FULL RECOMMENDATION
SECTION 7(1), PAYMENT OF WAGES ACT, 1991 PARTIES : KOSTAL IRELAND GMBH (REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - MR GABRIEL DELEE (REPRESENTED BY SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION) DIVISION :
SUBJECT: 1.Appeal of an Adjudication Officer's Decision No(s)ADJ-00023761 CA-00030322-001/002 BACKGROUND: DETERMINATION: The Adjudication Officer decided that the complaint was well founded. Background In order to address a shortage in demand in 2019 the Respondent reduced the working week from five days to three days for 213 direct and indirect staff. A total of five shifts in March 2019 and six shifts in April 2019 were not worked as a result of being on a three-day week for the weeks in question. The Complainant, in common with other staff, was offered the option of taking holidays or unpaid leave, of minus hours up to a maximum of 39 hours or the use of banked hours. In the case of the Complainant he did not work and was not paid for five shifts in the period and in the case of one shift he took holidays and was paid in respect of that shift. The contract of employment of the Complainant, who commenced employment in 1995, carried the following provision: 2.1 The Union agree and recognises that the Company has the sole right and exclusive right to manage the business. The Company’s right to manage the business shall include, but not be limited to the following: 2.8 To hire, discharge, classify, transfer, layoff, suspend or discipline employees. The contract of employment of employees who commenced employment since 2008 contains the following clause: The company reserves the right to lay you off from work or reduce your working hours where through circumstances beyond its control it is unable to maintain you in employment or maintain you in full employment. You will receive as much notice as possible prior to such lay-off or short time. You will not be paid during the lay-off period. You will be paid only in respect of hours actually worked during periods of short time. The Law The Act at Section 5(1) provides 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. Section 5(6) of the Act provides:(6) Where (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. Section 6 of the Act in relevant part provides as follows: 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, or (b) if the amount of the deduction or payment is greater than the amount referred to in paragraph (a), twice the former amount. Wages are defined in s. 1 of the Act in relevant part as:- “…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…” The Redundancy Payments Act, 1967 defines the terms ‘lay-off’ and ‘short time’ at section 1 as follows:Lay-off and short-time. 11.— (1) Where an employee’s employment ceases by reason of his employer’s being unable to provide the work for which the employee was employed to do, and— (a) it is reasonable in the circumstances for that employer to believe that the cessation of employment will not be permanent, and (b) the employer gives notice to that effect to the employee prior to the cessation, that cessation of employment shall be regarded for the purposes of this Act as lay-off. (2) Where — (a) for any week an employee’s remuneration is less than one-half of his normal weekly remuneration or his hours of work are reduced to less than one-half of his normal weekly hours, (b) the reduction in remuneration or hours of work is caused by a diminution either in the work provided for the employee by his employer or in other work of a kind which under his contract the employee is employed to do. (c) it is reasonable in the circumstances for the employer to believe that the diminution in work will not be permanent and he gives notice to that effect to the employee prior to the reduction in remuneration or hours of work, the employee shall, for the purposes of this Part, be taken to be kept on short-time for that week. Summary position of Complainant The Complainant, who has worked for the Appellant since 1995, worked 39 hours per week at 7.5 hours each day from Monday to Thursday and 9 hours on a Friday at al material times. In March 2019 he was informed by the Appellant that his hours were being reduced and that he would be required to work a shorter working week than his contracted hours and that he would not be paid his contracted wages. He was informed that each week from 11thMarch to 19th April 2019 his hours would be reduced by 7.5 hours per week or 16.5 hours per week depending on which day he was told he would not be attending the workplace. Over the period the Complainant’s hours were reduced by 42 hours in total and as a result his wages were reduced by €1,348.20 gross. The Complainant submitted that no provision of his contract of employment permitted a reduction in weekly working hours or his wages. He submitted that, having regard to the Act at Section 5(1), the deduction from his wages was not required by virtue of statute or any contractual term in the contract of employment or relevant collective agreement. The Complainant submitted that he had not given his consent, written or otherwise, for the deduction to be made from his wages and there is no established or accepted custom and practice in the workplace allowing a deduction from wages of this nature. In or around 2008 the Appellant sought agreement from the workforce to place them on short-time in an attempt to avoid redundancies. The workforce did not agree at the time to short-time working. However, when the roster was forced upon them, the Complainant participated under protest. The dispute which occurred at the time resulted in all new employees recruited since that date having a clause included in their contract of employment providing for lay-off and short-time working. The collective agreement in place in the employment does