EMPLOYMENT APPEALS TRIBUNAL
APPEAL(S) OF: CASE NO.
EMPLOYER -appellant PW197-PW221/2013
against the recommendation of the Rights Commissioner in the case of:
EMPLOYEE 1 -respondent 1
EMPLOYEE 2 -respondent 2
EMPLOYEE 3 -respondent 3
EMPLOYEE 4 -respondent 4
EMPLOYEE 5 -respondent 5
EMPLOYEE 6 -respondent 6
EMPLOYEE 7 -respondent 7
under
PAYMENT OF WAGES ACT, 1991
I certify that the Tribunal
(Division of Tribunal)
Chairman: Ms. N. O'Carroll-Kelly B.L.
Members: Mr. T. O'Sullivan
Ms. M. Mulcahy
heard this appeal at Dublin on 9th October 2013
Representation:
Appellant: Mr. Kevin Langford, Arthur Cox, Solicitors,
Earlsfort Centre, Earlsfort Terrace, Dublin 2
Mr David Farrell, IBEC, Confederation House, 84/86 Lower Baggot Street, Dublin 2
Respondents: Mr. Paul Henry, SIPTU, Liberty Hall, Dublin 1
Background:
These appeals came before the Tribunal by way of an employer (the appellant) appealing against the decision of a Rights Commissioner (references: r-123814-pw-12 (respondent 1), r-123818-pw-12 (respondent 2), r-123826-pw-12 (respondent 3), r-123812-pw-12 (respondent 4), r-124004-pw-12 (respondent 5), r-123816-pw-12 (respondent 6), and r-123832-pw-12 (respondent 7). These appeals were heard simultaneously with PW222/2013.
It was confirmed to the Tribunal that S.7(2)(b) was complied with in relation to the appeal.
A Human Resources Manager gave evidence that all clerical staff were paid an increment in January 2009 in addition to the first phase of the then National Pay Agreement. In April 2009 the Managing Director wrote a letter to each employee asking them to waive their right to any increase and seeking to revoke the increase paid in January due to economic circumstances. This was accepted by the staff and the 3.5% increase paid was revoked in May 2009. The increment remained at that time.
Subsequently, a letter issued on 21 January 2010 regarding a review of staffing costs. Following this the employer sought not to pay 2010 increments. The matter was ultimately referred to the Rights Commissioner service and an agreement was reached that the increment for 2010 would be paid to staff.
However, in October 2011 two options were given to staff. Option one was the offer of a taxable lump sum in lieu of waiving their right to future increments. All other terms and conditions remained the same. Option two was a transfer of employment to another company within the group with terms and conditions and salary backdated to January 2011.
A number of staff accepted one or other of the options. The employees who did not accept either option lodged claims with the Rights Commissioners’ service with regard to non-payment of the 2011 increment and later further claims were lodged in relation to non-payment of the 2012 increment.
There were a number of reasons why the employer sought not to pay increments. There is a current deficient in the pension fund of 90 million. Since 2009 the company has paid additional contributions in excess of employer contributions. Also, the company’s cost base because of salaries is very high and fuel costs have increased. Direct competitors do not have staff on incremental scales or are staffed by contract staff.
It was agreed between the parties that one employee would be called to give test evidence. Mr. W (respondent 6) stated that he was employed for over ten years and had received increments throughout his employment. His contract of employment provided for these increases. Appendix 2 of the contract related to salary structure and stated that progression within a scale would be based on satisfactory performance but it was the employees’ case this was not an issue. Mr. W stated there was no agreement given in writing regarding the non-payment of the increment in 2011 and 2012. During cross-examination Mr. W confirmed there was no cut in his actual basic pay. He confirmed that he was offered a lump sum buy-out of the increment clause in the contract.
It was the employees’ position that an increment is as defined in S.1(a) of the Act, “wages means any sums payable to the employee” and therefore the increment was wages properly payable to the employees herein. The pay scale was agreed between the employer and the union.
It was the employer’s position that the non-payment of an increase did not fall within the definition of wages in S.1 and nor did the non-payment of an increment constitute a deduction.
Determination:
The Tribunal have carefully considered all of the evidence adduced and the legal submissions submitted. The issue to be decided is whether or not a failure on the part of the employer to pay an increment is a deduction under the Payment of Wages Act, 1991.
Having regard to the decision of the High Court in the Michael McKenzie & another –v- The Minister for Finance & ors [2010] IEHC 461, the Tribunal adopts the principle that the Payment of Wages Act has no application to reduction of increment as distinct from a deduction. The Tribunal is bound by the High Court and therefore finds in favour of the employer and sets aside the decision of the Right Commissioner (references: r-123818-pw-12, r-123826-pw-12, r-123832-pw-12, r-123816-pw-12, r-123814-pw-12, r-123812-pw-12 and r-124004-pw-12.
Sealed with the Seal of the
Employment Appeals Tribunal
This ________________________
(Sgd.) ________________________
(CHAIRMAN)