maximum of four working weeks.
There are two aspects of note in regarding this sentence: first it is consistent with the Respondent’s contention that the Claimant’s paid annual leave entitlement is to be construed in a manner consistent with the Organisation of Working Time Act 1997; second, it shows that as a matter of fact, the Claimant was paid her full contractual entitlement to annual leave.
The plain construction of this sentence is that as an alternative to the preceding sentence, the Respondent can pay the Claimant a holiday entitlement at a rate of 8% of total hours worked in the leave year.
The Claimant seeks to rely upon one portion of the statement of main terms which gives rise to a large annual leave entitlement. The Claimant wishes to have this section of the statement of main terms read out of context and without regard to what follows. The Claimant disregards the clear legal and contractual alternative open to the Respondent to pay the Claimant a holiday rate commensurate with s19(1)(c) 1997 Act.”
It was submitted that the claim is cynical, frivolous and vexatious and on this basis that the complaint should be dismissed in accordance with section 42(1) of the Workplace Relations Act 2015.
Findings and Conclusions:
The contract of employment is the primary source of an employee’s entitlements and the employer’s obligations in relation to remuneration and conditions of employment. These are matters that must be agreed at the commencement of the employment and are the most essential elements of the bargain entered into between the parties. Unless there is an agreement to change the agreed terms, they are seen to endure. The contract or statement of terms entered into by the parties in this case sets out the essential elements of the bargain involving for the purposes of the complaint, the formula to be used for the calculation of annual leave. Section 5 of the Act of 1991 prohibits an employer from making deductions except in accordance with the provisions of that section. These include:
“(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.”
None of these considerations arise in this case. While the Act refers to payments effectively during a period of employment, the interpretation of the Act applies to deductions or payments payable arising from the contract at the time of the termination of employment even where that payment is made after the termination of the employment relationship. Payment of outstanding entitlements to annual leave should be made at the point of termination of employment.
In this case the Respondent and the Complainant signed a contract which included the following term:
“Your holiday year begins on 1st January and ends on 31 December each year. If you work for at least 365 hours during the holiday year you will receive a paid holiday entitlement of 4 weeks during the complete holiday year. Alternatively, you will receive a paid holiday entitlement of 8% of the total hours worked in the leave year, subject to a maximum of 4 working weeks.”
In her case the Complainant is relying on the terms of the contract as signed and agreed whereas the Respondent is relying on the terms as intended by them. As a matter of fact, following the departure of the Complainant from the employment the Respondent decided that the figure of 1,365 which it is accepted applied to employees generally within the employment should apply. Applying the terms of section 5 of the Act of 1991 it is self-evident that the Respondent was not authorised to deduct the payment claimed by reference to that section as none of the terms of (a), (b) or (c) applied to the withholding of the payment as expressed in the contract. Section 5(6) of the Act of 1991 provides:
(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.”
No error of computation arises in this case. In effect the Respondent is seeking to rely on their own error in the contract signed by the parties. For the avoidance of doubt, there can be no doubt that the figure of 365 provided in the Complainant’s contract was intended to be 1,365 and as such the offering of the contract with the lower threshold for calculation of annual leave was an error. However, the decision to withhold or deduct the payment of annual leave entitlements based on the signed contract was a decision to vary the terms of that agreed contract and not one of computation. In other words, a decision to correct the error retrospectively and without the agreement of the Complainant. A complaint based on these facts cannot be regarded as vexatious or frivolous and neither should it be.
In concluding whether a complaint under the Payment of Wages Act 1991 concerned with a deduction has merit, the primary consideration is whether the disputed payment was “properly payable”. The importance of this test was central to the decision of the High Court in Dunnes Stores (Cornelscourt) Ltd v Lacey  I.R. 478 which ultimately overturned the decision of a Rights Commissioner and the Employment Appeals Tribunal:
“I am satisfied upon careful perusal of the documents relied upon by the respondents that same cannot represent the agreement or an acknowledgement of the agreement contended for but rather contain a clear denial of the existence of any such agreement. No other evidence of an agreement was proffered. In these circumstances I am satisfied that the Employment Appeals Tribunal erred in law in failing to address the question of the remuneration properly payable to the Respondents, such a determination being essential to the making by it of a determination.” [emphasis added.]
This was one of the reasons on which basis the appeal in that case was allowed. The fundamental requirement to consider and apply the term “properly payable” in respect of deductions or payments withheld was further endorsed by the High Court when allowing in part an appeal of a decision of the Labour Court in Marek Balans v Tesco Ireland Ltd [2019 No. 83 MCA] where, in remitting a decision of the Labour to that body the High Court stated that: “Central to the Court’s analysis must be the concepts of wages properly payable and the circumstances in which if there is a deficiency in respect of those such payments, it arose as the result of an error of computation. An error of computation does not arise in this instance.”
The High Court in relying on the decision in Dunnes Stores went on to say that the decision supports the proposition the first matter which should be addressed by the [Labour Court] is to determine what wages are properly payable under contract.
