ADJUDICATION OFFICER DECISION

Adjudication Decision Reference: ADJ-00003726

Complaint for Resolution:

Date of Adjudication Hearing: 12/10/2016

Venue: Ardboyne Hotel, Navan, Co. Meath

Workplace Relations Commission Adjudication Officer: John Walsh

Procedure:

In accordance with 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

In August 2015 the Complainant agreed to accept a senior position with the Respondent on the same salary that she received in her previous employment. On the 7^th of October 2015 she signed a contract of employment with the Respondent. It was agreed that her salary would be €78,047. She commenced working for the Respondent on the 23^rd of November 2015. On the 9^th of December 2015, she was advised that there had been an ‘error’ in her contract in relation to her pay and that her salary would now be €73,754. She made several representations to the Respondent to rectify this matter without success. She filed a complaint under Section 6 of the Payment of Wages Act, 1991 to the Workplace Relations Commission on the 26^th of June, 2016.

Complainant’s Submission:

That she applied for a senior position with the Respondent. She previously worked in a similar position on a salary of €75,487.55 with an increment due on the 6^th of October 2015. Haddington Road was applied to her salary while she worked with her previous employer.

Following her successful interview for the post, she was due to start work on the 21^st of September 2015. She negotiated her salary and start date in August, 2015 with Ms. A.K. On the 12^th of August 2015 she sent an e-mail to Ms. A.K. confirming her start date as of the 21^st of September 2015 and the same salary that she had with her previous employer. The e-mail read as follows;

‘Good morning A,

It was great to talk to you this morning and I am looking forward to working with you in the near future. I’d like to confirm with you my start date will be the 21^st of September 2015, on the understanding that my salary will remain the same. I am currently on scale point 5, basic salary €75,487.55 with my next increment due on the 6^th of the 10th 2015.

Kind Regards,

 S '.

On the 19^th of August, she received a letter and her contract of employment from the Respondent. In that letter she was requested to please read in full her contract of employment and sign and return it to the undersigned.

Following receipt of this letter and attachments her previous employer insisted that she would give 3 months’ notice rather than one month. She spoke with the Respondent Ms. M who then sent her an amended contract dated the 19^th of August 2015 with a starting salary of €78,047 with the new start date of the 23^rd of November 2015. The contract that she received from the Respondent was correct.

Her new role requires her to cover the area of Kildare and West Wicklow and South Dublin. As a result she was required to purchase a car in order to drive to the various satellite offices of her staff. She did not have a car in her previous employment and used public transport but the new job did require a car and the Respondent was fully aware of this.

On the 23^rd of November 2015, she started in her new position. She enjoyed this role. On the 3^rd of December 2015, she received a telephone call from Ms. G.M. who told her that there had been an ‘error’ with her contract and that her salary had been overstated and would be reduced by €4,293. She explained to Ms. G.M. that she had negotiated this salary with Ms. A.K. and that she would not have accepted her previous role for less. She had worked in a senior position in her previous employment and understood from her discussion with A.K. that she would be transferring on the same salary. She was now unable to return to her previous job as her post had been filled during the period of 3 months’ notice.

She spoke to A.K. immediately who said that she would speak to recruitment and sort it out as there must be a misunderstanding. On the 7^th of December 2015, she spoke to Ms. G.M. with a view to her explaining to her why there had been a change to her signed contract. She informed her that Haddington Road had not been applied to her contract. She advised G.M. that it had already been applied in her previous employment. G.M. informed her that she would issue her with a new contract which she did on the 7^th of December 2015. The new contract failed to honour the contractual commitment that was made to her prior to joining the organisation.

During the rest of December 2015, she spoke with her line manager B.D., who spoke to her manager C.C. She passed the matter on to M.G. for urgent attention. During this time she was reassured by all senior management that the matter would be resolved satisfactorily. She continued to carry out her new position professionally at all times.

In February 2016, she spoke to M.McL., (HR). She agreed to look into the matter on her behalf. On the 19^th of February 2016, she received an e-mail from M.B. She outlined the various salary scales for the role within the Organisation. In the first line, she mentions ‘the inclusion of the incorrect salary scale on your contract of employment for which I apologise.’ It was not the incorrect salary scale because she had negotiated her salary before signing the initial contract.

