Complainant

Respondent

Parties

Shane  Ormsby

Inspirus Global Education

Representatives

Self-Represented

Andrea Montanelli Peninsula

Act

Complaint Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under section 6 of the Payment of Wages Act, 1991

CA-00061942-001

03/03/2024

The Complainant commenced his engagement with the Respondent on 16th January 2023. The fact of the Complainant’s employment and his rate of pay were both contested by the Respondent. The parties ended their engagement on 16th August 2023.

On 3rd March 2024, the Complainant referred the present complaint to the Commission. Herein, he alleged that the Respondent failed to discharge wages to the sum of €18,303.32, and he submitted that the Respondent had made an illegal deduction as defined by the Act. By response, the Respondent stated that the Complainant was not their employee and that no sums that might be defined as “wages” were due and owing to him. The Respondent further submitted that the complaint was statute barred for the purposes of the impleaded Act.

A hearing in relation to this matter were convened for and 10th February 2025. This hearing was conducted 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. No technical issues were experienced during the hearing.

Both parties issued extensive submissions in advance of the hearing, said submissions were expanded upon and contested in the course of the hearing. The Complainant gave evidence in support of his complaint, while two witnesses for the Respondent gave evidence in defense. All evidence was given under oath or affirmation and was opened to cross-examination by the opposing side.

As set out above, two preliminary issues as to my jurisdiction to hear the complaint were raised by the Respondent. Given the nature of the same, these will be considered following a summary of the substantive matter.  

In evidence, the Complainant stated that he commenced employment with the Respondent on 16th January 2023. The Complainant’s title was to be “Executive Director Global Education”, with an agreed salary of €110,000.  

In evidence, the Complainant discussed the circumstances of his being appointed to the Respondent. He stated that during all discussions and negotiations regarding the terms of his engagement, it was understood that he was to be directly employed with the Respondent. The Complainant stated that he was issued with draft terms of employment by the Respondent in advance of his commencement date and opened the same in evidence. He further submitted that the parties were in the process of negotiating an extended notice period, with the parties agreeing that the same was to be increased from one week to six weeks.  The Complainant stated that during his employment he acted as an employee at all times. In this regard, the Complainant stated that he applied for, and was granted, annual leave. The Complainant stated that he was, at least in theory, remunerated for public holidays. He further stated that he made his employers aware of his whereabouts and informed them of any proposed absences from the Respondent’s offices.

From the outset, the Complainant experience ongoing difficulties in regarding the timely payment of his wages. The first payment received by the Complainant was to the value of €5,000 on 13th March, almost two months following his start date. The Complainant stated that due to ongoing issues regarding the ROS and the Respondent’s accountant’s he was not set up as an employee of the purpose of revenue but instead issued an invoice for his payments.

Following receipt of the initial payment, the Complainant did not receive another payment of wages for over a year. In evidence, the Complainant opened numerous pages of conversations between himself and the senior management of the Respondent. Throughout the process, the Respondent accepted that the funds were due and owing and issued various undertaking in respect of the payment of the same to the Complainant. Each time these deadlines were not met, with the Complainant finally being forced to refer the present complaint thereafter.

The Complainant accepted that the last day of his employment was 16th August 2023, and that the present complaint was referred in excess of six months following the same. Nonetheless the Complainant applied for an extension of the relevant cognisable period in accordance with the Act. In this respect, the Complainant stated that continually sought to negotiate and potentially resolve the present dispute prior to the referral of the same.

In answer to a question posed in cross examination, the Complainant accepted that the contract of employment opened was not formally executed by the parties. In this respect, the Complainant stated that on the commencement of his employment other matters took precedence, and the matter of his own contract was not a priority. The Complainant further accepted that during the negotiations with the Respondent regarding the outstanding payments, he threatened to commence proceedings in the Circuit Court. When asked why he threatened this course of action, as opposed to the present complaint, he submitted that his understanding at the time was that this is the manner by which such complaints are resolved.

