FULL RECOMMENDATION
SECTION 7(1), PAYMENT OF WAGES ACT, 1991 PARTIES : FOROIGE (REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - KIERAN O'CONNELL (REPRESENTED BY IMPACT TRADE UNION) DIVISION : Chairman: Ms Jenkinson Employer Member: Ms Connolly Worker Member: Mr Shanahan |
1. Appeal of an Adjudication Officer's Decision No.ADJ-00001722
BACKGROUND:
2. This is an appeal of Adjudication Officer Decision made pursuant to Section 7(1) of the Payment of Wages Act 1991. The appeal was heard by the Labour Court on the 21st March, 2017 in accordance with Section 44 of the Workplace Relations Act 2015. The following is the Court's Determination:
DETERMINATION:
3
This is an appeal by Mr Kieran O’Connell against the decision of an Adjudication Officer in a claim made against his employer, Foroige under the Payment of Wages Act 1991 (the Act). The Adjudication Officer found that the claim was not well founded and failed.
The parties are referred to in this Determination as they were at first instance. Hence, Mr O’Connell is referred to as the Complainant and Foroige is referred to as the Respondent.
The Dispute
Ms Linda Kelly, IMPACT on behalf of the Complainant, submitted that the withholding of increments by the Respondent is a breach of the Act. The Respondent was refusing to restore increments following an agreed period of incremental freeze. Ms Kelly sought the restoration of increments with immediate effect and the retrospective payment of an increment from the date it fell due in 2016.
Ms Kelly contended that the non-payment of the increment constituted an unlawful deduction from the Complainant’s contractual wage within the meaning of Section 5 of the Act.
Ms Sophie Crosbie, Ibec, on behalf of the Respondent stated that due to its unprecedented financial challenges in October 2013 the Respondent wrote to all staff informing them of its intention to reduce salaries and freeze increments with effect from 1stJanuary 2014. In respect of the increment freezes the letter to staff stated: “There will be an increment freeze for a period of two years, at which time it will be reviewed.” The Complainant objected to the incremental freeze and refused to sign a document giving permission to the Respondent to cease paying increments. On 25 November 2015 the Respondent wrote to staff indicating that it was unlikely increments would be reinstated in 2016 as it was not in a position to do so due to its continuing financial difficulties. It stated that if increments were to be reinstated in 2016 it would result in the organisation and its projects being in deficit in 2016. It stated that the Board was obliged to protect the organisation from such circumstances. No increments were paid in 2016.
Preliminary Issue
Ms Sophie Crosbie, Ibec, submitted that the claim before the Court was referred outside the time prescribed by the Act. She stated that as the claim related to the non-payment of increment since 2013, and as the claim was not referred to the Workplace Relations Commission until 4th February 2016 it was therefore statute barred.
Ms Kelly confirmed for the Court that the claim was in relation to the non-payment of an increment from 1stJanuary 2016, in which case she submitted that the claim was in time.
On the basis of the clarification given by the Union, the Court has no hesitation in accepting that the claim was submitted in time.
Position of the Parties on the Claim
Ms Kelly stated the Complainant did not sign a document in October 2013 giving permission to the Respondent to cease paying increments from 2013 to December 2015. It expired in January 2016. Therefore she argued that Respondent did not have permission to extend the incremental freeze beyond January 2016.
Ms Kelly accepted that at the time of the increment freeze the Complainant did not seek to challenge the decision in a third party forum, this was on the understanding that the Respondent’s proposal had a specific end date, that being December 2015, wherein the proposed measures would cease to be imposed. Accordingly the Complainant was entitled under the Act to increments from January 2016 as he did not give permission for the continuation of the non-payment beyond January 2016 and she submitted that it was ‘properly payable’ from January 2016.
Ms Kelly contended that as the Complainant’s contract states he commences at point 1 of the incremental scale, then it is implied that incremental progression will apply every year. Accordingly, she submitted that he had a contractual commitment to incremental progress, as is evident from the Respondent seeking written permission from him in order to deduct the value of his next increment.
Ms Crosbie stated that the Respondent has paid all wages ‘properly payable’ to the Complainant. She said that there has been no ‘deduction’ lawful or otherwise within the meaning of the Act. She submitted that a review does not imply consent to undertake or restore the increment. It was simply an undertaking by the Respondent to enquire into whether or not it was in a financial position to reinstate the increments. There was no agreement to restore the increment, however, she said that in late 2015 the Respondent did review the situation.
Ms Crosbie remarked that the Court is being asked to adjudicate on this matter under the Act at a time when the parties are also engaged under the auspices of the WRC to find a mutually acceptable solution for all employees on this issue.
Ms Crosbie submitted that in any event the expectation of receipt of an increment in the future did not fall within the definition of “wages” for the purposes of the Act.
The Law
The Act in Section 5 prohibits an employer from making a deduction from the wages of an employee unless the deduction is authorised to be made by virtue of any statute or any instrument made under statute or is required or authorised to be made under the employee’s contract of employment or the employee has consented to the same.
Section 5 of the Act states
- 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.
Conclusions of the Court
The Court must first decide whether the claimed unlawful deduction was in fact properly payable to the Complainant.
InDunnes Stores (Cornelscourt ) v Lacey and Nuala O’Brien[2005] IEHC 417, unreported Finnegan P., the High Court found that in determining claims under the legislation, the central consideration is whether or not the remuneration in question was ‘properly payable’ to the claimant.
InEaragail Eisc Teoranta v Doherty[2015] 26 E.L.R 326 the High Court, Kerns P. in reference to the decision of Edwards J inMcKenzie v Minister for Finance[2011] E.L.R.109. 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.”
Subsection (6)(a) of section 5of the Act provides, in effect, that where the total amount of wages properly payable to an employee is not paid, the deficiency or non-payment is to be regarded as a deduction.
The Court notes that while the Complainant did not sign the document in October 2013 giving the Respondent permission to cease paying increments, he did not submit a claim under the Act for the two year period in question. Through his Union he sought restoration of the increments by letter dated 4thDecember 2015 to the Respondent and submitted his claim under the Act on the 4th February 2016. Consequently, the Court must turn to a consideration of the amount that was properly payable to the Complainant from 1stJanuary 2016, the date of contravention claimed by him.
The letter from the Respondent to staff in October 2013, informing staff of salary reductions and increment freezes effective from 1stJanuary 2014 stated:-
- “There will be an increment freeze for a period of two years, at which time it will be reviewed.”
The Court finds that the commitment to ‘review’ increments in January 2016 by the Respondent cannot be considered as having the same meaning as ‘agreeing’ to pay increments. The Court notes that negotiations on restoring increments is an ongoing matter between the Respondent and the Union and is currently the subject of conciliations talks at the Workplace Relations Commission. The Court takes the view in the absence of an agreement to pay increments, then such payments are not ‘properly payable’ and consequently no deduction of pay has taken place within the meaning of the Act on the date of the alleged contravention.
In these circumstances, the Court finds that the Complainant’s complaint under the Act is not well founded.
Determination
The Court concurs with the Adjudication Officer’s findings, upholds his Decision and rejects the Complainant’s appeal.
The Court so Determines.
Signed on behalf of the Labour Court
Caroline Jenkinson
7th April, 2017______________________
CCDeputy Chairman
NOTE
Enquiries concerning this Determination should be addressed to Ceola Cronin, Court Secretary.