On the 29^th of February 2016, she replied to M.B. outlining the correct sequence of events over the previous 6 months and the fact that she had resigned from her position based upon the signed contract with the correct salary which was negotiated. She also pointed out that it took three months after her resignation and ten days after she started working with the Respondent before she was informed of the ‘error’. She asked for an explanation as to how this ‘error’ had been made on 4 occasions and what her recourse was.

On the 7^th of April 2016 she received an e-mail from G.M. stating the ‘so-called mistakes’ in her contract were due to an administrative error. She would like to point out that where G.M. refers to reductions in salary under Haddington Road Criteria, when she worked for her previous employer, she had been subject to two reductions, initially when she commenced in April 2010, her starting salary was reduced by approximately 5K and in 2013, under Haddington Road, a further reduction of 4K was made.

Respondent’s Submission:

The following is a summary of the Respondent’s submission;

The salary scale in the employment contract that was signed by the Complainant and dated the 7^th of October 2015, is incorrect and was inserted as a result of a mistake on the part of the Respondent. The Respondent was entitled and legally obliged to stop paying the Complainant at the incorrect rate in December 2015 and to ensure that the Complainant was paid in line with the correct salary at that time.

The correct salary scale for a Principal Social Worker is set-out in the job advert issued to the Complainant in April 2015. The correct salary scale is also set-out at page 21 of the Respondent’s salary scales. This document clearly provides for a maximum salary of €73,754 for a Principal Social Worker. It is common knowledge that salary scales in the Respondent Organisation are set according to Health Sector consolidated Salary Scales. The Respondent was entitled to correct this mistake and re-issue the Complainant with an amended contract showing the correct salary and to pay the Complainant in-line with that scale. In fact, the Respondent was obliged by law to do so.

The basis for setting the consolidated salary scales is important. The financial emergency measure in the Public Interest (No. 2) Act,2009 (“FEMPI 2009”) introduced reductions to remuneration to public servants. Section 2 of FEMPI 2009 provides that

“a relevant provision that fixes the remuneration or any part of the remuneration of a Public Servant shall be taken to have been amended with effect on and from the 1^st of January 2010 in accordance with this section.”

Section 4 of FEMPI 2009 provides;

“(1) subject to subsection (2) and section 6, a purported amendment (other than amendment by Act of Oireachtas) of a relevant provision amended by Section 2 that would have the effect of increasing the remuneration payable to a public servant is of no effect.

(2) An amendment of a relevant provision may be made-

(a) for the purpose of complying with any order of a court in respect of which there is no stay in being.

(b) for the purpose of complying with any enforceable determination of the Labour Court in respect of which there is no stay in being, or

(c) where the Minister is satisfied that a legal entitlement exists in respect of any position held by a public servant or a group or class of public servants to a higher rate of remuneration, and the minister has certified accordingly in writing to the public service body concerned. “

FEMPI 2009 was amended in 2013 by the Financial Emergency measure in the Public Interest Act, 2013, introducing further reductions in remuneration and inserting a section 2A into FEMPI 2009.

Section 5 of FEMPI 2009 [as amended by FEMPI 2013] provides that

‘(1) Where a relevant provision is taken to have been amended by section 2 [or 2A]

(a) public servant whose remuneration falls to be determined in accordance with the relevant provision is not entitled to receive remuneration of an amount greater than the amount so determined and

(b) no person or body responsible for paying the remuneration of such a public servant is entitled to pay remuneration to the public servant of an amount greater than the amount so determined.

