PW244/2012

EMPLOYMENT APPEALS TRIBUNAL

APPEAL OF:                                                                                                                                      CASE NO.

Damhnait Nic Bhradaigh,       -           appellant                                                                                 PW244/2012

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

Mount Anville Schools,          -           respondent

under

PAYMENT OF WAGES ACT, 1991

I certify that the Tribunal

(Division of Tribunal)

Chairman:       Ms F. Crawford B.L.

Members:        Mr. L. Tobin

                        Mr C. Ryan

heard this appeal at Dublin on 28th August 2013

Representation:

_______________

Appellant:       In Person

Respondent:    Mr Liam Riordan, Mason Hayes & Curran, Solicitors, South Bank House, Barrow Street, Dublin 4

This case came before the Tribunal by way of an employee appeal of the Rights Commissioner Decision ref: r-115121-pw-11 under the Payment of Wages Act 1991. The Rights Commission held that the reduction in pay was a lawful deduction as per Section 5(1) of the Payment of Wages Act 1991.

Summary of Evidence

The respondent is a private fee paying school. The appellant is the secretary of the school. Within the school there are 27 teachers paid by the Department of Education and Science. All other teachers and staff are funded by fees and private funds. The school does not receive any other funding whatsoever apart from the 27 teachers paid directly by the Department of Education and Skills. It does not receive any capitation or ancillary grants.

The Department of Education and Skills has deemed the respondent to be a ‘recognised’ school for the purpose of circular 70/2010, which outlines the percentage salary reductions in accordance with the Financial Emergency Measures in the Public Interest (no.2) Act 2009. The circular instructs the respondent to make the appropriate reductions in salary to the remaining staff not paid by the Department of Education and Skills, ‘It has now been determined that, in accordance with the Act, you should ensure that the pay reductions provided for therein are applied, with effect from 1 January 2011.’

The circular also stipulates that all staff working in a ‘recognised’ school come within the definition of public servant, ‘regardless of the source of the money used to fund their salary, notwithstanding that the Minister does not determine their terms and conditions of employment, and irrespective of whether or not they are eligible for, or members of, a public service pension scheme.’

The appellant maintains that she is not a public servant and deems the reduction in salary to be a reduction and not a statutory deduction as allowed for in the Payment of Wages Act 1991.

As the appellant’s salary is paid by the respondent using private funds; there is no benefit to the exchequer in ordering the mandatory reduction in salary. The respondent is in agreement with the appellant. The appellant’s salary is and always has been paid using private funds.

In this vein, the respondent wrote to the Minister for Finance seeking clarification and confirmation that the reduction in salary should be applied to private staff members.

‘While it is appreciated that the purpose of the Act is to bring about savings to the State in relation to its expenditure on remuneration, both directly and indirectly, staff members are of the opinion and have expressed the view that:

1. They are paid solely out of monies raised by the school and the Oireactas makes no contribution whatsoever to the monies.
2. The contracts of employment involved are private contracts…’

I am writing to request confirmation in writing from you that the Act does or does not apply to employees who are paid solely out of monies raised by the school.’

A reply was received stating that the Financial Emergency Measures in the Public Interest (no.2) Act 2009applies to all staff in recognised schools, ‘it is the status of the employing body in terms of legislation that is the determining factor.’

The appellant also wrote to the Minister for Education and Skills who re-iterated that the appellant worked for a recognised school and was therefore deemed a public servant for the purpose of the Act. The reply also outlines the reasoning for the reduction in salary,

‘The purpose of this legislation is to achieve a significant reduction in the public service pay bill. In this regard €22 million in savings will be secured…. This reduction to capitation and ancillary grants for schools will reduce capitation rates…

The reduced rates to ancillary and support services grants will reflect the reduction in pay that will apply, with effect from January 2011, to personnel who are paid from these grants.’

The respondent school is not in receipt of any capitation or ancillary grants; the appellant’s salary is paid using private funds. As instructed the respondent applied the pay reduction to the appellant and all other staff, consequently and innocently reducing their own salary bill.

Determination

Dissenting Opinion

1. The appellant in this case brings an appeal from the Rights Commissioner in relation to a claim under the Payment of Wages Act 1991.