That the conclusions of the High Court in the Balans case that the Payment of Wages Act 1991 does not allow for the rectification of an error in a contract by way of unilateral repudiation of the contract by the employer or respondent is consistent with the decision of the adjudication officer at first instance in the Balans case where he stated:
“Nevertheless, it is difficult to see grounds why this should be set aside because of such a unilateral mistake. There is nothing unconscionable about a rate of pay €11.87. I accept the evidence that this was not a prevailing rate of pay in the respondent, but it was the rate of pay inserted into the contract. The complainant did not contribute to the respondent’s mistake. Applying the doctrine of mistake, there is no basis to set aside the binding nature of the basic rate of pay as €11.87 per hour.”
That adjudication officer also referred to section 4 of the Act of 1991 and stated:
“Section 4(3) cannot be extended to apply to errors relating to wages and statements issued pursuant to s.3 of the Terms of Employment (Information) Act or in the contract of employment. There is no statutory provision which enables the employer to set aside a contractual term even where there is an error made in good faith.”
Neither the Labour Court nor the High Court disagreed with that finding on the part of the adjudication officer. In summary, in this case the contract forms the basis of the primary source of the Employee’s entitlements and the Employer’s obligations in relation to remuneration and conditions of employment. An error was made in the contract by the Respondent. However, there is no provision within the Payment of Wages Act to vary that contract unilaterally by the Respondent and neither does it fall to this decision maker to set aside the terms of the contract based on that error. The principal point of the Complainant’s case that there was an unlawful withholding of payments due by reference to her contract of employment is well founded.
Moving on to the matter of a time limit for bringing the complaint, if this argument is being maintained, the fact is that the Complainant was allowed to carry forward leave into 2020 something that may have been necessitated by the circumstances at the time. The employer compelled her to take some of her outstanding leave at the commencement of 2020. No evidence of a statement of outstanding leave entitlements being provided to the Complainant at that time was provided at the hearing and there is no evidence that she was informed that she could not carry forward any remaining leave. It is a matter of fact therefore that she was not aware of the breach of her contract until she sought payment of her annual leave entitlements at the point of termination of her employment in July 2020. In any event, if part of this complaint relates to calculation of leave under the Organisation of Working Time Act, the only annual leave year under that Act is April to March of any year and while the term January to December is inserted in many contracts, it is the terms of the Organisation of Working Time Act which still holds precedence in terms of the annual leave year for the purposes of calculating basic statutory entitlements. This finding does allow for the fact that in this case there is an additional leave entitlement but nonetheless the employer is seeking to rely in part on the Organisation of Working Time Act in their arguments. Any assertion that the complaint was outside of the initial time limit under the Act is not a valid one.
The third significant element of the defence presented on behalf of the Complainant Respondent is that the term of the contract is open to interpretation. On this point, either the figure of 365 was an error or it was not. Allowing that it was an error and that it was intended to read:
“...if you work for at least 1,365 hours during the holiday year you will receive a paid holiday entitlement of 4 weeks during the complete holiday year. Alternatively, you will receive a paid holiday entitlement of 8% of total hours worked in the leave year, subject to a maximum of 4 working weeks.”
In some respects, the Employer is attempting to’ have their cake and eat it’ in relation to the interpretation of the relevant clause of the contract. The conclusion in this case is that it was fully intended that the hours for the basis of the four weeks annual leave would be 1,365 hours and this term applied to those who would achieve those hours. In the alternative given that variable hours were worked by employees in the employment the alternative basis of calculation holiday entitlement of 8% of total hours was inserted into the contract to allow for the nature of the variable or even part-time hours worked by employees. It is not accepted that the Employer first made the mistake and instead of applying the terms of that part which favours the Complainant, can apply the second part of the terms as an alternative in her case acting in their favour to reduce to the terms of the part containing the error. The Complainant had worked 365 hours in each year of her employment, and it is the first part of the contract which applies to her circumstances. As contended by her representative, it is that part of the term which triggers her entitlement once she had worked the requisite hours. The attempt by the Respondent to reduce her entitlement by disregarding the term of the contract and applying the lesser figure as a matter of convenience in the circumstances is not well founded.
Regarding the calculation of the amount withheld and compensation, the figures are disagreed; net figures have not been provided; and the number of hours worked by the Complainant on which to base the calculation is disputed. These factors have been mentioned earlier in this text.
Section 6(1) of the Payment of Wages Act 1991 is as follows:
“6. (1) A decision of an adjudication officer under section 41of the Workplace Relations Act 2015, in relation to a complaint of a contravention of section 5as 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.”
Having regard to all the circumstances of the case, the lack of clarity regarding the actual and net figures withheld from the Complainant, the disputed hours to be used as the reference point for any calculation, acknowledging the term of the contract but allowing for some consideration in this decision to what occurred and what is justified in the circumstances, a figure of €1200 net is considered reasonable in the circumstances allowing that such discretion is provided to an adjudication officer under the Payment of Wages Act 1991.
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.
CA-00039799-001 Payment of Wages Act 1991
The complaint brought by Ciara Daniel (Complainant) against Maximus SOS Limited T/A Offbeat Donut (Respondent), is well founded. She is to receive €1200 compensation from the Respondent.
Date: 21st September, 2021
Workplace Relations Commission Adjudication Officer: Janet Hughes