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-00007282-001

30/09/2016

This complaint concerns the removal of a contractual entitlement to the provision of health insurance.

The complainant claims that as part of her contract under the heading “remuneration” she was entitled to the respondent paying for her medical health insurance. She claims that the respondent ceased paying that element of her wages as of 30 April 2016. She claims that this amounts to an unlawful deduction from her wages.  

The respondent claims that it did pay for the complainant’s medical health insurance for a period of time. However, due to dire financial difficulties it sought to buy out its employees’ private health insurance cover. The respondent said that the benefit provided was not wages but a ‘benefit in kind’ which does not fall within the definition of ‘wages’ as provided for under the Payment of Wages Act, 1991.

Preliminary matters.

This complaint was heard in April 2017, the Adjudication Officer failed to deliver a decision before he ceased employment with the Workplace Relations Commission. The case was reheard as a de novo hearing on 6 November 2018 by a different Adjudication Officer. The respondent has raised preliminary matters as to the de novo hearing.

The complainant in response to the preliminary matters raised by the respondent made the following points.

She claims that the hearing of this complaint should proceed on the basis that the case had previously been heard however, as the Adjudication Officer was not in a position to issue a decision prior to him leaving the Workplace Relations Commission he has not completed his functions, under Section 41(5) of the Workplace Relations Act, in particular subsection (5)(iii) and (iv), where it states that,

Section 41(5)(a) - An adjudication officer to whom a complaint or dispute is referred under this section shall—

(i) inquire into the complaint or dispute,  

(ii) give the parties to the complaint or dispute an opportunity to—  

(I) be heard by the adjudication officer, and  

(II) present to the adjudication officer any evidence relevant to the complaint or dispute,  

(iii) make a decision in relation to the complaint or dispute in accordance with the relevant redress provision, and  

(iv) give the parties to the complaint or dispute a copy of that decision in writing.

She further states that there is no legal impediment or restriction in the Act that excludes the Workplace Relations Commission from assigning the complaint to a different Adjudication Officer in situations where the case was heard and the complete functions under Section 41(5)(a) were not delivered prior to the Adjudication Officer ceasing his/her position with the Workplace Relations Commission.

She claims that the complaint remains open until a decision is taken and that is not satisfactory or fair. She said that it is common in other similar bodies in particular the Courts were the decision maker or Judge has started a case but is unable to conclude for whatever reason, including illness, death, etc, the case is simply reassigned, reheard and brought to a conclusion.

She claims that the respondent cannot claim that it will suffer any prejudice on the case being re-heard. Her substantive submission has not changed in any way, and nothing new has been added.

Substantive matters.

The complainant claims that she commenced employment on 30 May 2005 with a company that was subsequently acquired by the respondent and she transferred to the respondent pursuant to a transfer of undertaking under the EC (Protection of Employees on Transfer of Undertakings) Regulations 2003.

She claims that her remuneration is composed of both gross salary and Health care membership. The remuneration clause in her contract reads as follow: “Your gross salary will be €17,500 per annum. Payment will be made each month in arrears by credit transfer. Your V.H.I membership will be paid by the company in full. This will be Plan B – 28 units.”

She submits that the respondent unilaterally withdrew her contractual entitlement to the provision of health insurance in April 2016. She said she was contacted by the respondent in or around September 2015 and advised of its intentions and that she was entitled to one of two buy-out options. Option 1 - 60% of the value of the premium to be added to her annual base salary (€1,200) with twice the remaining value (40% x 2 = €1,600) being paid as a lump sum or Option 2 - twice the value of the premium (€4,000) to be paid as a once off lump sum. The complainant was advised that Option 2 would be considered the ‘default option’ should she fail to inform the respondent by the 1 October 2015. The buy-out which amounted to a significant loss for her was to be made on the renewal date of the policy.

She claims that she challenged the legality of the respondent’s actions and sought confirmation that her health insurance would not be cancelled. She said that she was not afforded any opportunity to negotiate with the respondent and did not select an option. She said that the respondent invoked the default option, Option 2. She said she attempted to engage with the respondent on the matter through her solicitors but to no avail.

