Complainant

Respondent

Anonymised Parties

A Warehouse Operative

A Supermarket Retailer

Representatives

O'Hanrahan Lally Solicitors

IBEC

Act

Complaint Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under section 6 of the Payment of Wages Act, 1991

CA-00013123-001

14/08/2017

Complaint seeking adjudication by the Workplace Relations Commission under section 13 of the Industrial Relations Act, 1969

CA-00013123-002

14/08/2017

The complainant is a night worker in the distribution centre of a retailer. He asserts that he is entitled rely on the basic hourly rate of pay of €11.87 stated in his contract of employment of the 16th June 2015; the respondent states that this was a mistake and the complainant’s then correct rate of pay was €10.29 per hour.

The complainant outlined that he initially worked for the respondent on a three-day week and became full-time in June 2015. He works overnight 37.5 hours per week, starting at 10pm and finishing at 6am. The complainant worked every Friday night/Saturday morning. He initially raised the pay issue in August 2016 and made further enquiries in October 2016 and January 2017. The respondent replied on the 16th February and the 24th March 2017. His grievance was heard on appeal on the 19th April 2017 and the outcome issued on the 11th May 2017.

The complainant outlined that he is entitled to redress of €7,140 in respect of his payment of wages claim. The complainant submitted that an extension of time should be granted to this claim because he had sought to pursue complaint via internal procedures. He applied to extend time to August 2016, a period of 12 months. He submitted that the contract provided to him in June 2015 stated his basic rate of pay as €11.87. He submitted that the respondent is not entitled to unilaterally reduce his basic rate of pay to €10.29 per hour. The complainant outlined that he is also entitled to redress for the unsocial hours premium of 20% for his night work. Since May 2017, the complainant’s consolidated rate of pay was €12.34 per hour (after the respondent increased his basic rate of pay to €10.50).

The complainant submitted that the contractual provision “Hours worked between Saturday and Sunday attract a 20% Premium if part of the rostered working week” means every hour worked on a Saturday attracts a premium. This meant that he should be paid this additional premium for work on Saturdays (i.e. midnight Saturday to 6am). He stated that he is paid the unsocial hours allowance for two hours on a Sunday, i.e. from 10pm to midnight, until when Monday starts. The complainant said that at least one colleague who worked days received hourly pay of €12.34. This colleague was on the same contract and employed for the same length of time.

The complainant’s colleague gave evidence. He worked for the respondent since 2007. He initially worked through an agency and then started as a respondent employee, receiving €11 per hour. He is a warehouse operative and his current rate of pay is €18 “something” per hour. He worked both days and nights and was now on nights. When he works nights, he is paid the basic rate +20%. When he goes to days, he returns to the basic rate.

In closing comments, the complainant submitted that he was seeking to enforce the binding contract he signed. He relied on contract law and any rectification requires agreement. If the complainant were to move to days, it is unclear what his rate of pay would be. He would likely move to a reduced rate of pay.

The respondent submits that the 2015 contract provided to the complainant contained a clerical error in respect of his basic rate of pay. This was provided to the complainant when his working week increased from 22.5 hours to 37.5 hours. The 2015 contract should have read €10.29 per hour, plus a 20% payment for unsocial hours. The 2017 contract was issued to this effect. There was no contract that attracted a basic rate of pay of €11.87. In its letter of the 16th February 2017, the HR Manager indicated that the €11.87 is a consolidated rate of pay, including the 20% premium for unsocial hours. This position was affirmed by the outcome of the complainant’s grievance.

The respondent submitted that there were three contracts. The original 2013 contract clearly set out the rate of pay of €9.69 and a premium of 20%. The 2015 contract was a full-time contract that should state a basic rate of pay of €10.29. This was then the rate of pay for new employees. €11.87 did not exist as a basic rate of pay.

The complainant was not paid the higher amount after 2015 and this arose as a contractual issue in 2017. The respondent outlined that there is a 2% pay increase each year and the complainant’s basic pay increased to €10.50 in May 2017 (to a consolidated rate of €12.34, including the 20% premium).

In relation to Saturday work, the respondent outlined that night shift workers start at 10pm on Friday nights and work until the following morning. Saturday work attracts only the 20% payment. They are paid a premium for the two hours worked on a Sunday night. 

The respondent outlined that the complainant was recorded on the system as a night worker in receipt of consolidated rate of pay. The documentation transcribed this information from the system. The respondent submitted that as the contract was not performed, it was not enforceable. Employees were not provided with contracts unique to them. The complainant incurred no financial loss in this instance. The respondent submitted that there was no deduction in the complainant’s pay and this matter did not fall within the ambit of the Payment of Wages Act.

