PW426/2011

EMPLOYMENT APPEALS TRIBUNAL

APPEAL OF:                                                                                      CASE NO.

Mieczyslaw Marzec – appellant                                                       PW426/2011

against the decision of the Rights Commissioner in the case of:

Billy Purcell Plant Hire Limited (In Liquidation)

under

PAYMENT OF WAGES ACT, 1991

I certify that the Tribunal

(Division of Tribunal)

Chairman:      Ms N. O’Carroll - Kelly B.L.

Members:       Mr R. Prole

                        Mr J. Dorney

heard this appeal at Carlow on 11^th May 2012

Representation:

Appellant:       Cathy Hamilton BL instructed by Padraig Murphy Solicitor,

                        54 South William Street, Dublin 2

Respondent:    No appearance or representation

This case came before the Tribunal by way of an appeal by an employee (the appellant) against a decision of a Rights Commissioner under the Payment of Wages Act, 1991, ref: r-106991-pw-11/JT.

The decision of the Tribunal was as follows:-

The appellant’s representative informed the Tribunal that the appellant was seeking to be paid in full for the period he was on lay-off. The appellant did not have a contract of employment and therefore his terms and conditions do not include a provision for not paying him in the event of lay-off. During the period of lay-off the employee/employer relationship continued and the employer is required to pay the appellant.

The appellant did not consent to not being paid. Therefore it can be argued that his non-payment amounts to a 100% deduction.

Determination

The Tribunal has carefully considered all of the evidence adduced together with the documentation handed in during the hearing and the submissions furnished post hearing.

The claimant was placed on temporary lay-off from 1^st November until 22^nd February 2011. He was not paid during that lay-off period. The claimant did not have a written contract of employment nor was he given any terms of his employment. The claimant states that he is entitled to his pay for the period he was on lay-off as he did not consent to the deduction either verbally or in writing. Furthermore, he states that the deduction made to his wages was unlawful.

Section 11 of the Redundancy Payments Act 1967 states

1 (1) where after the commencement of this Act 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,

(c)   That cessation of employment shall be regarded for the purposes of this Act as lay-off.

It is clear from the facts submitted that the respondent was of the belief that the cessation of employment would not be permanent. That in fact was the case. Therefore, Section 11 (2) (a) is satisfied. The respondent did give notice to the claimant prior to the period of lay-off and therefore Section 11 (2) (a) is satisfied.

The question the Tribunal must answer is whether or not by virtue of the employer having invoked Section 11 of the 1967 Act the employee’s contractual and statutory right to pay during that period of lay-off is suspended.

The claimant relied on the case of Industrial Yarns v Greene [1984] ILRM 15. The factual situation that existed in the Industrial Yarns case is different from that in the claimant’s case. That case primarily focused on the right of an employee to be given statutory notice of the termination of his employment or to be paid in lieu in circumstances where the company, knowing that the employees were going to claim redundancy, used the statutory lay-off legislation to force its employees to invoke their rights under Section 12 of the 1967 Act. All of the parties were fully aware that the lay-off period would be permanent and that the sole purpose of putting the employees on lay-off was so that they would invoke their right to claim redundancy. The company then used that to avoid its legal obligation to pay notice, based on the fact that it is the employee who sought redundancy. That was clearly an improper use of the legislation and was not its intended use. In the case before the Tribunal Section 11 of the 1967 Act was used for its intended purpose and the respondent clearly satisfied Section 11 (2) (a) and (b).

The claimant sought to rely on Costello J. when he stated that “It is clear that the employer in operating this section is not terminating the contract of employment – there is a cesser of employment, but the contract still subsists.” The claimant went on to argue that by virtue of the fact that the contract still subsists together with the fact as per Costello J. “there is no contractual power (express 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” that the respondent’s failure to pay him during the lay-off period was unlawful. If one reads on Costello J. states correctly that repudiation does not automatically bring a contract to an end. The employee is free to accept that the repudiation has brought the contract to an end or not as the case may be. The claimant has cherry picked from the Costello J. judgement and has taken sections of it out of context for his own benefit. The learned Judge in that section of his judgement was specifically referring to the employer’s erroneous use of Section 11 and the legal position that followed from it. His comments are inextricably linked to the factual situation that existed in that case and cannot be applied to the claimant’s case. Furthermore, whilst there may not be a “contractual power in the contract of employment to suspend the operation of the contract for a limited period of time” there is a statutory one, Section 11 of the 1967 Act, and that statutory power takes precedence over a contract regardless of whether the contract is silent on the issue or not. Once Section 11 is invoked there is a temporary cessation of employment but the contract of employment still existed but in a state of temporary suspension. There can be no breach of contract in these circumstances.

