PWD1614

This is an appeal by Inisbofin Community Service Programme Co. Ltd against the decision of a Rights Commissioner /Adjudication Officer in a claim by Brenda Burke under the Payment of Wages Act 1991 (the Act).

The parties are referred to in this Determination as they were at first instance. Hence, Inisbofin Community Service Programme Co. Ltd is referred to as the Respondent and Ms Burke is referred to as the Complainant.

The Dispute

It is the Complainant’s case that her hourly rate of pay was increased from €8.65 to €9.65 with effect from 1^stSeptember 2013. It was then reduced to €8.65 from 1^stJanuary 2014. The Complainant contends that the reduction in her wages constituted an unlawful deduction from her contractual wage within the meaning of s.5 of the Act.

The Respondent accepts that the Complainant’s rate of pay was increased by €1.00 on the aforesaid date. It contends, however, that the increase was intended to apply only until the end of 2013 unless the Complainant generated sufficient additional income for the Respondent to cover the additional costs involved.

Position of the Parties

The Complainant told the Court in evidence that she asked the Board of the Respondent for a wage increase at her annual appraisal in 2013. It was the Complainant’s evidence that in or about September 2013 her then Manager, Ms O’Malley, informed her that the Board had approved an increase in her rate of pay to €9.65 per hour with effect from 1^stSeptember 2013. The Court was told that Ms O’Malley further informed the Complainant that the position regarding her pay would be reviewed at the end of 2013 with a view to awarding her a further increase. The Complainant accepted the offer put to her.

In her sworn evidence the Complainant was emphatic that it had not been put to her that the increase in pay was temporary in nature. She accepted that Ms O’Malley had said that her wages would be reviewed at the end of 2013 but that the purpose of the review would be to consider a further increase at that time.

The Complainant’s testimony disclosed some confusion on how the increase was paid. She told the Court that the increase was reflected in each of the weekly pay slips with which she was provided between 1^stSeptember 2013 and 31^stDecember 2013. However, she told the Court that the value of the increase was paid by cheque in December 2013 in a single lump sum. However, nothing turns on this point as the fact of the Complainant having received a €1.00 increase in the period in question is not in dispute.

The Respondent put in evidence a copy of the minutes of a meeting of the Respondent’s Board held on 2^ndSeptember 2013. At point 2 of the minutes the following is recorded: -

• “It was agreed to give Brenda Burke a €1 per hour wage increase with a review at year’s end to see if she could find a way of generating the revenue required to cover her wage top up.”

The Respondent further submitted, in the alternative, that the reduction in the Complainant’s rate of pay cannot, as a matter of law, be regarded as a deduction to which the Act applies. In advancing that submission the Respondent relied on the decision of the High Court inMcKenzie v Minister for Finance[2011] E.L.R.109wherein Edwards J had observed that a reduction in pay, as opposed to a deduction from pay, did not come within the intendment of the Act.

Conclusions of the Court

Section 5 of the Act provides: -

• 
  5.—(1) An employer shall not make a deduction from the wages of an employee (or receive any payment from an employee) unless—
  • 
    (a) the deduction (or payment) is required or authorised to be made by virtue of any statute or any instrument made under statute,

    (b) the deduction (or payment) is required or authorised to be made by virtue of a term of the employee's contract of employment included in the contract before, and in force at the time of, the deduction or payment, or

    (c) in the case of a deduction, the employee has given his prior consent in writing to it.

  
  (2) An employer shall not make a deduction from the wages of an employee in respect of—
  • 
    (a) any act or omission of the employee, or

    (b) any goods or services supplied to or provided for the employee by the employer the supply or provision of which is necessary to the employment,

  
  unless—
  • • (i) the deduction is required or authorised to be made by virtue of a term (whether express or implied and, if express, whether oral or in writing) of the contract of employment made between the employer and the employee, and

      (ii) the deduction is of an amount that is fair and reasonable having regard to all the circumstances (including the amount of the wages of the employee), and

      (iii) before the time of the act or omission or the provision of the goods or services, the employee has been furnished with—

      • 
        (I) in case the term referred to in subparagraph (i) is in writing, a copy thereof,

        (II) in any other case, notice in writing of the existence and effect of the term,

        and

      
      (iv) in case the deduction is in respect of an act or omission of the employee, the employee has been furnished, at least one week before the making of the deduction, with particulars in writing of the act or omission and the amount of the deduction, and

      (v) in case the deduction is in respect of compensation for loss or damage sustained by the employer as a result of an act or omission of the employee, the deduction is of an amount not exceeding the amount of the loss or the cost of the damage, and

      (vi) in case the deduction is in respect of goods or services supplied or provided as aforesaid, the deduction is ofan amount not exceeding the cost to the employer of the goods or services, and

      (vii) the deduction or, if the total amount payable to the employer by the employee in respect of the act or omission or the goods or services is to be so paid by means of more than one deduction from the wages of the employee, the first such deduction is made not later than 6 months after the act or omission becomes known to the employer or, as the case may be, after the provision of the goods or services.

    (3) (a) An employer shall not receive a payment from an employee in respect of a matter referred to in subsection (2) unless, if the payment were a deduction, it would comply with that subsection.
    • 
      (b) Where an employer receives a payment in accordance with paragraph (a) he shall forthwith give a receipt for the payment to the employee.
  (4) A term of a contract of employment or other agreement whereby goods or services are supplied to or provided for an employee by an employer in consideration of the making of a deduction by the employer from the wages of the employee or the making of a payment to the employer by the employee shall not be enforceable by the employer unless the supply or provision and the deduction or payment complies with subsection (2).

