EMPLOYMENT APPEALS TRIBUNAL
APPEAL(S) OF: CASE NO.
PW337/2010
EMPLOYEE
against the recommendation of the Rights Commissioner in the case of:
EMPLOYER
under
PAYMENT OF WAGES ACT, 1991
I certify that the Tribunal
(Division of Tribunal)
Chairman: Ms P. McGrath B.L.
Members: Mr. J. Horan
Ms N. Greene
heard this appeal at Naas on 2nd April 2012
and 31st July 2013
Representation:
_______________
Appellant(s):
Mr. Richard Grogan, Richard Grogan & Associates,
Solicitors, 16 & 17 College Green, Dublin 2
Respondent(s): No appearance
Mr. David Carson, Deloitte & Touche, Deloitte House, 29
Earlsfort Terrace, Dublin 2
Determination:
The Tribunal has carefully considered this matter. The claimant commenced his employment with the Respondent Company in and around November of 2005. The Respondent Company is in the business of providing concrete and other by-products to the construction, building and maintenance industries.
There was a Contract of employment inter-partes which described the Claimant as a General Operative, expected to work normal working hours in the Respondent’s plant at Carbury. The Claimant’s rate of pay is specified and the Contract of Employment goes on to specify that:
“The Employer reserves the right to lay you off from work or reduce your working hours where through circumstances, beyond it’s control, it is unable to maintain you in full time employment. You will receive as much notice as is reasonably possible prior to any such lay-off”
The Tribunal notes that the Contract is silent on the issue of remuneration in the event of any such reduction in working hours and/or lay-off. The Tribunal further notes that this clause appears in the Contract of Employment under the heading “Summary Dismissal” which is unfortunate as Lay –off and Summary dismissal are unrelated workplace scenarios. It has not, however, been suggested that the provision for Lay-off is in any way negated by reason of it’s having appeared under the said heading. There can be no doubt that this particular Employer recognised the possibility of Lay-off in this workplace and has made proper provision for the recognition of same albeit the issue of remuneration is not referred to.
As it happens on the 19th of August 2009 the Claimant was given notice of the need to lay-off within the Respondent workplace. A letter of notification of the fact of Lay Off was given to the Claimant by a Mr. YT on behalf of the Respondent company on the 19th of August aforesaid stating that:
“…due to the very severe downturn in the Construction Industry we have to downscale…We are now placing you on temporary Lay-off as and from Friday the 4th of September 2009”
The letter goes on to state:
“On or before the Monday the 4th of October we will let you know if we are in a position to re-instate your employment”
As per this letter, the Claimant was laid-off on the 4th of September 2009 and the Claimant was not in receipt of any remuneration from his employer, the Respondent, during this period of Lay-off. The next pertinent communication from the Respondent came on the 23rd of December 2009 (some sixteen weeks later) at which time the Claimant was told he was going to be made Redundant. The Claimant was subsequently paid his two statutory weeks pay in lieu of Notice. Redundancy was also paid.
The Claimant brought a claim under the Payment of Wages Act, 1991 stating that he was entitled to be fully remunerated for the sixteen week period of lay-off which preceded his being made redundant. The monetary claim is in the amount of €6,552.00. The claim was initially heard before the Rights Commissioner who by determination issuing on the 13th of October 2010 found that the Respondent had not contravened it’s obligation under Section 5 of the Payment of Wages Act 1991 which said section generally prohibits employers from making deductions in wages save in circumstances specifically provided for and regulated for in Section 5. It is noted that the Respondent/Employer was present at the hearing before the Rights Commissioner and the Employer asserted that it had been the custom and practise of the company never to pay wages during lay off periods – which fact was presumably not accepted by the Claimant.
The Claimant appealed the finding of the Rights Commissioner to the Employment Appeals Tribunal and the issue came before the said Tribunal on the 2nd of April 2012. The Tribunal upheld the decision of the Rights Commissioner and issued a determination to this effect on the 19th of April 2012. It should be noted that by the time the matter came before the EAT, the Respondent company was in receivership and there was therefore no appearance by or on behalf of the Respondent company then or since.
The Claimant opted to Judicially Review the findings of the Employment Appeals Tribunal and the Statement grounding the Application for Judicial Review (as amended at the leave to apply process) has been made available for the Tribunal’s consideration. In essence the Claimant asked the High Court to direct that the Employment Appeals Tribunal re-hear this matter in circumstances where, as contended by the Claimant, the Tribunal had
-mis-interpreted the Claimant’s Contract of Employment,
- had wrongly attributed custom and practise to the Employer and
- had allowed an unlawful/illegal deduction in the Claimant’s remuneration contrary to the Payment of Wages Act 1991.