not contain any clause providing for short-time working without pay. The High Court, inBalans v Tesco Ireland Ltd [2020] ELR12andDunnes Stores (Cornelscourt) Ltd v Lacey [2007] IIR 478set out that any consideration of a complaint under the Act must first consider the wages which were properly payable on the occasion. InUCC v Finbarr Waldron PWD 212, this Court confirmed that “The Act does not make provision for the determination of what wages are properly payable on an occasion on the basis of what the Court might think reasonable. Rather, the Act requires the Court, having investigated the matter, to make a determination as regards what wages were properly payable on a given date by reference to objective criteria.” The Complainant’s contract of employment clearly provides for wages properly payable in the amount of €1,252.00 per week. He pointed to the Appellant’s original submission to this Court wherein it was stated “The Respondent contends that the wages “properly payable” to the employee were the wages as advised to the employee in the contract of employment. However, due to unforeseen circumstances, the Complainant’s working week was reduced temporarily ….” As a result of the lack of an express term in the Complainant’s contract, the Appellant has sought to rely on the existence of a ‘custom and practice’of this type of deduction from wages in the workplace stemming back to 2008 / 2009. No such custom and practice exists. Deductions were made from wages at that time but the Complainant continuously refused to accept that deduction and any participation in the implementation of a reduced roster at that time was done under protest. InStefan Chmiel and others v Concast Precast Limited [PW 725 / 2012]this Court held that “at common law there is no general right to lay-off / short time without pay and while there are limited circumstances wherein there will be such a right, the employer must demonstrate that it has been custom and practice of the workplace and that the custom must be reasonable, certain and notorious”. The events giving rise to the within complaint were not required by statute or authorised to be made by virtue of statute or any instrument under any statute, and neither did the reduced working period conform with the definition of short-time working contained in the Redundancy Payments Act, 1967 or the definition of lay-off as defined in that Act.The precedent case which should be applied to the Complainant’s situation isIndustrial Yarns v Greene [1984] ILRM 15. In that case the employee was seeking wages that his employer had deducted from him while he was supposedly on lay-off. In that case the Court held “If there is no contractual power (expressed or implied) in the contract of employment to suspend the operation of the contract for a limited period, than by ceasing to employ an employee and refusing to pay him wages the employer is guilty of a serious breach amounting to repudiation of it” Summary position of Appellant The central issue for consideration by the Court is whether deductions were made from the wages of the Complainant that were properly payable to the Complainant and, if any such deductions were made, whether those deductions were made contrary to Section 5(6) of the Act. The High Court in Dunnes Stores (Cornelscourt) Ltd v Lacy made clear that the Employment Appeals Tribunal “erred in law in failing to address the question of the remuneration properly payable to the Respondents or in the alternative erred in implicitly finding that the remuneration properly payable as a result of an agreement reached between the Appellant and MANDATE was the appropriate hourly rate, the service pay and the long service increment there having been no agreement on the part of the Appellant to make such a payment” The important element is to establish the wages “properly payable” to the employee “on the occasion”. The Appellant contended that the wages “properly payable” to the Complainant were the wages as advised to the Complainant in the contract of employment. However, due to unforeseen circumstances, the Complainant’s working week was reduced temporarily from 5 working days to 3 working days. It was the Appellant’s position that the Complainant was entitled to be paid only for the actual hours worked in the period. The Appellant submitted that while the Complainant’s contract is silent in relation to reduced pay for periods of short time working, there is a collective agreement in place between SIPTU and the Appellant which clearly confirms the Appellant’s right to place employees on ‘layoff’. That agreement in relevant part asserts The Company Role 2.1 The Union agree and recognizes that the Company has the sole and exclusive right to manage the business. The Company’s right to manage the business shall include, but not be limited to …. 2.6 To establish or change work shifts and work standards2.7 To schedule hours of work, including overtime 2.8 To hire, discharge, classify, transfer, layoff, suspend or discipline employees” To place employees on lay-off would have a significant financial impact on them and therefore short-time working whilst still impactful would have less of an effect. The Appellant considered strongly that the only alternative to short-time working on the occasion would have been to place new entrants on lay-off or let them go permanently. The question for the Court therefore is to determine if the Appellant was required to pay the full wages of the Complainant in the relevant period of short-time working. It was the Appellant’s position that the Complainant was entitled to be paid for the actual number of hours worked during the period and this position is supported by the decision of the Employment Appeals Tribunal inWroblewicz & Balut v Murray Timber [EAT PW 105/2012, 245/2012, 671/2012 and 31/2013wherein