2. As set out in the evidence above, the appellant is a secretary in a private fee paying school. The Department of Education has no involvement in her employment and she is paid solely from the private funds of the school. The appellant is therefore a private employee in a school. The appellant states that she is not a public servant albeit employed in an educational institution, and has none of the benefit of the terms and conditions inherent in an employment contract enjoyed by public servants. In a similar vein, the appellant submits that she therefore cannot be deemed to be a public servant amenable to the pay reductions imposed in accordance with the Financial Emergency Measures in the Public Interest (No. 2) Act 2009 (hereinafter FEMPI Act) as introduced after Circular 70/2010. The appellant therefore claims that any deduction in her salary is contrary to the Payment of Wages Act and in particular Section 5 thereof.

3. The respondent school states that it feels sympathetic to the position of the appellant but states that any deductions to her pay are made by operation of the terms of the FEMPI Act and therefore in effect, have no alternative but to sanction the deductions.

4. The respondent school sought guidance from the Department and from Minister Howlin as viewed the deductions enforced as being unfair on privately funded employees, however it was reaffirmed that a “public servant” was a person who is employed or holds an office in a public service body” (of which the school is included in the definition). The respondents’ submission is that was left with no alternative but to make the deductions and therefore any deductions were as per Section 5 (a) of the Payment of Wages Act, 1991 “was required or authorised to be made by virtue of any statute or any instrument made under statute.”

5. In assessing this matter, the provisions of the FEMPI Act have been addressed. Section 1 of this Act defines both “public servants” and a “public servant body”, these definitions are all centred on the fact as to “whether or not a public service pension exists or applies or may be made.” This does not apply to the appellant in this matter and she does not have the benefits of a public servant pension.

6. Further, the preamble to the FEMPI Act was assessed. It is unusual in Irish legislation to have a preamble to any Act along European lines and therefore the Act must be assessed in the context of the preamble bearing in mind the explanation for the introduction of the legislation.

7. The clarification eluded from the preamble shows that the Act itself was introduced during a period of economic turmoil and inter alia to save the State revenue and to ensure that there were funds available to discharge public servant pensions into the future. The preamble sets out, inter alia that

a)      There was a serious disturbance in the economy and revenues of the State and there are significant State commitments in respect of public servant pensions and it is necessary to make reductions to ensure that there are sufficient resources to discharge State commitments to Public service pensions;

b)      It was therefore necessary to cut Exchequer spending to prevent a sovereign debt crisis in the State;

c)      As the benefit of the public service pension will remain and this is significantly and markedly more favourable than those generally available in other employment.

8. The Tribunal has also had sight of the Dáil answer of Tánaiste Coughlan (as she was then) and the letter from Minister Quinn dated the 20^th June 2011. The appellant received this correspondence when she requested clarification as to Circular 70/2010 and to the application of the provisions of the FEMPI Legislation to her situation. Both of these correspondences confirm that although there was an initial issue as to how a “public servant”should be determined that all school staff come under the ambit of the “public servant” definition for the purposes of the Act.

9. It is also noted (as previously set out in the decision of the Rights Commissioner) that it would have been beneficial if this legal advice was provided to understand the rational included therein. Whereas it is understandable that legal advice is not always provided, in this situation, the legal basis of any variation in the definition of the posts of employees to come under the ambit of the legislation would have been practical to all involved (and most particularly those to whom circular 70/2010 was deemed to apply to).
10. However, in reading the entirety of the Act and submissions, the appellant cannot be deemed to be a public servant given that she does not enjoy the benefits of a public service pension and further, the fact that any reduction/deduction in the salary of the appellant cannot in any way show a saving to the State funds. The FEMPI Act is clear that there has to be a public element in the pay received which is also hinged on the actual existences or application (or in the future) of a public pension.
11. Further, it is the finding that on an interpretation of the purposes of the FEMPI legislation, any deduction in the payments made to the appellant does not achieve the objective of the Act.
12. In all the circumstances, it is the view to allow the appeal of the Rights Commissioners decision of the 20^th of March 2012 and find that the appellant is entitled to relief under the Payment of Wages Act. The appellant gave no consent to the deduction from her wages and established that the appellant is outside the remit of the FEMPI legislation.

Majority Decision

The Tribunal find by majority decision, that the appeal of the Rights Commissioner Decision ref: r-115121-pw-11 under the Payment of Wages Act 1991 fails. The Decision which finds that the deduction from the appellant’s pay was legal under Section 5 of the Act is affirmed.

Sealed with the Seal of the

Employment Appeals Tribunal

This   ________________________

(Sgd.) ________________________

     (CHAIRMAN)