In summary, the Complainant submitted that he was clearly and unequivocally and employee of the Respondent. He further submitted that the Respondent had accepted that they failed to discharge his wages in the course of his employment and that the wages in question remained due and owing to him.

By response, the Respondent denied that the Complainant was their employee during the cognisable period for the purposes of the present complaint.

In this respect, the Managing Director accepted that at the outset of their engagement, the anticipation was that the Complainant would be engaged directly as an employee. He accepted that the statement of terms had been created and shared with the Complainant for this purpose. However, in evidence, the Managing Director stated that in the course of the Complainant’s engagement, it became apparent that the role the Complainant occupied was more clearly defined as a contractor providing various consultancy services. In this respect, he submitted that the employment model was discarded in favour of the agency model for the course of the Complainant’s engagement. In this respect, he submitted that the Complainant was not paid as an employee but issues invoices for services that were discharged by the Respondent. In addition to the foregoing, the Managing Director stated that his engagement with the Respondent was one of several business ventures operated by the Complainant. He further submitted that he exerted limited to no control over the actions of the Complainant and that he was free to come and go as he pleased.

Regarding the payments allegedly outstanding to the Complainant, the Respondent submitted that as a contractor, he was not entitled to either holiday pay or a notice payment. The Respondent further submitted that the Complainant was remunerated for all work competed and that no payments to the Complainant were outstanding on the date of hearing.

In summary, the Respondent submitted that the Complainant was not their employee, and that no payments that might be determined as “wages” were due and owing. In this respect, the Respondent placed reliance on the fact that the Complainant’s purported contract of employment was not signed by the parties and, in their view, did not have legal effect.

Notwithstanding the forgoing, the Respondent submitted that the Complainant was referred to the Commission in excess of six months following the Complainant’s resignation and that the Complainant was statute barred on these grounds.

By submission and in evidence, the Respondent stated that the Complainant was not, for at least the cognisable period of the present complaint, their employee. They submitted that while it was initially intended that the Complainant would be engaged directly as an employee, they submitted that on the commencement of employment the parties agreed that it would be more advantageous to engage in a contractor relationship. By response, the Complainant disputed this submission and stated that he was clearly and unequivocally an employee of the Respondent throughout his engagement. In this regard, the Complainant opened various correspondence between himself and the Respondent demonstrating, in his view, the existence of an employment relationship between the parties.

In this regard, Section 1 of the Act 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 subject of what constitutes a “contract of employment” for these purposes has been the focus of numerous superior court matters in recent times. Most recently, the Supreme Court issued an authoritative determination in the matter of Revenue Commissioners v. Karshan [2023] IESC 24. Here, following a consideration of the considerable body of law in this particular area, the Supreme Court posed the following five questions that must be examined prior to reaching a determination in this regard:

1.      Does the contract involve the exchange of wage or other remuneration for work?

2.      If so, is the agreement one pursuant to which the worker is agreeing to provide their own services, and not those of a third party, to the employer?

3.      If so, does the employer exercise sufficient control over the putative employee to render the agreement one that is capable of being an employment agreement?

4.      If these three requirements are met the decision maker must then determine whether the terms of the contract between employer and worker interpreted in the light of the admissible factual matrix and having regard to the working arrangements between the parties as disclosed by the evidence, are consistent with a contract of employment, or with some other form of contract having regard, in particular, to whether the arrangements point to the putative employee working for themselves or for the putative employer.

5.      Finally, it should be determined whether there is anything in the particular legislative regime under consideration that requires the court to adjust or supplement any of the foregoing.”

Regarding the present matter, it is common case that the pre-engagement communications between the parties all indicated that the Complainant would be engaged as an employee. These discussions cumulated with the Complainant being issued with terms of employment by the Respondent on 13th January 2023, three days prior to the commencement of his employment. These terms clearly and unambiguously outline the Complainant’s status as an employee of the Respondent, and it was on this basis that the Complainant commenced his engagement, which must be described as an employment, with the Respondent on 16th January. The day following the commencement of the Complainant’s employment, he received a further email from the CEO in relation to HR advice received in relation to the Complainant’s notice period, again this correspondence clearly indicates that the Complainant commenced the engagement as an employee and was viewed as such at the outset of the engagement.