it was found that “the respondent did not have sufficient work for the appellants at various times … because of a fall in the kind of work the appellants were hired to do and their weekly working hours were reduced, and their wages reduced pro-rata. The Tribunal finds that nothing specifically turns on whether the reduction in time is called lay-offs or short time. The salient issue for the Tribunal is whether the appellant had an entitlement to be paid for those times that the appellant did not work”and“to interpret a lay-off provision as other than lay-off without pay would be illogical and a nonsense” (emphasis of the Appellant added) The Appellant submitted that there is a well established custom and practice in the employment that short-time working on reduced pay is used as a mechanism to preserve employment when necessary to deal with temporary shortfalls in production requirements. This was the case on a previous occasion that short-time working on reduced pay was implemented in 2008 without objection. That there are not other recent examples of this custom and practice is not remarkable in circumstances where the Appellant would only seek to implement such short-time working in the most extreme of situations in order to preserve employment.The Appellant submitted that it has been widely accepted in a number of cases that “there is a reasonable, certain and notorious custom and practice that lay-off in Ireland is without pay since the coming into force of the 1967 Act. In all the recent EAT cases, the EAT found that general custom and practice that temporary lay-off (duly notified under the Redundancy Payments Act, 1967 to 2014) is generally, by notorious custom and practice, unpaid”. The Appellant submitted that Section 11 of the Redundancy Payments Acts, 1967 to 2014 requires the employer to have reasonable belief that lay-off or short-time working will be temporary in nature and appropriate notice is given to impacted employees. In the case of the Complainant, the Trade Union accepted that there had been a reduction in customer demand which was outside the Appellant’s control and an acceptance that they understood the rationale for the implementation of short-time work.The Appellant asked the Court to also considerDon McDonagh v Shoreline Taverns Limited (trading as Daly’s of Donore [2014] 25 ELR. 98where the EAT held that when section 11 of the redundancy payments acts was genuinely involved, and the employer believed the cessation of employment would not be permanent and notice is given to the employee prior to lay-off then the contract of employment was temporarily suspended and there is no right to payment during the period. The Appellant submitted that the instant appeal could be distinguished from the case ofInternational Packaging Corporation (UK) Ltd v Balfour [2003] IRLR 11on the basis that in the Irish jurisdiction an implied contractual term can arise within the context of the Act without the necessity for it to be in writing. InHussman Manufacturing Ltd v Weir [1998] IRLR 288the employer had the right under the contract of employment to change an employee’s working bours and the consequent reduction in income did not amount to a deduction in wages. The Appellant submitted that a decision of an Adjudication Officer inPW 473 /2011is authority for the proposition that, where an employer bases its decision to deduct from the wages of an employee on a need to address genuine and significant difficulties and that the decision to deduct was both reasonable and proportionate, a decision to award no compensation under the Act is reasonable pursuant to the Act at section 6(2). Under questioning from the Court, the Appellant confirmed that the events giving rise to the within appeal did not correspond with the statutory definition of either lay-off or short-time working as set out in the Act of 1967 and that, consequently, no lay-off or short-time working within the meaning of the Act of 1967 had occurred in the case of the Complainant. The Appellant did however submit that the meaning of clauses 2.1 and 2.8 of the collective agreement in place in the employment is that the employer has the agreed right to reduce working hours and, consequently, wages paid to workers below the level specified in the contract or specified in a collective agreement forming part of that contract at its discretion. The Appellant submitted that, without prejudice to the submission made in opposition to the complaint, the Court should, in the event of an award being considered, have due regard to the difficulties faced by the Appellant at the material time and also to the fact that the Complainant had made claims against the State in respect of his entitlements during the period when he was not at work. Discussion and conclusions The High Court inMarek Balans v Tesco Ireland Limited [2020] IEHC 55, made clear that this Court, when considering a complaint under the Act, must first establish the wages which were properly payable to the employee on the occasion before considering whether a deduction had been made. If it is established that a deduction within the meaning of the Act had been made from the wages properly payable on the occasion, the Court would then consider whether that deduction was lawful. It is common case that the contract of employment of the Complainant comprises a written contract and a collective agreement concluded between the Complainant’s Trade Union and the Appellant. The written contract of employment specifies that the Complainant will work 39 hours per week and the rate of pay to be paid to the Complainant is the subject of collective agreement between the parties. The Court therefore concludes that the contract of employment in place and relevant collective agreement establish the rate of pay which was properly payable to the Complainant