The complainant claims that in accordance with Section 5(1)(c) of the Payment of Wages Acts, 1991 it states that “An employer shall not make a deduction from the wages of an employee (or receive any from an employee) unless – in the case of a deduction, the employee has given his prior consent in writing to it.”

The complainant cited the definition of ‘wages’ from Maeve Regan’s Employment Law book from page 340 paragraph [11.14], which reads “Wages are a sub-set to ‘pay’ when given the wide ECJ meaning. The meaning is defined [in the Payment of Wages Act 1991, s 1.] in Irish law as:

… any sums payable to the employee by the employer in connection with his employment.

The use of the phrase ‘in connection with’ is very wide. This is expressed to include:

(i) any fee, bonus or commission, or any holiday, sick or maternity pay, or any other emolument, referable to his employment, whether payable under his contract of employment or otherwise, and

(ii) any sum payable to the employee upon the termination by the employer of his contract of employment without his having given to the employee the appropriate prior notice of the termination, being a sum paid in lieu of the giving of such notice.”

She went on to refer to the recent appeal to the High Court in the case of Devidas Petkus and Others -v- Complete Highway Care Limited [2015 No. 76 MCA] in relation to an adjustment to the employees pay whether it was a reduction or a deduction and whether it was lawful.

The complainant claims that the employer in this case made a unilateral decision to make a deduction of her health insurance from her remuneration.

Preliminary matters.

The respondent sought to raise the following preliminary matters.

The respondent noted that the complainant lodged the complaint with the Workplace Relations Commission on 30 September 2016 and the case was the subject of a hearing before an Adjudication Officer on 19 April 2017. Following the hearing no decision issued. The respondent said it was surprised to be invited again to another hearing on the matter.

The respondent claims that Section 41(1) of the Workplace Relations Commission Act, 2015 states that an employee “… may present a complaint to the Director General …”, in relation to an alleged contravention of the provision listed in schedule 5 of the Act, including Section 5 of the Payment of Wages Act 1991. That subsection further provides that “…where a complaint is so presented, the Director General shall, …, refer the complainant for adjudication by an Adjudication Officer”. The respondent said that Section 45(5) empowers the Adjudication Officer to whom the complaint is referred under this section to:

(i) inquire into the complaint or dispute,

(ii) give the parties to the complaint or dispute an opportunity to—

(I) be heard by the adjudication officer, and  

(II) present to the adjudication officer any evidence relevant to the complaint or dispute,

(iii) make a decision in relation to the complaint or dispute in accordance with the relevant redress provision, and

(iv) give the parties to the complaint or dispute a copy of that decision in writing.

It claims that there is no provision in the Act for a complaint to be referred to an Adjudication Officer for hearing a second time due to the failure of an Adjudication Officer to issue a decision. It claims that the only role for the Workplace Relations Commission delineated in the Act post-referral of a complaint in line with Section 41 is to publish the decision of the Adjudication Officer under the provision of Section 41(14).

It claims that once the case has been assigned to an Adjudication Officer, it is their responsibility as office holder to deal with the complaint and to issue a decision of any case heard. It claims that the Workplace Relations Commission has no power, statutory or otherwise, to refer a complaint a second time to another Adjudication Officer once the complaint has been previously referred.

The respondent claims that apart from the legal question above, it will suffer significant prejudice if a case that has already been heard is reheard. It claims that the respondent has already prepared and delivered a robust defence of the case it had to meet and on a rehearing of the case the complainant has had the benefit of redrawing her submission based on the respondent’s aired defence also given the passing of time there was reasonable and legitimate expectation that the matter would not been reheard but a decision should have issued. It claims that it had written to the Workplace Relations Commission setting out the matters and seeking an adjournment of this case until a solution could be found. It claims that no reply was forthcoming.

Substantive matters.