The position of the Respondent thereafter was that the parties came to a mutual agreement to the effect that they would dispose of this employment relationship and, at some point in the engagement, commence a non-employment, contractor style relationship. In evidence, the Complainant strongly denied that this occurred, and stated that he was engaged as an employee at all times. A number of difficulties arise in relation to the Respondent’s position in this regard. Firstly, as set out above, it is common case that the engagement commenced as one of employment. If this employment ended and a different form of engagement arose, as submitted by the Respondent, evidence would have to be produced of this employment being terminated by either party. In this regard, no evidence of this nature was provided during the hearing. The Complainant certainly did not resign his employment and the Respondent did not issue any communication that might be interpreted as a dismissal any time prior to 16th August 2023. This being the case, it is apparent that the contract of employment commenced on 16th January and ceased with the dismissal of the Complainant some seven months later.

In evidence and by submission, the Respondent placed a strong reliance on the fact that the statement of terms of employment was not signed by the Complainant. In the view of the managing director of the Respondent, the absence of a signed contract of employment demonstrated that the Complainant was not their employee of the relevant period of the present complaint.

While contractual documentation is a relevant factor in determining employment status, the absence of same does not prove fatal to the Complainant’s application. In this regard, it is noted that Section 1(1) of the Payment of Wages Act, in defining a contract of employment, provides that the same may exist “whether the contract is express or implied and if express, whether it is oral or in writing”. Having regard to the foregoing, the Act clearly permits a contract of employment to exist outside of written form, and the failure of the Complainant to execute the agreement issued to him at the commencement of his employment is far from fatal to his application.

Having regard to the accumulation of foregoing points, I find that the Complainant was engaged as an employee of the Respondent. In this regard, the complexities and nuances of the Karshan test outlined above are somewhat ameliorated by the fact that the parties commenced their engagement in an employer / employee relationship and that this relationship did not end prior to the Complainant’s dismissal.

In such circumstances, I accepted jurisdiction to hear the present complaint, subject to the second preliminary issue listed below.

By submission, the Respondent stated that relevant payment of wages was due in excess of six months prior to the referral of the complaint. By response, the Complainant applied to have the cognisant period for the purposes of the present Act extended from six to twelve months. The “reasonable cause” relied upon by the Complainant in this regard is the fact that the parties were in ongoing negotiations in respect of the issues at hand and it was anticipated that the matter could be resolved locally prior to the referral of the present complaint.

In this regard, Section 6(6) of the Workplace Relations Act 2015 provides that,

“…an adjudication officer shall not entertain a complaint referred to him or her under this section if it has been presented to the Director General after the expiration of the period of 6 months beginning on the date of the contravention to which the complaint relates.”

Thereafter, section 6(8) provides that,

“An adjudication officer may entertain a complaint or dispute to which this section applies presented or referred to the Director General after the expiration of the period referred to in subsection (6) or (7) (but not later than 6 months after such expiration), as the case may be, if he or she is satisfied that the failure to present the complaint or refer the dispute within that period was due to reasonable cause.”

In the matter of Health Service Executive -v- McDermott 2014 [IEHC} 331, Hogan J. stated that,

“…the words “contravention to which the complaint relates” which are critical. It may be accepted that every distinct and separate breach of the 1991 Act amounts to a “contravention” of that Act. If, for example, an employee is paid monthly and the employer makes unlawful deduction X in respect of salary for every month in a two year period it might be said in the abstract that there have been 24 separate “contraventions” of the 1991 Act during that period”

And,

“For the purposes of this limitation period, everything turns, accordingly, on the manner in which the complaint is framed by the employee. If, for example, the employer has been unlawfully making deductions for a three year period, then provided that the complaint which has been presented relates to a period of six months beginning “on the date of the contravention to which the complaint relates”, the complaint will nonetheless be in time.