in any week during the material time for the complaint which gives rise to the within appeal. The Court requested the parties to agree the factual matrix underpinning the within appeal and to make a shared submission in that respect to the Court. The parties failed to make such a shared submission in response to the Court’s request. There are consequently small differences between the parties as regards the weekly wages properly payable to the Complainant at the material time and as regards the difference between what he was paid at the material time and what was properly payable to him in the same period. Notwithstanding the refusal of the parties to provide the Court with a shared view of the factual matrix underpinning the within appeal, the Court concluded that the differences were of such relative insignificance as to mean that the Court could nonetheless proceed to decide the matter. As a result of his contract of employment and the collective agreement which forms part of that contract, the gross weekly rate of pay of the Complainant at the material time was €1,231.37 (according to the Appellant) or €1,252 (according to the Complainant). The Court concludes that the wages which were properly payable to the Complainant at the material time were €1,231.37 or €1,252 per week. It is common case that the wages paid to the Complainant during the period forming the basis for the complaint before the Court were less than the total amount of wages that were properly payable to the Complainant on the occasion. The quantum of difference between what was properly payable and what was actually paid was either €1,325.61 (according to the Appellant) or €1,348 .26 (according to the Complainant). The submission on these matters from the Complainant confirmed that he had made claims against the State at the material time and been in receipt of entitlements under the Social Welfare code to the value of €243.60 during the period. The Act, at Section 5(6), provides that where 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 to the employee on that occasion, 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. There is no submission before the Court contending that the difference between wages actually paid to the Complainant and the wages which were properly payable to him on the occasion was attributable to an error of computation. The Court therefore concludes that the difference was a deduction within the meaning of the Act Th Act at Section 5 prohibits an employer from making a deduction from the wages of an employee unless the deduction (a) is required or authorised to be made by virtue of any statute, (b) is required or authorised to be made by virtue of a term of the employee's contract of employment or (c) the employee has given his prior consent in writing to it. There is no contention before the Court that the deduction made from the wages of the Complainant on the occasion was required or authorised by statute or that the Complainant had given his prior consent in writing to the deduction. The collective agreement in place between the Complainant’s Trade Union and the Appellant provides as follows: “the union agree and recognises that the Company has the sole and exclusive right to manage the business. The Company’s right to manage the business shall include but not be limited to the following: To hire, discharge, classify, transfer, layoff, suspend or discipline employees” The Appellant acknowledged that the events on the occasion did not conform to the definition of a ‘lay off’ contained in the Redundancy Payments Act, 1967. The Appellant however asserted to the Court that the collective agreement, in specifying that the Appellant has the sole right to ‘layoff’ should be interpreted as meaning that the Appellant has the right to alter the working hours of the workers covered by the agreement and that whenever the Appellant alters such hours to a level below contracted working hours in a week, a worker will not be paid the wages specified in the contract of employment / collective agreement. The Appellant submitted that, for reasons set out in its submission related to trading and other circumstances, it reduced the working hours of the Complainant in the weeks concerned and consequently reduced the wages of the Complainant and that the deduction was authorised by the collective agreement in place in the employment and consequently lawful. The Trade Union submits that the complainant was not laid off within the meaning of the Redundancy Payments Act, 1967 or the collective agreement and that, as a result, the Appellant cannot be considered to have exercised the clause in the collective agreement entitling it to lay off the Complainant. The Trade Union submitted that no other agreement or statute is in being which entitled the Appellant to reduce the wages of the Complainant on the occasion below the wages that were properly payable on the occasion. The Court notes the dispute between the parties as regards the meaning of the term ‘layoff’ as used in their collective agreement. The Court also notes that the parties are agreed that no lay-off or short-time working within the meaning of the 1967 Act took place during the weeks at issue before the Court. The Appellant contends that the term ‘layoff’ as used in the collective agreement should be given a wider interpretation that that set out in the 1967 Act and should be understood as meaning that the working hours agreed between the parties and enshrined in the collective agreement can be unilaterally altered by the employer under the terms of that agreement. The Appellant further contends that the wider interpretation contended for should also be understood as amounting to an agreement that the wages which, according to the collective agreement and the contract of employment of which the collective