ADJ-00005536

Complainant

Respondent

Parties

A Lecturer

A University

Representatives

ARTHUR MCLEAN SOLICITORS

Ken O'Doherty Human Resources

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-00007514-001

10/10/2016

The Claimant is claiming breaches of sections 4 & 5 of the Payment of Wages Act 1991

The Claimant is employed as a lecturer by the Respondent. He sought leave of absence from his duties for the period September 2014 to June 2015 to study abroad. This was approved under the Respondent’s Leave of Absence Policy Which they say is approved by the Revenue Commissioners. The Respondent set the financial implication of this leave for the Claimant which was as follows;

His salary for the leave period was to be reduced from €54,941.00 to €24,845.00 payable monthly.

That a subsistence allowance amounting to €28,031.00 (and travel costs 0f €2,064.00) be paid in three instalments in July, October 2014 and March 2015.

By paying it this way, the Claimant received in gross terms the precise sum he would have received by way of salary had he not taken the leave and the Respondent paid no additional sum over and above by way of salary.

As a consequence of a disciplinary procedure involving the Claimant, the Respondent determined that the subsistence allowance was overpaid. Therefore adjustments were to be made to the calculation that were applied. This decision was affirmed on appeal. Following communications between the parties and following a further review of the calculations the amount the Claimant ought to have claimed was €9,654.00 giving rise to a sum of €18,377.00 to be put through payroll. Although this calculation was challenged no further communication was entered into about the amount to be deducted. However, it would appear that €1,000.00 per month is being deducted over an 18 month period.

In regard to the Payment of Wages Act, the subsistence allowance is clearly not ‘wages’ within the definition of section 1 as it could not be said to be a sum payable in connection with his employment. It also, cannot be ‘wages’ as PAYE etc. would have to be paid on it nor could it be an expense incurred by an employee in the carrying out of his employment. Furthermore in regard to section 5 of the 1991 Act that when making a deduction the purpose of the deduction is a reimbursement I of an over payment.

Therefore the purpose of the deduction here is not to reimburse the employer wages or expenses overpaid by them but to apply a tax treatment to part of a sum paid pursuant to its Leave of Absence Policy and this to pass monies to the Revenue Commissioners. The Respondent cannot be the sole arbiter of what is payable to Revenue. They should have sought direction from Revenue but they did not. It should have filed an amended P35.

The Respondent’s Leave of Absence Scheme allows a staff to divert a portion of their gross pre-tax salary while on approved leave of absence to meet expenses on a subsistence basis (i.e. they can take a reduced gross salary and claim this reduction as ‘tax-free expenses subject to location and number of days abroad). The Claimant successfully applied for leave of absence of one semester from September to December 2014. It appears that he notified the Financial Services Division that he had been approved for leave of absence for one year. As a result he received a greater value of expenses ‘tax-free’ than that to which he was entitled.

This subsequently resulted into an inquiry into this matter and others concerning his affairs while on leave of absence for one semester rather than a year. A number of options were presented to the Claimant in regard to the recovery of the over payments. However, no response was forthcoming. It was then decided to increase his salary by €1,000 and a subsistence of €1,000 be repaid out of net salary until the total adjustment of €20,450 was accounted for. This was spread over 20 months. Supporting document was provided to the Hearing.

The Claimant received approval for leave of absence for a single term on 2014. He mistakenly received the tax and expenses advantage relating to a year’s approved leave of absence. The Respondent is required to recoup any over payments made ‘tax-free’ in error and rectify the underpayments to Revenue.

I have considered the submissions made by the parties. The claim has been taken under the Payment of Wages Act 1991. This Act provides for an employer to recover overpayments made to an employee.

The Claimant received approval under the Leave of Absence Scheme for one term on 2014. His leave finished in December but continued to receive the tax advantages beyond this date. It is difficult to see how he could not have been aware of this. When the error was discovered he did not engage with the Respondent in regard what options were available to recover the over payments. The Respondent therefore had no choice but to implement a process to do this.

I therefore to not find the claim under the Payment of Wages Act well founded and it fails.

overpayment