The respondent submits that it recently experienced a threat to its long-term viability and as a result introduced a plan to return to sustained profitability and inject significant capital into the company. All employees were impacted as significant cost saving initiatives including redundancy were undertaken. As part of the same the respondent sought to buy-out private health cover for its employees. It gave seven months’ notice to all, engaged directly with employees through face to face company briefings and individual correspondence and provided a choice of generous buy-out options. The buy-out options were agreed in advance with the employee’s trade union which represents the majority. It wrote to its members explaining that the buy-out in the circumstances in which the company found itself would be considered generous by the Labour Court.

The respondent claims that it received an email from the complainant requesting confirmation that the Health Insurance would not be cancelled, to which it replied explaining again the rationale for the decision. It said that the complainant formally accepted option 1 on 12 April 2016. The complainant’s choice of option 1 was processed in the April 2016 payroll.

The respondent claims that section 1 of the Act defines ‘wages’ and excludes from that definition ‘any payment in kind or benefit in kind’ and therefore the issue in dispute here is in relation to the payment of Health insurance, which when paid by the employer under contract is a benefit in kind and not wages in the definition of the Act. Additionally, it claims that it is treated as such in the Revenue Commissioners code [5.1.18 Employer-Paid Medical Insurance Premiums], which states that “where an employer pays medical insurance premiums on behalf of an employee and/or his or her dependants, a benefit in kind charge will arise. PAYE, PRSI and Universal Social Charge (USC) will be deducted by the employer in respect of the value of the benefit provided.” The respondent said that this is supported by the way that the medical insurance was treated on the complainant’s monthly pay slip, where it states that the deduction is a benefit in kind.

Furthermore, the respondent claims that the Act provides that even if that were not the case that deduction is legitimate where the employee has given express prior consent as per Section 5(1)(c) of the Act. It states that the complainant wrote to the respondent and expressed an interest in Option 1. The respondent claims that this demonstrates that she has clearly given her consent to the alteration of her terms and conditions.

The respondent claims that under Section 41(6) of the Workplace Relations Acts, 2015 an adjudication officer shall not entertain a complaint referred after the expiration of 6 months beginning on the date of the contravention. The respondent said that in the 6-month period prior to taking the case to the Workplace Relation Commission under the Act – 1 April 2016 until 30 September 2016 - the complainant had received full value of the health insurance premium either by lump sum or an addition to her base salary, therefore there was no deduction from the complainant’s wages in the relevant period.

Preliminary matters.

I note that the respondent said that the complainant lodged the complaint with the Workplace Relations Commission on 30 September 2016 and the case was the subject of a hearing before an Adjudication Officer on 19 April 2017. Following the hearing no decision issued and it was surprised to be invited again to another hearing on the matter. It claims that there is no provision in the Act for a complaint to be referred to an Adjudication Officer for a second time due to the failure of an Adjudication Officer to issue a decision. It claims that once the case has been assigned to an Adjudication Officer, it is their responsibility as office holder to deal with the complaint and to issue a decision of any case heard. It claims that the Workplace Relations Commission has no power, statutory or otherwise, to refer a complaint a second time to another Adjudication Officer once the complaint has been previously referred. It will suffer significant prejudice if a case that has already been heard is reheard. It claims that it has already prepared and delivered a robust defence of the case it had to meet and on a rehearing of the case the complainant has had the benefit of redrawing her submission based on the respondent’s aired defence, also given the passing of time there was reasonable and legitimate expectation that the matter would not be heard but a decision should have issued. It claims that it had written to the Workplace Relations Commission setting out the matters and seeking an adjournment of this case until a solution could be found. It claims that no reply was forthcoming.

I note that the complainant claims that the hearing of this complaint should proceed on the basis that the case had previously been heard however, as the Adjudication Officer was not in a position to issue a decision prior to him leaving the Workplace Relations Commission he has not completed his functions, under Section 41(5) of the Workplace Relations Act, 2015.She states that there is no legal impediment or restriction in the Act that excludes the Workplace Relations Commission from assigning the complaint to a different Adjudication Officer in situations where the case was heard and the complete functions under Section 41(5)(a) were not delivered prior to the Adjudication Officer ceasing his/her employment with the Workplace Relations Commission. She claims that the complaint remains open until a decision is taken and that is not satisfactory or fair. She said that it is common in other similar bodies in particular the Courts where a case is simply reassigned, reheard and brought to a conclusion. She claims that the respondent cannot claim that it will suffer any prejudice on the case being reheard. The complainant’s substantive submission has not changed in any way, and nothing new has been added.