The claimant opened the case of John Lawe v Irish Country Meats Limited 1998 [ELR] 266 to the Tribunal by quoting White J. from Hanley v Pearse & Partners 1915 1 KB 698 “Absent a term in the contract, the employer’s fundamental obligation is to pay the agreed remuneration for the times of work during which the employee is prepared to work. Ordinarily an employer is free to lay off workers for any reason provided he continues paying them. The Tribunal note that White J. relied heavily on authorities from the United Kingdom. Whilst they are helpful in some aspects one must take note of the fact that the United Kingdom’s statutory position in relation to layoff differs from ours in that the legislation specifically refers to the employee “being employee under a contract on terms and conditions… “. Our equivalent legislation is silent in relation to the contractual terms.

Section 147 Employment Rights Act 1996 (UK)

(1)  For the purposes of this Part an employee shall be taken to be laid off for a week if-

(a)  He is employed under a contract on terms and conditions such that his remuneration under the contract depends on his being provided by his employer with work of the kind which he is employed to do, but

(b)  He is not entitled to any remuneration under the contract in respect of the week because the employer does not provide such work for him,

(2)  For the purposes of this Part an employee shall be taken to be kept on short-time for a week if by reason of a diminution in the work provided for the employee by his employer (being work of a kind which under his contract the employee is employed to do) the employee’s remuneration for the week is less than half a week’s pay.

Furthermore, British common law seems to rely on the employee “being prepared to work”. No such legal test exists in this jurisdiction. What is noteworthy about the Lawe case is that, as in the Industrial Yarns case there seems to have been an unlawful use of Section 11. The Plaintiff contended that the lay-off was not justified and was done to put pressure on the workforce to accept the new practices and that it was essentially a lock out situation. Also White J. found that the lay-off was not temporary but formed part of the winding down of the company and its workforce. The Tribunal find that it would be wrong to apply principles of law established in circumstances where a party attempted to avoid its legal obligation by wrongly invoking legislation for a purpose for which it was never intended. To apply such principles generally could lead to an injustice.

White J., based on the specific set of circumstances that were before him, found that in that situation the employees were entitled to pay during lay-off. Interestingly White J. did state that a right to lay-off without pay could exist where the lay-off was temporary and where custom and practice existed. Such custom must be reasonable, certain and notorious. No evidence was produced before the Tribunal in relation to the custom and practice of the respondent. However, it can be said that generally throughout this country the custom and practice is that lay-off will be without pay. That custom and practice has existed since the coming into force of the Redundancy Payment Act.

The Tribunal finds that when Section 11 is genuinely invoked and the employer satisfies Section 11 2 (a) and (b) then, the contract of employment is temporarily suspended and there is no right to payment during that period. Furthermore, the Tribunal finds that there is a notorious custom and practice in this jurisdiction that employees will not be paid during a period of lay-off.

The appeal against the decision of the Rights Commissioner under the Payment of Wages Act 1991 fails. The decision of the Rights Commissioner is upheld.

Sealed with the Seal of the

Employment Appeals Tribunal

This   ________________________

(Sgd.) ________________________

     (CHAIRMAN)

                                                                                            THE HIGH COURT

                                                                                                          2013 No.60 MCA

Monday the 1^st day of July 2013

BEFORE MR.JUSTICE HEDIGAN

IN THE MATTER OF THE PAYMENT OF WAGES ACT 1991

AND IN THE MATTER OF AN APPEAL PURSUANT TO SECTION 7(4)(b) OF THAT ACT

BETWEEN

MIECZYSLAW MARZEC 

                                                                                                               APPELLANT

AND

BILLY PURCELL PLANT HIRE LIMITED ( IN LIQUIDATION)           

                                                                                                            RESPONDENT

AND

THE EMPLOYMENT APPEALS TRIBUNAL

                                                                                                                                                                                                                              NOTICE PARTY

                   Upon Motion of Counsel for the Appellant pursuant to Notice of Motion herein dated the 5^th day of March 2013 made unto the Court this day and upon reading the said Notice the Affidavits of service thereof the Affidavit of Padraig Murphy filed herein on the 5^th day of March 2013 and the documents and exhibits respectively referred to therein and the copy letter herein dated the 9^th day of May 2013 from the Chief State Solicitor on behalf of the Notice Party from which it appears that Notice Party is not participating in this statutory appeal

And upon hearing said Counsel and there being no attendance in Court by or on behalf of the Respondent or the Notice Party

IT IS ORDERED that the decision of the Employment Appeals Tribunal dated the 17^th day of January 2013 be set aside

AND IT IS ORDERED that the Appellant do recover against the Respondent the sum of € 8,720.00 in respect of unauthorised deductions pursuant to Section 5 of the Payment of Wages Act 1991

AND IT IS ORDERED that the Appellant do recover against the Respondent the costs of this Motion and Order when taxed and ascertained

                                                                           AISLING O’NEILL

                                                                              REGISTRAR

                                                                          23^RD OCTOBER 2013

Padraig Murphy

Solicitor for the Appellant

Eileen Creedon

Chief State Solicitor

Solicitors for the Notice Party