ADJUDICATION OFFICER DECISION/RECOMMENDATION

Adjudication Reference: ADJ-00005931

Complaint for Resolution:

Act	Complaint/Dispute Reference No.	Date of Receipt
Complaint seeking adjudication by the Workplace Relations Commission under section 6 of the Payment of Wages Act, 1991	CA-00008231-001	17/11/2016

Date of Adjudication Hearing: 15/03/2017

Workplace Relations Commission Adjudication Officer: Gaye Cunningham

Location of Hearing: The Anner Hotel

Procedure:

In accordance with Section 41 of the Workplace Relations Act, 2015 and Section 6 of the Payment of Wages Act 1991, following the referral of the complaint to me by the Director General, I inquired into the complaint and gave the parties an opportunity to be heard by me and to present to me any evidence relevant to the complaint.

Background:

The complaint is that in contravention of Section 5 of the Act, the respondent made deductions from the complainant’s final wages when his employment ended.

Summary of Complainant’s Case:

The complainant was employed as a Café Manager with the respondent from 5^th June 2009 to 30^th May 2016. At the end of his employment he was due payment of wages and emoluments of €1,800. In fact he received just €794.16, leaving a shortfall of €1,005.84. The respondent employer had advised that the deduction was in respect of overpayment of annual leave in the period 2014-2016.

It is contended if the respondent seeks to rely on clause 3.6 of the complainant’s contract of employment to justify the deduction, it should be noted that no agreement was made in advance for any such deduction. At item 10.4 in the contract, it states that annual leave may not be carried into the next year. The logical conclusion is that if this clause is read in conjunction with clause 3.6, then any clawback should be calculated at the end of each year and it is therefore unreasonable for the clawback in this case.

It is further submitted that in the case of Avon County Council v Howlett, there is a proposition for the common law position with regard to overpayment of wages and there is a three point test as follows:

The employer has led the employee to believe that he or she is entitled to treat the money as his or her own;
The employee receiving the money has in good faith altered his or her position as a result
The overpayment was not caused primarily by the fault of the employee.

It is submitted that either good records were kept by the employer in this case and he should have been aware of any issue of overpayment or poor records were kept and cannot therefore be relied upon by the employer for the case he is now trying to make to withhold wages.

Summary of Respondent’s Case:

The respondent states that the deduction made was in respect of overpayment of wages due to the complainant availing of annual leave in excess of that allowed, particularly for the years 2014 – 2016.

It is submitted that it only came to the attention of the respondent when the wages due to the complainant on cessation of his employment were checked. It is further submitted that the overpayment was recouped in accordance with the complainant’s contract of employment and notice of same was not given as the final wages were calculated at the end of the employment.

The respondent submitted extensive records, payslips and calculations to support his argument.

Findings and Conclusions:

Section 5 of the Act provides:

—(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..

The complainant’s written contract of employment provides at clause 3.6:

“3.6 The Company will deduct from salary any monies owed by you as a result of overpayments of wages or overpayment of holiday. The amount of the deduction and a repayment schedule will be agreed with you in advance of any deduction being made.”

I note the extensive records provided by the respondent and I accept their validity. However, I note there was no agreement in relation to the deduction or a reasonable repayment schedule. In Ryanair v Downey [2006], ELR 347, The Employment Appeals Tribunal held that the fact that a clause in the employee’s contract provided for a deduction did not of itself justify the deduction. For the deduction to be lawful the employer must comply with the provisions of subsection (2), in that case the giving of one week’s notice before making the deduction and complying with the requirement that the amount of the deduction be fair and reasonable.

In this instant case, while I find the employer’s records to be credible, the manner in which he proceeded to make the deduction was not reasonable, nor did it take account of the requirement to agree a repayment schedule with the complainant.

For these reasons above, I find that the respondent did not comply with Section 5 of the Act.

Decision:

Based on the findings and conclusions above, I find the complainant’s complaint to be well founded. I require the respondent to pay to the complainant the sum of €1,005.84 within 6 weeks of the date of this decision.

Dated: 25^th April 2017

Workplace Relations Commission Adjudication Officer: Gaye Cunningham

Key Words:

Provision in contract