CA-00013123-001 Payment of Wages Act

The complainant’s 2015 contract of employment provides:

“Basic rate - €11.87

Hours worked between 22.00 to 06.00 attract a consolidated rate of pay that includes a 20% premium for unsocial hours

Hours worked between Saturday & Sunday attract a 20% Premium if part of rostered working week.”

The May 2017 contract repeats these provisions, except states that the basic rate is €10.29.

The complainant asserts that he is entitled to rely on the rate of pay stated in the 2015 contract; the respondent denies that this is the case. The respondent asserts that this was clearly a mistake in filling in the contract at the time it was presented to the complainant in June 2015. It submits that it never paid the complainant the higher rate, so there was no performance of the contract.

It is first necessary to set out the time line of the salient events in this employment relationship. The complainant commenced direct employment with the respondent on the 11th November 2013. He then worked a minimum roster of 22.5 hours per week and was paid a basic rate of €9.69 per hour. On the 16th June 2015, he signed a contract which both increased his hours and his basic rate of pay (the enforceability of the latter is in dispute). The complainant availed of the grievance procedure, culminating in the appeal outcome of the 11th May 2017. In May 2017, the basic rate of pay of certain employees increased from €10.29 to €10.50; the respondent paid this increase to the complainant. The complaint to the Workplace Relations Commission was submitted on the 14th August 2017.

It is clear that the entry of €11.87 as the basic rate of pay in the June 2015 contract was a mistake on the part of the respondent. Nevertheless, it is difficult to see grounds why this should be set aside because of such a unilateral mistake. There is nothing unconscionable about a rate of pay of €11.87. I accept the evidence that this was not a prevailing rate of pay in the respondent, but it was the rate of pay inserted into the contract. The complainant did not contribute to the respondent's mistake. Applying the doctrine of mistake, there is no basis to set aside the binding nature of the basic rate of pay as €11.87 per hour. (See McDermott, "Contract Law").

For completeness, I address whether section 4(3) of the Payment of Wages Act can avail the respondent. Section 4 in its totality provides:

“Statements of wages and deductions from wages.

4.— (1) An employer shall give or cause to be given to an employee a statement in writing specifying clearly the gross amount of the wages payable to the employee and the nature and amount of any deduction therefrom and the employer shall take such reasonable steps as are necessary to ensure that both the matter to which the statement relates and the statement are treated confidentially by the employer and his agents and by any other employees.

(2) A statement under this section shall be given to the employee concerned—

(a) if the relevant payment is made by a mode specified in section 2 (1) (f), as soon as may be thereafter,

(b) if the payment is made by a mode of payment specified in regulations under section 2 (1) (h), at such time as may be specified in the regulations,

(c) if the payment is made by any other mode of payment, at the time of the payment.

(3) Where a statement under this section contains an error or omission, the statement shall be regarded as complying with the provisions of this section if it is shown that the error or omission was made by way of a clerical mistake or was otherwise made accidentally and in good faith.

(4) An employer who contravenes subsection (1) or (2) shall be guilty of an offence and shall be liable on summary conviction to a fine not exceeding [£1,000.]”

Section 4(3) could be construed as offered a good faith defence to an employer who provides to an employee a statement of terms of employment or a contract which contains an error related to wages. I do not believe that this is a correct interpretation of section 4(3).

First, section 4 deals with statements of wages paid to employees, i.e. pay slips. Section 4 of the Payments of Wages Act is not justiciable before an adjudication officer, and section 4(3) offers a good faith defence to employers facing prosecution by the (now WRC) inspectorate service. This arises where there is an error or omission in a pay slip or other similar document.

Section 4(3) cannot be extended to apply to errors relating to wages in statements issued pursuant to section 3 of the Terms of Employment (Information) Act or in a contract of employment. There is no statutory provision which enables an employer to set aside a contractual term even where there is an error made in good faith.

Section 5 of the Payment of Wages Act regulates the deductions permissible to an employee’s pay. This is justiciable before an adjudication officer. Section 5(6) provides:

“(6) Where—

(a) the total amount of any wages that are paid on any occasion by an employer to an employee is less than the total amount of wages that is properly payable by him to the employee on that occasion (after making any deductions therefrom that fall to be made and are in accordance with this Act), or

(b) none of the wages that are properly payable to an employee by an employer on any occasion (after making any such deductions as aforesaid) are paid to the employee,

then, except in so far as the deficiency or non-payment is attributable to an error of computation, the amount of the deficiency or non-payment shall be treated as a deduction made by the employer from the wages of the employee on the occasion.”