The Claimant in his application for Judicial Review also specifically claims that the Employment Appeals Tribunal ignored pertinent case law opened to it and the resulting determination was therefore inadequate in all the circumstances.
The matter was dealt with before Mr. Justice Hogan of the High Court on the 26th day of November 2012. Having considered the documents before the Court, the Honourable Court ordered that the decision made by the Employment Appeals Tribunal on the 19th of April 2012 be quashed and the matter be remitted to the Employment Appeals Tribunal for reconsideration.
It is noted that neither the Tribunal as the Respondent to those Judicial Review proceedings, nor the Employer as the Notice Party to those proceedings were represented at the High Court hearing.
As per the Order of the High Court the within claim under the Payment of Wages Act 1991 has been remitted to the Employment Appeals Tribunal for reconsideration. The Claimant’s legal representative has indicated that he has no difficulty with the fact that the same division of the Tribunal was assembled to re-consider the matter.
The Payment of Wages Act, 1991 prohibits the employer from deducting the wages of an employee unless specifically provided for by Statute (e.g. for Income Tax purposes) or where there has been prior agreement of the parties.
Lay-Off is defined in Irish Law in the Redundancy Payments Act of 1967 at section 11 (1) as follows:
11. 1 Where after the commencement of this Act an employee’s employment ceases by reason of his employer 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 a lay-off.
It is certain that the Employer must therefore establish two things before a lay-off as defined can have any relevance and/or application in the particular workplace. Firstly, the employer must give Notice of an upcoming cessation of employment. Secondly, the employer must reasonably believe that the said cessation will not be permanent.
In the instance before the Tribunal the Claimant has made the case that the Employer knew or ought to have known at the time when the letter of the 19th of August 2009 issued that there was no reasonable prospect that the Claimant would ever return to work. It is accepted by the Tribunal that the Construction industry, as stated in the Claimant’s legal submission was in “freefall”(and for the avoidance of doubt the Tribunal confirms that it sees the concrete industry as being inextricably connected with the construction Industry in the context of these proceedings). However, the Tribunal recognises that this “freefall” observation is made with the benefit of hindsight and there can be no doubt that in the course of 2009 many businesses hoped that the slump would be short lived. The Tribunal has for the past four years dealt with the reality of parties believing that things would not get as bad as they have gotten. The Tribunal cannot therefore find that the Respondent herein was unreasonable in believing (between August and December of 2009) that this particular cessation of employment would not be a permanent one.
The letter of the 19th of August 2009 operates as the necessary Notice given to the Claimant prior to the cessation of employment and the letter refers to the possibility of re-instatement.
The Tribunal therefore recognises that the Respondent herein satisfies the criteria for putting into effect a lawful lay off under the Statutory definition.
At common law there is no general right to lay off without pay. However it has always been accepted that there are some limited circumstances wherein there will be such a right. This right can be implied so that for example in the UK case of Browning and Others v Crumlin Valley Collieries (1926) 1 KB 698 the Court found the there was an implied term that a mine owner could lay off miners without pay while repairs are effected through no fault of the mine owners.
It seems well established at common law that lay off without pay may be operable where an employer can demonstrate it has been the custom and practise of the trade and/or workplace and that the custom must be reasonable, certain and notorious. This concept is referred to by Mr. Justice Jelp in Devonald and Rosser (1906) 2 KB 728 wherein he affirms (a previous finding of Lord Denman in R v Stoke Upon Trent ) :
“A custom so universal that no workman could be supposed to have entered into this service without looking to it as part of the Contract”
It is worth noting that the line of legal authority which highlights the need for a custom which allows for lay off without pay to be a certain and notorious custom, has generally been considered in cases where the Contract of Employment has been silent on the issue of lay off. The circumstances which currently present themselves are distinguishable insofar as there is a very clear provision in the Contract of employment for the Claimant’s lay off and the Tribunal must only therefore decide whether a contractual right to lay off gives a further implied right to withhold pay.