Conclusion

The facts of the preliminary matter set out in this case are straight forward, the case was referred by the Director General of the Workplace Relations Commission to an Adjudication Officer under Section 41(4). The appointment of an Adjudication Officer and cessation of such appointments are set out under Section 40 of the Act. The Adjudication Officers functions, in relation to the hearing of a complaint and delivering a decision thereafter, are set out under Section 41(5).

It is clear that in this case the Adjudication Officer heard the complaint and the parties were given an opportunity to present their case as per Section 41(5)(a)(i) and (ii). However, prior to the date of Adjudication Officer’s cessation of employment with the Workplace Relations Commission the functions under Section 41(5)(a)(iii) and (iv) were not delivered on and therefore the complaint was not properly dispensed with.

I note that there is no provision under the Act to transfer a complaint from one Adjudication Officer to another in such circumstances. Likewise, I note that there is no provision under the Act which prevents the Director General of the Workplace Relations Commission to refer a complaint that has not fully being dispensed with in accordance with the entirety of Section 41(5), once an Adjudication Officer’s cessation of employment with the Workplace Relations Commission to another Adjudication Officer to carry out the entire functions of Section 41(5).

The circumstances of these events have led to the suspension of the proceedings indefinitely, and that is not a satisfactory situation for any of the parties.

I note in Hogan and Morgan’s Book Administrative Law in Ireland (4th Ed. 2010), at Chapters 6 – 76 and 6 - 77, where the authors look at Tribunals and in particular the assignment of cases and the independence of tribunal members. It states at,

“6-76 - It is surprising though that there have been so few cases concerning the particular procedural rules of individual tribunals. However, such cases are starting to come to court. One Supreme Court case, GE v Refugee Appeals Tribunal, [2006] 2 I.R. 11 [which was also reported under the name Edobar  v Ryan [2005] 2 I.L.R.M. 113], has recently been decided which, raises a common problem, namely the assignment of cases and the independence of tribunal members. The situation arose out of the fact that there was a serious backlog in the cases decided by one particular member of the RAT. Specifically, in the two appeals which formed the subject matter of the judicial review in GE, oral hearings had been held in March and May 2003 but, by March 2004, neither case had been determined. In response, the chairperson of the tribunal had purported to re-assign the cases, for re-hearing before another member of the tribunal. In doing this, the chairperson stated that he was acting under the Refugee Act 1996 Sch.2 para.13 which states that, “the chairperson shall assign to each division [of the Tribunal] the business to be transacted by it.” [my emphasis added]

6-77 - Giving judgment for the Supreme Court majority, which reversed the High Court, Fennelly J. held that this statutory power did indeed include authority to remove from one division and assign to another. Fennelly J. went on to state that this power, like any other statutory administrative power, must be exercised fairly and in accordance with the rules of constitutional justice but this did not mean that the power should be confined to any particular circumstances, for example, illness or other incapacity (to take situations mentioned in the High Court and in Kearns J.’s dissenting judgment). “

I am satisfied that the case referred to in the Supreme Court decision above is very similar if not identical to the de facto situation in the case that is before me for consideration. I have noted the Courts finding that a tribunal has “authority to remove from one … and assign to another” and I am satisfied to proceed on that basis, in particular I am mindful that the principles of natural justice and fairness should apply here also.