It follows, therefore, that if an employer has been making deduction X from the monthly salary of the employee since January 2010, a complaint which relates to deductions made from January, 2014 onwards and which is presented to the Rights Commissioner in June, 2014 will still be in time for the purposes of s. 6(4). If, on the other hand, the complaint were to have been framed in a different manner, such that it related to the period from January, 2010 onwards, it would then have been out of time.”

Having regard to the above-mentioned authority, the factual matrix must be examined to determine thedate of the contravention to which the complaint relates. Under most contracts of employment, the manner and method of payment is clear and uncontroversial. While the statement issued by the Respondent did state that, “…your salary…will be paid monthly in arrears”, it is common case that this is not what occurred in practice. Rather, in the course of the Complainant’s employment, it is apparent that that his wages were not discharged with any regularity, either in the amount received or that date on which they were paid. This being the case, the “date of the contravention to which the complaint relates” does not appear to be any fixed date within the Complainant’s employment, rather the Complainant was due payment of a significant amount of wages at almost all times of his employment, and particularly towards the end of the same.

In circumstances whereby the Complainant’s employment ended on 16th August 2023 and the complaint form was referred on 3rd March 2024, it is apparent that period of six months and fifteen days elapsed between the same. However, the date of the contravention for the purposes of the present Act is not the date on which the employment ended, but the date on which the Complainant was due to receive his wages and suffered an alleged illegal deduction from same. Having regard to the express wording of the terms issued by the Respondent, and the manner by which payment was issued in the course of the Complainant’s employment, I find that the date of contravention occurred at least one month following the termination of the Complainant’s contract and that a significant amount of accrued wages were due at that point. In these circumstances I find thatdate of the contravention to which the complaint relates occurred within the cognisable period of he purposes of the present complaint, and I accept jurisdiction to hear the substantive matter.

Regarding the substantive complaint, the Complainant alleged that he suffered an underpayment, and consequently an illegal deduction, of €18,303.32 from his wages. By submission he set out that this sum was comprised of the persistent underpayment and non-payment of his salary in the course of his employment, the non-payment of various expenses accrued in the course of his duties, the non-payment of annual leave entitlement on termination and the non-payment of wages in lieu of his notice emtotlement.

By response, the Respondent submitted that the Complainant either had no entitlement to the payment in question due to their view on his employment status and, without prejudice to the same, that he did not have a contractual right to the payments in question.

Regarding the present case, the Complainant has alleged that he suffered an illegal deduction of €18,303.32 from his wages. He submitted that this deduction took the form of the under payment or non-payment of his salary, the non-payment of various expenses accrued in the course of his duties and the non-payment of notice and annual leave entitlements.

Section 1 of the Payment of Wages Act 1991, defines “wages” as “any sums payable to the employee by the employer in connection with his employment, including…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”

In the matter of Marek Balans v Tesco Ireland Ltd [2019 No. 83 MCA], McGrath J stated that when considering complaints under the present Act,

“Central to the Court’s analysis must be the concepts of wages properly payable and the circumstances in which there is a deficiency in respect of those such payments”.

Regarding the first alleged deficiency in the payment of wages, the Complainant alleged that he was due the sum of €3,051.70 in unpaid salary over the course of his employment. In calculating this sum, the Complainant calculated that in consideration of his contractual rate of pay, he earned the sum of €65,016.36 in the course of his employment. The Complainant accepted that he received payment of €61,964.66 from the Respondent in respect of the same, creating a deduction of €3,051.70 in unpaid wages. While the Respondent disputed this position on the grounds of the Complainant’s employment status, given the finding above in relation to the same, I find that the wages in question were properly payable. By submission, the Respondent further disputed the Complainant’s calculations, stating that the Complainant was paid the sum of €67,343.07 in the course of his employment, and that consequently all wages were properly paid. However, on examining these figures, it is apparent that the same include payments of various “expenses” that are not calculable as “wages” for the purposes of the present Act. Having regard to the foregoing, I find that the Respondent’s failure to discharge the entirety of the Complainant’s wages constitutes an illegal deduction for the purposes of the Act.