The Tribunal has been invited to consider the Irish case of John Lawe -v- Irish Country Meats Limited 1998 ELR p266 wherein the issues of an employer’s right to lay-off without pay and the issue of the recognised custom and practise applicable in the workplace were considered by the learned Judge White in the Circuit Court. The Judge accepted that there is no inherent right to lay off without pay at common law though he further recognised that there are certain limited circumstances which give rise to the right to lay-off without pay. This included a situation where an employer is able to establish that the entitlement arises out of well-established custom and practise. In the Lawe case a lay-off without pay was effected and whilst there was a recognised custom and practise which allowed for lay off in certain circumstances none of these circumstances had applied here, and the employer had in fact used the lay off process as a preliminary step to redundancy. The lay off in Lawe further lacked the reasonable belief that the cessation in employment would not be permanent as is required under the section 11 definition.
Judge White said (at page 271):-
“If the Lay-Off was intended to be temporary and the custom and practise…applied…and notice was given that the lay-off would be temporary, the company was entitled to lay-off without pay”
The Tribunal must ask itself, therefore, if the reasonable implication of this observation of the learned Judge is that he accepted that a lay-off when correctly and honestly utilised carries an implication that there will be no pay for the duration of lay-off.
The Claimant has also opened up the case of Industrial Yarns -v- Greene (1984) ILRM 15 to the Tribunal. In that case, Costello J considered the nature of the Contract of Employment once the Lay-off (as envisaged in sections 11 through 13 of the 1967 Act) has come into operation. The Honourable Judge found that where such a person is laid off on foot of a notice and where there is a reasonable belief that the cessation of work will not be permanent the Contract of Employment is not rescinded or at an end. The Claimant makes the case that if the Contract of employment subsists after the fact of lay off then the rights and obligations flowing from same must also subsist and that must include the right to be fully paid. The Tribunal cannot accept that this is a logical extension of what Costello J said. In the context of the Judgement the Judge was dealing with the employer’s erroneous use of Section 11 as a vehicle for forcing employees to seek redundancy and forgo their entitlement to Minimum Notice. The Judge recognises that Lay-off under Section 11 is supposed to provide an interim measure of relief without having an overall negative effect on the Contract of Employment. The Judge recognises that a fundamental aspect of any Contract of Employment is being put to one side (i.e. the right to be provided with work) and that this is possible to do without necessarily terminating the Contract and without impacting negatively on other reliefs, benefits and obligations so that for example – service still continues to accrue. It is noted by the Tribunal that Judge Costello was not asked to consider the issue of the right to lay off with or without pay.
The Tribunal notes that wages are defined in the Payment of Wages Act 1991 as:-
“wages”, in relation to an employee, means any sum 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,…..
Therefore in reconciling the definitions which the Tribunal must give consideration to, it is noted that “wages” arise in “connection with employment”, and “lay off” arises for periods of “cessation of employment”. It is not absurd to suggest that a lay off which gives rise to a cessation of work must by implication also give rise to a cessation of wages.
Having considered the law in the area and the able arguments presented by the Claimant’s representation, the Tribunal cannot agree that the Claimant was entitled to be fully remunerated during the course of his lay-off.
The Tribunal is satisfied that the Contract of Employment specifically allowed for and recognised the periodic need to operate a scheme of lay off. The question of custom and practise is not so compelling where the Contract actually provides for lay-off. But even if that hadn’t been the case, the Tribunal additionally would observe that lay-off is a fact of life in the construction industry and the Claimant’s employment herein comes under that umbrella description. The Tribunal is satisfied that the Employer reasonably believed that the Lay off would not be permanent and that an appropriate notice to that effect was delivered thereby satisfying the requirements as defined in the Redundancy Payments Act, 1967. The Tribunal accepts that whilst the Contract does not specify that there will be no wages payable during lay-off any other interpretation would be a nonsense. The Tribunal would go so far as to say that the cessation of pay during periods of lay-off is self-evident. There would be no logic to the practise of lay off otherwise. Lay-off allows an employer to buy time to generate work, secure Contracts and/or get over lull (sometimes seasonal) periods. The expectation is that normality will resume and an employer wants to avoid shedding an experienced workforce on a permanent basis. At a national level it is noted that persons who are temporarily laid off are allowed to collect social welfare for such periods of Lay-off. It would defy logic if such a person found to be so entitled to social welfare would also be entitled to be fully remunerated for the same period.
The Tribunal determines, for the aforementioned reasons that the claim under the Payment of Wages Act 1991 fails
Sealed with the Seal of the
Employment Appeals Tribunal
This ________________________
(Sgd.) ________________________
(CHAIRMAN)