Complainant

Respondent

Anonymised Parties

National account manager

Logistics company

Representatives

 Solicitors

 Solicitors

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-00012716-002

20/07/2017

Complaint seeking adjudication by the Workplace Relations Commission under section 27 of the Organisation of Working Time Act, 1997

CA-00012716-003

20/07/2017

Complaint seeking adjudication by the Workplace Relations Commission under section 27 of the Organisation of Working Time Act, 1997

CA-00012716-004

20/07/2017

In relation to specific complaint CA/00012716/002, the Complainant’s case was that the Respondent had not paid him sick pay for a period before the termination of his employment.

Specific complaints CA-00012716-003 and CA-00012716-004 were withdrawn at the hearing.

The Complainant went on sick leave on the 16th of September 2016.

During 2016 he was paid for eight weeks’ full pay and eight weeks’ half pay.

His employment ended on the 2nd of September 2017 on his resignation.

His complaint was that there was a sick policy with the Respondent, but he was not being paid in accordance with the sick pay policy.  

The policy (as set out below) had stated that there was a potential entitlement to discretionary company sick pay. This was to vary with the length of service at the time of the commencement of the period of sickness. It went on to state that no more than the total entitlement cited would be paid in any one service year. As the Complainant was deemed to have more than three years’ service, it stated that the entitlement was eight weeks at full pay and eight weeks at half pay. There was no definition of service year in the contract however the annual leave year was defined as “the company holiday year runs from the 1st of January to December 31st”.

The Complainant’s case was that the discretion was not exercised by the company and the company did not pay the sick pay being eight weeks’ full pay and eight weeks’ half pay in 2017.

The Complainant’s further case was that he was entitled to his pension payment arising from his sick pay at 8% of his base salary.

The clauses in his contract of employment were as follows:

“Potential entitlement to discretionary Company Sick Pay varies with your length of service at the time of the commencement of your period of sickness. This entitlement constitutes the Company’s sick pay scheme. Unused sick pay cannot be carried forward from one year of service to the next. Sickness payments made, whether for continuous or for separate absences are added throughout the year. No more than the total entitlement cited below will be paid in any one service year

Less than 3 month’s service

Nil

From 4 months to 12 months’ service

Two weeks at full pay, two weeks at half pay

More than 1 years’ service

Four weeks at full pay, four weeks at half pay

More than 3 years’ service

Eight weeks at full pay, eight weeks at half pay

The entitlement will be paid, less any Social Welfare disability benefit to which you are entitled. It is your responsibility to claim from the Department of Social Welfare any such benefits to which you are entitled for absence due to certified sickness in excess of three days.

Non-compliance with the company’s absence policy and/or abuse/misuse of the company’s sick pay scheme may result in non-payment of sick pay and/or disciplinary action up to and including dismissal. At all times the Company reserves the right to send that employee for a medical examination to a doctor nominated by the Company.

Pension

The company will take responsibility for funding the continuation of your existing pension plan with

New Ireland Assurance to the value of 8% of your base salary – value €6,160.

You are entitled to access the organisation’s P.R.S.A scheme. For details please contact the Human Resource department.”

The Respondent’s case is that the Complainant started working for a different company on the 27th of August 2012 but due to a transfer of undertaking he transferred to the Respondent on the 15th of February 2016 on his existing terms and conditions.

He was provided with a new contract of employment by the Respondent and there was a number of amendments made to that contract arising from the obligations under the transfer of undertakings regulations.

The Respondent relied on the definitions set out in the Payment of Wages Act. It submitted that pensions are not mentioned in the definition of wages but are mentioned in the exclusion clause. The Respondent’s submission was that clearly, they were separate items and there was no basis on which it could be read that pensions are included in the definition of wages.

The Respondent’s submission was that the entitlement to company sick pay was discretionary and that the vast majority of employees would have no entitlement to sick pay in the company.

Its submission was that the periods referable in the sick pay policy in the contract were referable to “years of service” and that the service year is different in language to the annual leave year.

The submission made was that the service year would vary from employee to employee. The use of the phrase “service year” was a deliberate use of language.

The Respondent set out that the different levels of sick pay specifically referred to the level of service that the employee had with the Respondent. Employees could not pick and choose their level of service. The service year related to the anniversary of the start date of the Complainant in employment.

In addition, it also submitted that although the policy set out the maximum entitlement, it was still discretionary.

The Respondent set out that it did exercise its discretion and it did award eight weeks’ full pay and eight weeks half pay to the Complainant. The Respondent’s position was that the Complainant had exhausted his entitlements for sick pay in these payments and he was not entitled to any further payment in the service year to the 26th of August 2017.

The Respondent noted that the Complainant resigned on the 2nd of July 2017.

It is the employer’s duty to pay wages or remuneration as agreed between employer and employee in the contract of employment. The obligation to pay is both a statutory and contractual duty.

In Charlton v Aga Khan’s Stud Société Civile, reference was made to the following passage from Halsbury’s Laws of England as a correct statement of the entitlement of an employee to non-statutory sick pay:

“Whether any such private sick pay is payable, its amount, its duration, and its relationship with statutory sick pay or any other benefit depend entirely on the terms of the individual employee’s contract, since there is no rule of law that it either is or is not payable.”

I have reviewed the definition of wages and deductions in the Payment of Wages Act 1991

“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.

5. Regulation of certain deductions made and payments received by employers

(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.

The Complainant commenced work on the 27th of August 2012 with a different employer. Under a transfer of undertaking he transferred to the Respondent on the 15th of February 2016.

He worked with the Respondent until his absence on sick leave on the 16th of September 2016. Thereafter he was paid eight weeks’ full pay and eight week’ half pay together with his pension contributions. This covered a period up to the end of the first week in January 2017.  

His employment ended with the Respondent on the 2nd of July 2017.

He lodged the claim with Workplace Relations on the 20th of July 2017.

I have read clause 3 and clause 20 of the employment contract of the Complainant.

On page 1 of the contract it states that

“the start date is the 27th of August 2012.

On the same page, it sets out his salary per annum and the pension obligation of the company. The pension is stated to be

“8% of base salary”.

I have decided that a pension deduction is not a payment by way of a pension within the meaning of the Act and accordingly disagree with the Respondent’s submission that the matter is outside the scope of my jurisdiction.

Clause 3 is a conditional clause. It is qualified and is conditional. Firstly, it sets out that the company sick pay is discretionary and it goes on to state that it varies with length of service at the time of the commencement of the period of sick leave. There is table of different service periods. The clause goes on to state that no more than the total entitlement cited below would be paid in any one service year.  

I find that the potential entitlement is linked to the amount of years worked with the company. As there is no definition of service year in the contract, I must give it its ordinary understanding linked to the start date of the Complainant. I find that “service year” for the Complainant is between 27th of August of one year and the 26th of August the following year.

As regards the Complainants pension entitlement, this as per his contract is linked to his base salary. I note that the Complainant was paid his sick pay - eight weeks’ full pay and eight weeks’ half pay - from the period 16th of September 2016 to the first week in January 2017. He was also paid his pension contributions up to that date.

My decision is that the requirement to pay sick pay was in the service year 27th of August 2016 to the 26th of August 2017. I find that the Complainant was paid his full sick pay entitlement and pension contribution or premium for this period.

As the payment of his pension is linked to his salary, I further find that while not being paid by the company his base salary or sick pay, there is no requirement to pay the pension contribution.

I dismiss the complaint CA/00012716/002.

Pension deduction, sick pay, service year.