agreement is a part, are properly payable to a worker on an occasion, can be reduced on any occasion where the employer reduces the working hours of the worker. The Act makes clear that a deduction from the wages properly payable to an employee on an occasion will be lawful only in the circumstances set out at Section 5(1). There is no contention that the deduction at issue was authorised by statute or that the worker had given his prior consent to that deduction in writing. This case therefore turns on whether the deduction is required or authorised to be made by virtue of a term of the Complainant’s contract of employment included in the contract before, and in force at the time of, the deduction or payment. The Appellant contends for a meaning to a term of the contract of employment which would have a profound bearing on the core of the contract itself. In essence the Appellant contends that the use of the word ‘layoff’ in the contract should be interpreted as having a wider meaning than the term ‘lay off’ as used in the Act of 1967 and that wider meaning should be understood as over-riding any contractual commitment to provide the working hours set out in the contract and on such an occasion where those hours are not provided, to undermine the requirement resting on the Appellant to pay the wages agreed in the contract of employment or any collective agreement forming part of that contract. In the view of the Court, any such contractual provision would require to be explicitly expressed and clear in meaning and intent in order for it to be taken as removing from the Complainant the protections afforded by the Act at Section 5(1). In this case the Complainant and his Trade Union refute the meaning contended for by the Appellant of the term ‘layoff’ as utilised in the contract of employment. The reference to ‘layoff’ contained in the contract of employment amounts to a single word carrying no elaboration or explanation; notwithstanding the Appellant’s submission that its meaning was intended by both parties to be of such significance as to undermine explicit arrangements and commitments set out elsewhere in that contract as regards the working hours and wages of the Complainant. The Court does not, having regard to these circumstances, accept that the word ‘layoff’ as utilised in the Complainant’s contract of employment, can reasonably be understood as carrying the meaning contended for by the Appellant. For these reasons the Court concludes that the contract of employment of the Complainant did not, at the material time, provide a requirement or authorisation for a deduction to be made from the wages properly payable to the Complainant at the material time. In the alternative to its submission as regards the provisions of the contract of employment the Appellant has contended that the practice of reducing the working week and the wages payable to the Complainant in the manner which occurred at the material time was an established custom and practice within the employment. In support of this contention, the Appellant submitted that the Complainant and other workers were placed on ‘short time’ working in 2008 which resulted in the payment of reduced wages and that no objection was made by the Complainant at the time. The Appellant submitted that “it had been widely accepted in a number of cases that there is a reasonable, certain and notorious custom and practice that lay-off in Ireland is without pay since the coming into force of the 1967 Act”. The Court was not provided with the detail of any such cases. The Complainant submits that, whereas no complaint under the Act was made on the occasion in 2008, he had made it clear at the time to the employer that he did not accept the deduction made from his wages and co-operated with the event ‘under protest’. It is common case that no event of the nature of the event before the Court has occurred since 2008. It is also common case that no event of lay off within the meaning of the Act of 1967 occurred at the material time for the within appeal. The Court cannot, on the basis of a single event which occurred in 2008, the circumstances of which are disputed, conclude that an established custom and practice existed in the employment. Similarly, having regard to the fact that no lay-off within the meaning of the 1967 Act occurred at the material time, the relevance of custom and practice in relation to such lay-off to the matters before the Court has not been established. Having regard therefore to all of the circumstances of the within appeal as set out above, the Court concludes that a deduction within the meaning of the Act occurred as contended for by the Complainant and that this deduction from the wages properly payable to him on the occasion was unlawful and that the within Complaint is well founded. Award The Act at Section 6 in relevant part provides as follows: 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 (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 the totality of the events which occurred at the material time, the fact that the State intervened to provide a payment to the Complainant in recognition of the fact that he was without work and payment at the material time, the amount of the gross wages of the Complainant and the gross amount of the deduction made from the wages of the Complainant, the Court directs the Appellant to pay to the Complainant compensation in the amount of €650, being the amount the Court thinks reasonable in the circumstances. Decision The Court decides that the within complaint is well founded and directs the Appellant to pay to the Complainant compensation in the amount of €650. The decision of the Adjudication Officer is varied. The Court so decides.
NOTE Enquiries concerning this Determination should be addressed to David Campbell, Court Secretary. |