  (5) Nothing in this section applies to—

  • (a) a deduction made by an employer from the wages of an employee, or any payment received from an employee by an employer, where—
    • 
      (i) the purpose of the deduction or payment is the reimbursement of the employer in respect of—
      • 
        (I) any overpayment of wages, or

        (II) any overpayment in respect of expenses incurred by the employee in carrying out his employment, made (for any reason) by the employer to the employee, and

      
      (ii) the amount of the deduction or payment does not exceed the amount of the overpayment,

      or

    
    (b) a deduction made by an employer from the wages of an employee, or any payment received from an employee by an employer, in consequence of any disciplinary proceedings if those proceedings were held by virtue of a statutory provision, or

    (c) a deduction made by an employer from the wages of an employee in pursuance of a requirement imposed on the employer by virtue of any statutory provision to deduct and pay to a public authority, being a Minister of the Government, the Revenue Commissioners or a local authority for the purposes of theLocal Government Act, 1941, amounts determined by that authority as being due to it from the employee, if the deduction is made in accordance with the relevant determination of that authority, or

    (d) a deduction made by an employer from the wages of an employee in pursuance of any arrangements—

    • 
      (i) which are in accordance with a term of a contract made between the employer and the employee to whose inclusion in the contract the employee has given his prior consent in writing, or

      (ii) to which the employee has otherwise given his prior consent in writing,

      and under which the employer deducts and pays to a third person amounts, being amounts in relation to which he has received a notice in writing from that person stating that they are amounts due to him from the employee, if the deduction is made in accordance with the notice and the amount thereof is paid to the third person not later than the date on which it is required by the notice to be so paid, or

    
    (e) a deduction made by an employer from the wages of an employee, or any payment received from an employee by his employer, where the employee has taken part in a strike or other industrial action and the deduction is made or the payment has been required by the employer on account of the employee's having taken part in that strike or other industrial action, or

    (f) a deduction made by an employer from the wages of an employee with his prior consent in writing, or any payment received from an employee by an employer, where the purpose of the deduction or payment is the satisfaction (whether wholly or in part) of an order of a court or tribunal requiring the payment of any amount by the employee to the employer, or

    (g) a deduction made by an employer from the wages of an employee where the purpose of the deduction is the satisfaction (whether wholly or in part) of an order of a court or tribunal requiring the payment of any amount by the employer to the court or tribunal or a third party out of the wages of the employee.

  (6) Where—
  • 
    (a) the total amount of any wages that are paid on any occasion by an employer to an employee is less than the total amount of wages that is properly payable by him to the employee on that occasion (after making any deductions therefrom that fall to be made and are in accordance with this Act), or

    (b) none of the wages that are properly payable to an employee by an employer on any occasion (after making any such deductions as aforesaid) are paid to the employee,

  
  then, except in so far as the deficiency or non-payment is attributable to an error of computation, the amount of the deficiency or non-payment shall be treated as a deduction made by the employer from the wages of the employee on the occasion.

The Court has considered the submissions advanced on behalf of the Respondent that a reduction in an employee’s wages does not come within the intendment of the Act. That submission was based on the decision of Edwards J inMcKenzie v Minister for Finance[2011] E.L.R.109. The decision in that case was later considered by the High Court (per Kerns P.) inEaragail Eisc Teoranta v Doherty[2015] 26 E.L.R 326. Here the President stated as follows: -

• The court is also satisfied that the decision in McKenzie is distinguishable from the facts of the present case in a number of respects. The court accepts the submissions of the respondents that the remarks of Edwards J. in relation to “reduction v deduction” issue were obiter. Furthermore, McKenzie related to the reduction in an allowance payable in respect of motor travel and subsistence. The definition of ‘wages’ in the 1991 Act expressly excludes any payment in respect of expenses incurred by the employee in carrying out his employment and so the finding by Edwards J. that the “RDF Allowance” did not come within the scope of a deduction under the Act relates to an entirely different situation to that the present case where employee’s salaries were reduced. I am satisfied therefore that the Tribunal was entitled to proceed to consider the complaints on the basis that the reduction to the employee’s wages in the present case may have constituted a deduction in breach of the 1991 Act.

Amount Properly Payable

The amount properly payable to the Complainant by way of wages at the material time is to be assessed by reference to her contract of employment. The Complainant told the Court in her sworn evidence that her rate of pay was increased to €9.65 with effect from 1^stSeptember 2013. In her evidence, which the Court accepts, she said that this increase was not limited in time and that the purpose of the review, to which reference was made in the offer put to her by Ms O’Malley, was with a view to considering if a further increase was warranted. The Complainant accepted the offer in the terms put to her by Ms O’Malley who was acting for and on behalf of her employer. Hence, a verbal agreement came into being between the Complainant and the Respondent which amended her contract of employment so as to provide that her hourly rate of pay was to be €9.65. The Court accepts, on the evidence, that the Complainant’s contract of employment, as amended by this verbal agreement, did not contain a term allowing the Respondent to unilaterally reduce her rate of pay to its pre September 2013 level.

Outcome

It follows from the foregoing that, by application of S.5(6) of the Act, the reduction of the Complainant’s pay by €1.00 per hour after 1January 2014 is to be treated as an unauthorised deduction to which the Act applies. Accordingly, the decision of the Rights Commissioner / Adjudication Office to uphold the Complainant’s complaint and to award her compensation in the amount of €1,014 must stand.

The Respondent’s appeal is disallowed and the decision of the Rights Commissioner / Adjudication Officer is affirmed.

Signed on behalf of the Labour Court



Kevin Duffy
LS______________________
18 May 2016Chairman



NOTE

Enquiries concerning this Determination should be addressed to Louise Shally, Court Secretary.