The question is whether the basic rate of pay of €11.87 was “properly payable” to complainant so that the non-payment of this amount constituted a deduction within the ambit of section 5.

In Sullivan v Department of Education [1998] E.L.R. 217, the EAT held that a deduction includes any amount payable to an employee, i.e. sums to which an employee is properly entitled. The relevant part of the decision states:

“There is no specific definition of a deduction in the Act; guidance can be taken from the definition of ‘wages’ in section 1 of the Act: ‘Any sums payable to the employee in connection with his employment, including: …’

We consider the word ‘payable’ to be significant. Whereby [the employer] contended that there is no deduction where an employee continues to receive the same amount (and the same composition) of wages from the outset, the Tribunal considers that if an employee does not receive what is properly payable to him or her from the outset then this can amount to a deduction within the meaning of the 1991 Act. We take ‘payable’ to mean properly payable. The definition of ‘wages’ goes on to give examples of types of payments which can amount to ‘wages’ and states that the payments can amount to wages ‘where payable under [his] contract of employment or otherwise…’. Although in our view it is not simply a matter of what might have been agreed or arranged or indeed paid from the outset, but in the view of the Tribunal, all sums to which an employee is properly entitled.” 

Applying the statutory provisions and the Sullivan decision, I find that the rate of €11.87 was properly payable to the complainant. The underpayment made to the complainant amounts to a deduction within the ambit of section 5 of the Payment of Wages Act.

It follows that the complainant is entitled to recover the shortfall in his basic rate of pay as well as the 20% hourly premium for unsocial hours. This extent of this redress is set out below.

The next question of construction is whether the complainant’s work between midnight and 6am on Saturday morning attracts the second premium of 20%. The relevant part of the contract states: “Hours worked between Saturday & Sunday attract a 20% Premium if part of rostered working week.” Giving these words their ordinary meaning, the premium is paid for hours between Saturday and Sunday and not between Friday and Saturday. The fact of the complainant working the early hours of Saturday morning does not enable him to recover this additional premium pursuant to this provision. This element of the claim is, therefore, not well founded.

I make the following findings in respect of redress for the elements of the claim which are well founded. The complaint was made to the Workplace Relations Commission on the 14th August 2017. I do not see reasonable cause to extend the limitation period provided in the Act. Whatever shortcomings there were with the grievance process, they did not prevent the referral of the complaint.

I find that the Payment of Wages Act only permits an award of redress for a contravention that predates a complaint. It is not possible to make an award in this decision for a contravention after the 14th August 2017.

The calculable period for redress is, therefore, the six months (26 weeks) predating the 14th August 2017. It is not disputed that the respondent paid the complainant the basic rate of €10.29 per hour and at the rate of €10.50 per hour after the 1st May 2017. He was entitled to an hourly rate of pay of €11.87 during this time.

The complainant’s unsocial hours premium was also underpaid during this time. He was entitled to a premium of €2.374 per hour when he was paid €2.058 prior to the 1st May 2017 and €2.1 thereafter. His hourly loss in respect of the unsocial hours premium prior to the 1st May 2017 was €0.316 and €0.274 thereafter. The complainant is entitled to the unsocial hours premium for the 37.5 hours he worked and the additional Sunday premium for two hours.

Taking this together, I calculate that for the period before the 1st May 2017 (10 weeks), he incurred a shortfall in basic pay of €592.50; in the unsocial hours premium of €118.5 and in the Sunday hours of €6.32. For the period after the 1st May 2017 (16 weeks), I calculate the shortfall in basic pay as €822; in the unsocial hours premium of €164.40 and in the Sunday hours of €8.70.

The sum of these amounts is €1,712.42 and I award this as redress pursuant to the Payment of Wages Act.

CA-00013123-002 Industrial Relations Act

While I appreciate that the insertion of €11.87 in the 2015 contract was an error, the complainant was entitled to pursue payment of the basic rate stated in the correct. The complainant played no part in the error being made. While the respondent ran a procedurally sound grievance process, this never addressed the question raised by the complainant. It asked whether €11.87 was a rate of pay applicable in the distribution centre, instead of what were the ramifications of the complainant’s contract stating his basic rate of pay as €11.87 per hour. In these circumstances, I recommend that the respondent pay redress to the complainant of €1,000.

CA-00013123-001

I find that the complaint made pursuant to the Payment of Wages Act is, in part, well founded and the respondent shall pay to the complainant redress of €1,712.42.

CA-00013123-002

I recommend that the respondent pay to the complainant redress of €1,000 for the way the grievance process was undertaken in this case.

Payment of Wages Act / section 5

Mistake in contract of employment

Grievance procedure