The second head of loss submitted by the Complainant related to the alleged non-payment of €1,713.17 in respect of expenses accrued in his employment.

In this regard, Section 1 of the Act expressly excludes “any payment in respect of expenses incurred by the employee in carrying out his employment”, from the definition of “wages”. Having regard to the foregoing, I find that this portion of the amount claimed is not properly payable for the purposes of the Act.

The third amount claimed by the Complainant was the sum of €846.15 in respect of an accrued and unpaid holiday entitlement due on the termination of the Complainant. Again, the Respondent disputed this entitlement on the basis of their view on the Complainant’s employment status. In circumstances where I have found that the Complainant was employed by the Respondent, and that the definition of “wages” set out above expressly includes payment related to holiday entitlement, I find that this portion of the amount claimed constitutes wages for the purpose of the Act.

The final portion of wages claimed by the Complainant relates to his notice entitlement. By submission, the Complainant stated that he had negotiated and agreed a six-week notice period with the Respondent. In consideration of the Complainant’s annual salary, he calculated the value of the same at €12,692.30. By response, and without prejudice to their points as to jurisdiction, the Respondent submitted that the Complainant had no contractual entitlement to the same.

In this regard, Section One of the Act provides that the following is to be considered “wages” that are deemed to be properly payable,

“…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”.

In evidence, the Complainant stated that his employment was terminated by the Respondent in August 2023. Following the same he submitted that he received no payment of notice thereafter.

Regarding the Complainant’s contractual entitlement to notice, it is noted that the statement issued by the Respondent states that in consideration of the Complainant’s length of service, he is entitled to a payment of one week of notice. However, in the days following the delivery of these terms, it is apparent that the parties entered into a period of negotiation regarding this term. By submission, the Complainant opened an email between the CEO of the Respondent and their HR advisors, dated 13th January 2023, which states that,

“We agreed to change the notice period to 6 weeks for both sides right from the start”.

The position of the Respondent in this regard is that the parties did not amend the statement to reflect this position and that the same were never signed by the Complainant in any event. While it is that case that the statement of terms was not signed by either party, it is apparent from the email that was opened that the parties came to a verbal agreement in relation to the notice period. In this regard, it is noted that Section 1(1) provides that a contract may be “express or implied and if express, whether it is oral or in writing”. Having regard to the factual matrix presented, it is noted that the parties came to an express, oral agreement regarding the notice period, and that the Respondent’s failure to reduce the same to writing does not defeat the Complainant’s position in this regard.

Finally, in the matter of In Starrus Eco Holdings Limited T/A Panda / Greenstar and Ben Mandiche PWD2236, the Labour Court

“…that in order to determine the appeal before it under the Act of 1991 it would first have to exercise a jurisdiction under the (Minimum Notice and Terms of Employment) Act of 1973 in order to determine the wages properly payable to the Complainant on the occasion. No appeal under the Act of 1973 lies before the Court and consequently the Court lacks jurisdiction to decide upon an alleged breach of that Act.”

Regarding the instant case, it is also the case that no complaint under the Minimum Notice and Terms of Employment Act is before the Commission. However, the element of the complaint relating to the non-payment of the notice period is both a contractual and a statutory entitlement. Section One provides that wages may be “payable under his contract of employment or otherwise”. In circumstances whereby the Complainant has determined that he has a contractual entitlement to six weeks of notice pay, and that the contract provide that the Respondent reserves the right to pay same in lieu on termination, I find that payment in lieu of the six week notice period constitutes wages that are “proper payable” for the purposes of the impleaded Act.

I find that the complaint is well founded.

Regarding redress, Section 6(1)A(i) provides that a payment of compensation may be order to the sum of the deduction under the Act. Having regard to the foregoing, I order the Respondent to pay the Complainant the sum of €16,590.15 in respect of the deduction from his wages.

This payment should be subject to all normal deductions as income.

Wages, properly payable, notice payment, date of contravention