EMPLOYMENT APPEALS TRIBUNAL
APPEAL OF: CASE NOs.
Employer
against the recommendation of the Rights Commissioner in the case of:
Appellant
Employee A PW226/2012
Employee B PW225/2012
Employee C PW227/2012
under
PAYMENT OF WAGES ACT, 1991
I certify that the Tribunal
(Division of Tribunal)
Chairman: Dr. A. Courell B.L.
Members: Mr. D. Morrison
Ms. R. Kerrigan
heard this appeal at Letterkenny on 15th July and 27th November 2013
Representation:
Appellant : Ms Mairead McKenna B L instructed by
O'Donnell & Co., Solicitors, 6 Tirchonaill Street, Donegal Town, Co. Donegal
Respondents : Mr Vernon Hegarty, SIPTU, 8th Floor, Liberty Hall, Dublin 1
These cases came before the Tribunal by way of an appeal by the employer of the respondents against recommendations issued by a Rights’ Commissioner, references:
r-114833, r-114834, r-114835-pw-11/SR
The Tribunal treated this appeal hearing as a de novo case and in that context the respondents firstly presented their cases. It was agreed by all parties that the respondents need only submit two of their number for evidence and that the Order that flowed from that arrangement would apply to all the respondents and the appellant.
This order should be read in conjunction with PW353/2012 which contained the evidence from the two selected respondents and the appellant. That Order read as follows:
Respondents’ Cases
Respondent S told the Tribunal he was a long servicing employee with the appellant and commented that it was a great place to work. Along with other employees their remuneration payments were adjusted in 2006 as they were placed on annualised hours. That meant in effect a reduction in their income from this employment as overtime payments were much harder to achieve. At the time the workers accepted this new payment structure. As a consequence of that and its related effects this witness lost trust in the managing director.
On 14 April 2011 the workforce and management held a meeting. During the course of that gathering staff were informed that their current salaries, wages, and piece rates were to be reduced by ten percent. The main reason for that intended move was an attempt to address a serious financial difficulty facing the appellant. By the end of that month the appellant had furnished employees a document asking them to give their written consent to that reduction which was to take effect on 2 May 2011.
Around that time this witness together with many other respondents joined a trade union. The respondent did not recognise that trade union for negotiating purposes and as a result did not deal directly with it on this issue. However, the witness did participate in some discussions with the appellant as a member of a workers’ committee. He contended that despite several attempts, the appellant refused to disclose details of their financial affairs. However, he was prepared to accept the contents of letters sent by a bank to the respondent dated 10 March 2011. That letter sought the full repayment of certain loans and facilities by the end of that month. The company’s reasons for the non-disclosure of those details to the respondents, its representative, and the workers’ committee were not acceptable.
By early May 2011, and despite only a minority of the workforce confirming their agreement to the pay cut, the appellant began implementing it from that month. Several other changes were also introduced including extra restrictions on rostering. Further discussions between the workers’ committee and the respondent occurred together with more requests for information on the respondent’s financial situation.
Together with other employees this respondent received an invitation from the company to participate in a profit sharing scheme. This witness was one of several employees that declined that offer due to its terms and conditions. This witness cited two extracts from the company handbook in support of his and his colleagues’ cases. Section 2.1.7 reads as follows: The company reserves the right to deduct from your pay any monies due to the company, including such items as canteen charges, overpayments or loans, or any agreed deductions as may apply Section 8.2 states From time to time these terms and conditions of employment may need to be revised, to take account of new circumstances. Such revisions may be brought about by legislation, employee request, or management’s requirements, and will be discussed with employees as necessary. The witness described the latter section as very vague and added that 2.17 did not apply as no agreement existed to deduct wages.
Respondent C told the Tribunal that he did not consent or agree to the pay cut imposed in May 2011. From 2006 onwards no pay rises were implemented by the company and this witness of sceptical of its announcements on that issue. Introducing a profit sharing scheme while reporting financial loses made no sense to this witness. However, he commented that had the company given proof of their reported financial woes then an agreement could have been found between the workforce and management over cost saving measures. This witness maintained that the company did not have the authority to cut wages as not only had there been no discussions or input from the workers there had been no agreement to do so.
Appellant’s Case
The appellant is a long established business engaged in the seafood industry. It sources and processes fish and deals with a wide range of customers both domestically and internationally. It is located in south west Donegal and the majority of its staff are locally based.
The chief executive officer insisted that section 8.2 in the company handbook allowed the respondent to apply pay cuts to the workforce. There were very serious compelling reasons for that cut imposed in May 2011. The respondent was facing a drop in its revenue with no corresponding decrease in its expenditure. Its wage bill formed a high and significant portion of that expenditure. Apart from that scenario the respondent was under pressure from commercial banks regarding loans and terms and conditions for credit facilities. There was no viable option but to cut that wage bill as the company also needed to plan for the medium term.
While he was aware there were requests for sight of the company’s accounts the witness felt unable to divulge them to shareholders and staff for various reasons. Efforts were made to communicate the financial situation to all concerned parties. The respondent had no problem with employees being trade union members but did not engage with their union for negotiating purposes.
An auditor told the Tribunal that she understood and supported the respondent’s stance regarding divulging its financial affairs.
Determination
The net issues in this appeal relate to section 5 of the Payment of Wages Act, 1991 and paragraph 8.2 of the contract of employment between the appellant and the respondents. In firstly dealing with the latter the Tribunal does not accept the appellant’s contention that it could unilaterally deduct the wages of its employees based only on the provision of managements requirements. Such a deduction would be contrary to the wording of section 5 (1) (b) of the Act. In this case the appellant did not advance its own case for a deduction as it opted not to fully engage with the respondents as to the reported serious financial situation it was facing at the relevant time.
Section 8.2 of the contract of employment states From time to time these terms and conditions of employment may need to be revised, to take account of new circumstances. Such revisions may be brought about by legislation, employee request, or management’s requirements, and will be discussed with employees as necessary. Section 5 (1) of the Act states: An employer shall not make a deduction from the wages of an employee unless- Section 5(c) reads in the case of a deduction, the employee has given his prior consent in writing to it. The above clearly means that an employer must receive the written explicit permission of its workforce to allow it to deduct its remuneration. In all of the circumstances of this case the Tribunal cannot accede to the appellant’s request that the Tribunal exercise its discretion not to award compensation.
The Tribunal upholds and reaffirms the recommendations of the Rights’ Commissioner in all the above cases. Accordingly, the following awards apply under the Payment of Wages Act, 1991.
Appellant Award
A €6.69
B €10.23
C €41.72
Sealed with the Seal of the
Employment Appeals Tribunal
This ________________________
(Sgd.) ________________________
(CHAIRMAN)