The reassignment of the case to me, an Adjudication Officer appointed under Section 40 of the Act, to carry out the entire functions, in relation to the hearing and dispensing of a decision, as set out under Section 41(5) appears to be proper, fair and reasonable. I see no legal impediment. I have heard from both parties and notwithstanding a claim of possible prejudice by the respondent, I am satisfied that there is no evidence of actual prejudice for either party by the rehearing of this complaint. On the other hand, I am satisfied that the parties would be prejudiced by leaving the complaint pending indefinitely. Accordingly, I hereby proceed in accordance with Section 41 of the Workplace Relations Act, 2015, 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.

Substantive matters.

Section 1 of the Payment of Wages Act, 1991 at Interpretation states that

“1. — (1) In this Act—

…

“wages”, in relation to an employee, means any sums payable to the employee by the employer in connection with his employment, including—

(a) any fee, bonus or commission, or any holiday, sick or maternity pay, or any other emolument, referable to his employment, whether payable under his contract of employment or otherwise, and

(b) any sum payable to the employee upon the termination by the employer of his contract of employment without his having given to the employee the appropriate prior notice of the termination, being a sum paid in lieu of the giving of such notice:

Provided however that the following payments shall not be regarded as wages for the purposes of this definition:

(i) any payment in respect of expenses incurred by the employee in carrying out his employment,

(ii) any payment by way of a pension, allowance or gratuity in connection with the death, or the retirement or resignation from his employment, of the employee or as compensation for loss of office,

(iii) any payment referable to the employee's redundancy,

(iv) any payment to the employee otherwise than in his capacity as an employee,

(v) any payment in kind or benefit in kind.”

Having heard and considered all the submissions and the evidence from both the parties, I am satisfied that the first consideration that I must address relates to whether the payment of the Health insurance falls within the definition of ‘wages’ under the 1991 Act. Should I find in favour of the complainant I will proceed to address the other particulars raised in relation to the case, should I find in favour of the respondent here I need not address the other issues raised as the complaint will be deemed not well founded.

The complainant is clear that the payment of her health insurance is listed as part of her remuneration in her contract and therefore forms part of her wages. I note that the respondent claims that the payment of the complainant’s health insurance was a benefit in kind and therefore is not included within the definition of wages under Section 1 of the Act.

Firstly, I note in the case before me for consideration that the respondent paid for the complainant’s healthcare insurance on a monthly basis and that was recorded on the complainant’s monthly payslip as (BIK) in other words benefit in kind. This was the full payment of a set corporate healthcare insurance plan and it was not a payment that could be drawn down and used elsewhere or for other schemes.

I note from the Revenue Commissioners own website where they define what benefit in kind is and it states that “A benefit-in-kind (BIK) is any non-cash benefit of monetary value that you provide for your employee. These benefits can also be referred to as notional pay, fringe benefits or perks. The benefits have monetary value, so they must be treated as taxable income. You must deduct Pay As You Earn (PAYE), Pay Related Social Insurance (PRSI) and Universal Social Charge (USC) from your employee’s pay on the value of a benefit.”

I have also noted that the Revenue Commissioners have addressed the matter of medical insurance premiums, it states,“where an employer pays medical insurance premiums on behalf of an employee and/or his or her dependants, a benefit in kind charge will arise. PAYE, PRSI and Universal Social Charge (USC) will be deducted by the employer in respect of the value of the benefit provided.” (my emphasis)

In these circumstances and having considered the case I see that the Revenue Commissioners determine that the payment of medical insurance premiums as a benefit in kind. From the ordinary meaning of the wording set out in the definition of ‘wages’ in Section 1 of the 1991 Act it is clear that - “… the following payments shall not be regarded as wages for the purposes of this definition … (v) any payment in kind or benefit in kind.” – therefore it is clear that benefit in kind is not to be considered as wages under the definition of the Act.

Accordingly, I find that from the evidence adduced and from the plain and simple reading of Section 1 of the 1991 Act and the relevant Revenue Commissioners codes in relation to the same, that the health insurance benefit originally provided by the respondent to the complainant and now withdrawn does not constitute wages within the meaning of the Act and accordingly that the complaint must fail.                

The complaint is not well founded.

Payment of Wages Act - health insurance - benefit in kind - definition of wages – de novo hearing