EMPLOYMENT APPEALS TRIBUNAL
CASE NO.
PW83-PW91/2014
APPEAL OF:
Sliabh Bhreandain Teoranta (in liquidation)
against the recommendation of the Rights Commissioner in the case of:
Joseph Reid
Sean Baceir
Brendan Fitzgerald
Brendan Fitzgerald
Padraig Manning
Ciaran Feiritear
Tom Kennedy Jr
Kevin Martin
Raymond O'Sullivan
under
PAYMENT OF WAGES ACT 1991
I certify that the Tribunal
(Division of Tribunal)
Chairman: Ms. K. T. O'Mahony B.L.
Members: Mr J. Hennessy
Mr D. McEvoy
heard this appeal at Killarney on 6th July 2015
Representation:
Appellant : Mr Michael O'Sullivan, Arra Hrd Limited, Castlelost West, Rochfortbridge, Co Westmeath
Mr Myles Kirby, Ferris & Associates, 11/12 Warrington Place, Dublin 2
Respondent : Mr Pat O’Donoghue, SIPTU, Liberty Hall, Dublin 1
This case came before the Tribunal by way of an appeal by the former employer against a Rights’ Commissioner’s recommendations references r-132586/132597/132598/132599/132600/132601/132603/132604/132605-pw-13
Herein the appellant will be referred to as the employer and the respondents the employees.
The determination of the Tribunal is as follows:-
Background
Due to alleged financial challenges in 2012 the appellant/employer suspended its contribution to each of the respondents’/employees’ Personal Retirement Savings Account (PRSA) from 1 November 2012 without the employees’ written consent.
Preliminary Issue
The employer contended that its contributions to the PRSA scheme on behalf of the employees herein did not fall within the definition of wages in section 1 of the Payment of Wages Act 1991.
Determination
Section 1 of the Payment of Wages Act 1991 states:
“wages”, in relation to an employee means any sums 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, and
(b) any sum payable to the employee upon the termination by the employer of his contract of employment without his having given to the employee the appropriate prior notice of the termination, being a sum paid in lieu of the giving of such notice:
Provided however that the following payments shall not be regarded as wages for the purposes of this definition:
…
(ii) any payment by way of a pension, allowance or gratuity in connection with the death, or the retirement or resignation from his employment, of the employee or as compensation for loss of office,
…
Under the Pensions (Amendment) Act where an employer does not provide an occupational pension scheme for the employee, the employer is obliged to facilitate access to a PRSA) Act 2002 by:
- entering into an arrangement with a PRSA provider to enable the employee to participate in a PRSA,
- notifying the employees of their right to participate in a PRSA,
- allowing the provider reasonable access to the workplace to assist the employees in entering into a PRSA;
- making appropriate payroll deductions for the contributions agreed, and
- remitting the contributions to the PRSA provider within the statutory timeframe.
Significantly, employers are not obliged to make any financial contribution on behalf of the employee to the PRSA scheme but may do so.
The employer in the instant case facilitated the introduction of a PRSA in 2010 in accordance with the legislation. In addition the employer made a matching contribution up to a ceiling of 5% of the employees’ salary. However, by letter of 10 October 2012 the employer notified the employees that due to alleged financial difficulties it was ceasing to make its contributions from 1 November 2012, that this decision would be reviewed in April 2013 and that the employee contributions would continue to be paid into the scheme.
In Dunne v Department of Defence (PW7/95 the Employment Appeals Tribunal considered section1 (ii) of the Payment of Wages Act:
any payment by way of a pension, allowance or gratuity in connection with the death, or the retirement or resignation from his employment, of the employee or as compensation for loss of office,
and determined that the deductions made by the respondent from the employee’s wages in respect of Widows’ and Children’s Pension Scheme did not come within the definition of wages as defined in the Act.
In Perry v Cleaver HL 5 Feb 1969 Lord Reid stated:
“A pension is intrinsically a different kind from wages….the true solution is that wages are a reward for contemporaneous work but that a pension is the fruit, through insurance of all money which was set aside in the past in respect of his past work. They are different in kind.”
In the same case Lord Reid stated:
“His pension is …a personal benefit additional to anything that he may be able to earn by way of wages”
Thus, the Tribunal is s satisfied that the employer’s suspension of its contributions to the PRSA scheme does not constitute a deduction from wages under the Act.
In light of this finding, the other issues raised in this appeal do not arise for consideration.
The appeal under the Payment of Wages Act succeeds and the Tribunal sets aside the Rights Commissioner’s decision.
Note: It was agreed between the parties that the date of cessation of the employer’s contribution in the Rights Commissioner’s decision should read 1 November 2012 and not October 2002.
Sealed with the Seal of the
Employment Appeals Tribunal
This ________________________
(Sgd.) ________________________
(CHAIRMAN)