(2) if a public service body pays remuneration to a public servant at a higher rate than that provided by that provided by the appropriate relevant provision as taken to have been amended in accordance with section 2 [or 2A] then –

(a) the public servant shall hold the payment in trust for the public body and

(b) the public service body shall recover that amount of the overpayment from the public service wither directly or by a deduction taken from remuneration subsequently payable to that public servant or otherwise’

The remuneration of the Respondent employees is set by the circular with reference to salary scales and this is the’ relevant provision’ for the purposes of the FEMPI Acts that circular was amended in 2009 in line with FEMPI 2009 and again in FEMPI 2013 in line with FEMPI 2013. Circular 16/2013 contains the amended Consolidated Salary Scales, amended in 2013. The Consolidated Salary Scales set the salary of the complainant and other HSE employees and the HSE is obliged by the FEMPI Acts to comply with those salary scales and cannot legally pay any salary that is in excess of those salary scales.

Section 5 of The Payment of Wages Act covers deductions from wages and Section 1 provides that “wages” “in relation to an employee, means any sum payable to the employee by the employer in connection with his employment”. The word “payable” in this context was interpreted by the Employment Appeals Tribunal in Sullivan v Department of Education PW 2/1997 “properly payable”. In this case the salary of €78,047 was not properly payable as it was not legally payable. The level of salary is prohibited by the FEMPI Acts.

The financial measures in the Public Interest Act 2015 envisage that increases in salary should be paid in 2017 and 2018. At that time Consolidated Salary Scales will be amended and this will allow the Respondent to legally increase the Complainant’s Salary. However, at the moment, the Respondent is not legally entitled to pay the Complainant a salary that is in excess of the salary for the role of a Principal Social Worker as set out in the Consolidated Salary Scales.

Findings:  

The Complainant applied for and was successful in obtaining a senior position with the Respondent. Following discussions with the Respondent she was advised to negotiate her salary with her future manager. She had explained that her acceptance of her new role was dependant on her previous salary being matched by the Respondent. She was contacted by Ms. A.K. who had been nominated by Ms. C.C. to negotiate her contract salary. She confirmed this to her and communicated this to the Respondent.

She was issued with a contract commensurate with her salary at the previous employment. A second contract was issued with an amended start date which included the agreed salary. Based on this authentically signed contract, she resigned her position at her previous employment. The Respondent was fully aware that the Complainant would be required to purchase a car in order to carry out her new role. This role involved visiting a number of satellite locations where her staff would be working. She had no requirement for a car in her previous employment. She purchased a car on the basis of the contract provided to her by the Respondent.

It was not until three months after her resignation and ten days after she started working for the Respondent, the 3^rd of December 2015, that she was informed of an ‘error’ in her contract. The Respondent stated that “the remuneration of the Respondent’s employees is set out by the circular with reference to salary scales and that this is the ‘relevant provision’ for the purposes of the FEMPI Acts. The circular was amended in 2009 in line with FEMPI 2009 and again in 2013, in line with FEMPI 2013. Circular 16/2013 contains the amended consolidated salary scales, amended in 2013. The consolidated salary scales set the remuneration of the Complainant and other Respondent employees and the Respondent is obliged by the FEMPI Acts to comply with those salary scales and cannot legally pay any salary that is in excess of those salary scales. “

Decision:

Section 5.(1)(b) provides; ‘an employer shall not make a deduction from the wages of an employee (or receive any payment from an employee) unless-

(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,…’

The Respondent freely entered into negotiations with the Complainant in relation to the salary she was to be paid. An agreement was reached with the Complainant based on the salary that she was on with the previous employer. The Complainant was required to purchase a car in order to carry out her duties for the Respondent. The Respondent’s representatives should have been fully aware of the FEMPI Acts when they sat down to negotiate with the Complainant. At the time of the contractual negotiations, it appears that;

a) the Respondent’s representatives were unaware of the FEMPI Acts

or

b) they considered them irrelevant in discussions on the Complainant’s contract.

It also appears from the Respondent’s evidence that the Respondent’s representatives were unaware of the salary scales applicable to the Complainant.

The contract of employment issued to the Complainant is binding in law. The contractual wages outlined in that contract is the amount ‘properly payable’ to the Complainant. The Respondent has made an unlawful deduction of the Complainant’s wages contrary to Section 5(1)(b) of the Payment of Wages Act, 1991.

I order the Respondent to pay the contractual wages negotiated with the Complainant from her commencement date of the 23^rd of November 2015.

Dated:   2^nd February 2017